On the effects of EU trade policy: Agricultural tariffs still matter

Abstract

We capitalise on the latest development in the empirical structural gravity literature to examine the question of whether and how much the European Union (EU) agricultural tariffs affect agricultural imports. We capture both the protectionist and preferential nature of EU trade policies by measuring the effects of multilateral, bilateral and unilateral agreements on international trade relative to intra-EU trade. The computation of bilateral protection and preference margins is used to determine which countries/sectors are most negatively/positively affected. On average, EU agricultural tariffs have decreased international trade by 14 per cent. We also find that EU preferences have been effective in promoting trade by about 10 per cent.