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Abstract

The objective of the study is to examine the impact of free trade agreements (FTA) with agricultural trade flow in general and dairy, vegetable, live animals, meat and sugar in particular. To achieve the objective the paper employs gravity model through compiling panel data. The study focuses on selected North African countries (Algeria, Egypt, Morocco and Tunisia) as reporting countries and the rest of the world as partner countries. Accordingly, the study finds that being a member of trade agreement (FTA) is positively associated with aggregate agricultural trade flow. In fact, trade agreement could increase agricultural trade flow by around 39 percent in trade volume (USD). Further, the study finds the potential of trade creation. In fact, the trade agreement with EU created a market for former Soviet countries (Latvia and Lithuania). Notably, due to the trade accord, the countries start exporting commodities such dairy and vegetable products. However, despite the results, the disaggregate agriculture fails to have a similar association. For instance, vegetable trade flow is positively influenced by FTA while live animals trade is affected negatively by FTA. Therefore, it requires vigilance when making a conclusion regarding the effect of FTA on disaggregates agriculture trade flow.

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