Jason H. Grant

Agricultural Trade and the GATT/WTO: Does Membership Make a Difference?

Recent empirical studies have estimated the trade flow effect of membership in the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT). One important, although largely untested, conclusion from this literature is that the GATT/WTO works well if we ignore trade in agriculture - one of the institutions seemingly apparent failures. This article investigates this conclusion using a large panel of agricultural and non-agricultural trade flows. The results are impressive: the multilateral institution has delivered significant positive effects on members agricultural trade despite its sensitive nature and the reluctance of members to undertake serious reform. These findings are robust to various slices of the data and recent advances in the specification and estimation of the gravity equation to account for sample selection issues and the extensive margin of trade. Copyright 2012, Oxford University Press.

Evaluating the Trade Restrictiveness of Phytosanitary Measures on U.S. Fresh Fruit and Vegetable Imports

Empirically assessing sanitary and phytosanitary regulations has proven difficult because most data sources indicate whether a regulation exists but provide no information on the type or importance of the respective measure. In this article, we construct a novel database of U.S. phytosanitary measures and match these to 47 fresh fruit and vegetable product imports from 89 exporting countries over the period 1996–2008. A product‐line gravity equation that accounts for zero trade flows is developed to investigate the trade impact of different pest‐mitigation measures. While the results suggest that phytosanitary treatments generally reduce trade, the actual restrictiveness of these measures diminishes dramatically as exporters accumulate experience, and it vanishes when exporters reach a certain threshold. The results have important policy implications considering the number of empirical studies that find a negative impact of non‐tariff measures on trade.

Dairy Tariff-Quota Liberalization: Contrasting Bilateral and Most Favored Nation Reform Options

A highly disaggregated, “tariff line,” source-differentiated, partial equilibrium model of U.S. specialty cheese imports is developed to investigate reform options for tariff-rate quotas (TRQs). A mixed-complementarity framework is used to represent bilateral and most favored nation (MFN) tariff quotas. The impacts of liberalizing U.S. specialty cheese imports via bilateral and MFN quota expansions, out-of-quota tariff cuts, and simultaneous liberalization scenarios are evaluated. We find that the path of liberalization is quite different, depending on the reform approach undertaken, particularly if the United States adopted an MFN quota administration mechanism for specialty cheese imports. Copyright 2007, Oxford University Press.

Does the World Trade Organization Foster Successful Regional Trade Agreements

The World Trade Organization’s (WTO) Committee on Regional Trade Agreements (CRTA) is charged with monitoring, examining, and ensuring the compliance of notified RTAs. We develop a comprehensive dataset covering 290 regional economic integration agreements and ask whether oversight and examination by the WTO has fostered successful RTAs. The data reveal that almost half (43%) of all agreements in existence (up to 2005) are neither notified nor accounted for in the RTA database published by the WTO. Using variation in the notification status of an RTA we are able to determine whether oversight of notified RTAs has fostered higher levels of intra-regional trade. Surprisingly, we find that non-notified RTAs are significantly outperforming their notified counterparts despite the fact that notified RTAs are subject to conformity reviews and compliance standards enshrined in GATT Article XXIV. The ex post results suggest that oversight by the WTO may actually impede the effectiveness of regional integration. However, further robustness checks reveal that RTAs that entered into force after 1995, marking the establishment of the WTO and a formal committee (the CRTA) to oversee RTAs, are doing a much better job of stimulating members’ trade relative to non-notified agreements. The results thus identify strategies to make regional trade agreements more effective going forward.

Survival of the Fittest: Export Duration and Failure into United States Fresh Fruit and Vegetable Markets

&NA; Recent contributions to the theoretical and empirical trade literature emphasize the channels by which exporting occurs and the duration and survival rates of trade relationships. However, for agricultural trade, few studies have considered the factors affecting export survival. This article identifies factors affecting the duration of fresh fruit and vegetable exports to the U.S. market, including U.S. sanitary and phytosanitary (SPS) policy regulations. The main findings can be summarized as follows. First, our preferred model with exporter binary variables indicates that changes in U.S. commodity prices and exporter gross domestic product have the largest impact, whereas U.S. production variability and exporter experience have the lowest impacts on the hazard rate of export duration. Second, SPS treatment requirements have persistent impacts on trade duration. Water treatment requirements quadruple the average hazard rate in the first year of a spell of service, and while the hazard rate does diminish over time, it is still nearly three times the average hazard rate, even after the fourth year of the spell of service. Similarly, a combination treatment of fumigation and cold treatment/refrigeration more than triples the average hazard rate in the first year of the spell of service, but this effect diminishes more quickly over time.

Reciprocal Trade Agreements: Impacts on U.S. and Foreign Suppliers in Commodity and Manufactured Food Markets

Reciprocal trade agreements (RTAs), which grant special preferences to members, affect the pattern and volume of bilateral trade in global markets. This study uses the gravity framework and panel data depicting annual trade between 69 countries over 31 years to examine how 11 RTAs have shaped U.S. and other suppliers’ exports of commodity and manufactured foods. Empirical results show that joint RTA membership enabled exporters to increase their trade with member country importers in the two food markets. The few agreements that failed to have a positive effect on member trade in either commodity food or manufactured food involve developing countries that typically grant very limited cross-border trade preference to member countries. Interestingly, model results indicate that RTAs can be a vehicle to increase trade externally. Nine of the 11 RTAs also expanded exports externally to nonmember countries, albeit to a lesser degree than with member importers. In some cases, however, nonmember exporters of food bore the cost of the RTA-induced expansion of trade. Five RTAs lowered food imports from nonmember suppliers. The adverse effects on nonmember suppliers were more pronounced for the United States than for other competitors.