The dynamics of agri-food trade between the EU28 and East African Community (EAC)

Abstract

The increasing number of regional blocs and interdependence of nations have become important aspects of global economic integration. The European Union (EU28) as one of the most advanced regional bodies has had preferential trade agreements with other regional bodies, such as the East African Community (EAC). Historically, the EU28 has been the EAC’s leading trading partner. Against this background, this paper analyses the dynamics of bilateral trade in agri-food between the two regional blocs for the period 2000–2018, using the battery of empirical tools.The findings indicate that even though the EU has finalised trade agreements with the EAC, it holds on the region regarding trade has diminished. The EAC bloc has diversified its trading partners (to other African countries, India and China) beyond the EU28 markets. The results further reveal that the EU28 has comparative advantages in 32 out of 46 agri-food products in trading with EAC. The export concentration ratios show the EU28 slightly concentrated more in exporting products to the EAC than EAC to the Union. The BCG findings reveal (un)competitive and/or promising (dropping) products in export structures of both regions. By and large, the results indicate certain shifts in the comparative advantage, specialisation/diversification of exports and competitiveness of specific products on the bilateral level between EU28 and EAC. Policymakers, especially from EAC should continue to create enabling environments to stimulate food processing, trade and monitor changes in trade patterns or shocks within the framework of the Partnership Agreement.

Examining the Patterns and Dynamics of Intra-Regional Trade and Revealed Comparative Advantage in the East African Community

“…From 2017 to 2020, the percentage of agricultural exports declined gradually. Given that a significant portion of agricultural exports of the EAC countries is exported to Europe (Zdráhal et al, 2020), it is possible that part of the drop in the percentage of agricultural exports in total exports is due to the COVID-19 pandemic, which affected trade globally. Empirical literature has shown how the coronavirus (COVID-19) disrupted global trade flows and economic activity in general, besides the loss of human life (Arenas et al, 2022;Socrates and Lashitew, 2021;Zgovu, 2021;Liu, 2021).…”