Trade Agreement,Costs Elasticity And Trade Optimization

China is involved in multilateral and bilateral trade agreements to coordinate trade relations and promote trade development.Seeing that the particularity of the agricultural,The major purposes of this study are to make certain whether the trade agreement will benefit and improve the agricultural export trade environment.And what's the space of potential for agricultural trade optimization?One,trade costs involve important implications that partly determine a country's ability to integrate itself into global trading system.Scholars have quite differences on whether trade agreement substantially reduce agricultural trade costs.The other,Trade costs elasticity reflects the spatial size of expanding trade flow by reducing trade costs,which is an effective index to measure the trade potential.The research on cost elasticity is not comprehensive and systematic.Based on the review,a micro-founded measure of trade frictions developed by Novy(2011)is applied to estimate an indirect measure of China's agricultural trade costs with a large cross section dataset for 59 trading partners.Results show that China's agricultural trade costs experienced a significant downward trend during the period 1995 to 2013.The weighted average tariff equivalent of trade costs is 99 percent in 2013,which is far higher than the world average level.The trade cost measure shows substantial differences in the levels of integration across sectors and trading partner groups:The trade cost of primary agricultural products is significantly higher than that of processed agricultural products;and the trade cost between China and developing countries exceed that of developed countries;Developed economies have a stronger trade protection for primary agricultural products,so as developing economies to processed agricultural products.Next we use the classical gravity model to analyze the impact of trade agreements on china's agricultural trade cost.In detail,geographic and cultural factors as control variables,RTA and WTO as the key explanatory variables represented trade agreement.Dummy variables of industry and trading partners are also introduced to analyze the heterogeneity of determinants of their trade cost.Empirical analysis suggests that geographical factors explain most of trade costs variation,and participations in WTO seems not to be an important determinant.Unexpectedly,RTA significantly increased the agricultural trade cost on the 5%level.In addition,the study further confirms the existence of heterogeneity of trade costs in the industry sectors and trade partners.The trade costs reflect the immediate indicators of trade resistance but do not reflect the size of future trade optimization.Then this paper on the basis of translog gravity model,which Novy(2013)provides for endogenous trade cost elasticity,to measure bilateral agricultural trade cost elasticity between China and 23 main trading partners,know about the differential impact on the trade flows across different trade partners after lowering the trade cost.The conclusions are as follows:The elasticity of trade cost decreases with the increase of imports share,China's agricultural trade cost elasticity varies within wide range between[0.16,1008].The space of trade flows expansion by reducing trade costs are shrinking,because of the decline of elasticity and slowness of the rate of decline;the trade cost elasticity between China and Southeast Asian countries is at a low level that implies we shouldn't always pin our hope on reducing trade cost to gain trade benefits,moreover,the value of trade cost elasticity with European and American countries is large,and in future more opportunities should be seized to achieve bilateral economic and trade cooperation.Finally,some suggestions are put forward:rich agricultural connotation on account of basic status of agriculture;consolidate the existing market and develop the market of Europe and America region;Accelerate technological innovation and deal with trade barriers better.Trade agreements should be more covered with agriculture.