Asia‐Pacific Integration with China Versus the United States: Examining Trade Patterns Under Heterogeneous Agricultural Sectors

21 Pages Posted: 15 Apr 2020

See all articles by Kari Heerman

Kari Heerman

U.S. Department of Agriculture (USDA)

Shawn Arita

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Munisamy Gopinath

Oregon State University - Department of Applied Economics

Date Written: October 2015

Abstract

This article examines bilateral trade patterns in the Asia‐Pacific using a new model in which comparative advantage within the agricultural sector is linked to agro‐ecological characteristics, and trade costs are product‐specific. Bilateral market share is a function of productivity and trade costs. However, countries with similar land and climate characteristics systematically have high productivity in similar products making them disproportionately sensitive to changes in each other's trade costs. We use a random coefficients logit model to estimate a parametric distribution of comparative advantage and trade costs across products and calculate regional trade liberalization elasticities for each exporter in each import market. Unlike most existing models, the value of the elasticity depends on the degree to which liberalization includes competitors with similar comparative advantage within the agricultural sector. We find disproportionately larger trade elasticities under China‐led liberalization relative to U.S.‐led liberalization among close U.S. competitors compared to countries whose agricultural products are unlikely to compete head‐to‐head with U.S. exports. For the United States, we find that the “lost opportunity” cost of exclusion from regional liberalization is increasing in the extent to which its close competitors gain new access.

Keywords: agricultural trade, Asia‐Pacific integration, free trade agreements, trade liberalization

Suggested Citation

Heerman, Kari and Arita, Shawn and Gopinath, Munisamy, Asia‐Pacific Integration with China Versus the United States: Examining Trade Patterns Under Heterogeneous Agricultural Sectors (October 2015). American Journal of Agricultural Economics, Vol. 97, Issue 5, pp. 1324-1344, 2015, Available at SSRN: https://ssrn.com/abstract=3574944 or http://dx.doi.org/10.1093/ajae/aav038

Kari Heerman (Contact Author)

U.S. Department of Agriculture (USDA) ( email )

1301 New York Ave. NW
Washington, DC 20250
United States

Shawn Arita

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States

Munisamy Gopinath

Oregon State University - Department of Applied Economics ( email )

213 Ballard Extension Hall
Corvallis, OR 97331-4501
United States
541-737-1402 (Phone)
541-737-2563 (Fax)

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