The impact of climate change and the European Union GSP-scheme on East Africa’s horticultural trade
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Date
2014-11
Authors
Lubinga, Moses Herbert
Journal Title
Journal ISSN
Volume Title
Publisher
University of the Free State
Abstract
With the aim of generating reliable information upon which appropriate decisions can be
based to benefit the various stakeholders, this research at one hand aims at developing a set of
meteorological indices, which are used as proxies to evaluate the impact of climate change on
horticultural trade flows to the European Union (EU) market. On the other hand, the study
examines the role of European Union's Generalised System of Preferences (EU-GSP scheme)
in boosting agricultural imports into the EU. Furthermore, the study assesses the export
competitiveness of various horticultural commodities of East African states within the EU
market, as well as exploring East Africa's trade potential and performance of the selected
commodities within the EU.
Various techniques were used to attain the above objectives. Such techniques include;
Balassa's Revealed Comparative Advantage (RCA) approach, the out-of sample technique,
the relative difference and absolute difference methods. To estimate the various gravity
models specified, a set of the extended Poisson models, viz: Zero Inflated Poisson (ZIP) and
Negative Binomial Regression (NBR) techniques for panel data estimations were employed
so as to deal with the excess zeros and over dispersion problems associated with highly
disaggregated data. Time series data for a period of 23 years (1988-2011) for 15 EU member
states and 3 East African states (Kenya, Tanzania and Uganda) were used for the analysis.
Data was obtained from various sources such as the TRAINS database, World Bank
Development Indicators, African Growth and Development Policy Modeling Consortium
(AGRODEP) database, Food and Agriculture Organisation (FAO) database, and TYN CY
1.11 database provided by the Tyndall Centre for Climate Change Research.
Some of the key empirical findings decomposed at country level reveal that:
- Kenya has export competitiveness in Asparagus, Mushrooms and truffles. Uganda
exhibits competitiveness in exporting pepper, bananas and eggplants while for Tanzania,
vegetables were the most competitive. Therefore, each of these countries should put
much emphasis on producing and exporting commodities over which she has
comparative advantage. Climate change generally has both positive and negative effects on horticultural trade
flows into the EU-Market, depending on the kind of proxy being put into consideration.
Within the EU market, anomalies in precipitation enhance horticultural imports from
East Africa while temperature anomalies tend to hinder trade. Anomalies in temperature
in exporting countries boost horticultural trade flows from Tanzania and Uganda while
the contrary is true for Kenya. Precipitation anomalies in exporting countries favor
horticultural trade flows from Kenya while they curtail trade flows from Tanzania and
Uganda. Thus, results imply that the use of anomalies as proxies for climate change in
agrarian based economies provides a more reliable measure of the effects of climate
change in trade than using the generalized Kyoto Protocol policies.
- The EU-GSP scheme selectively favors importation of certain horticultural commodities
into the EU-market, depending on the country of origin. It promotes importation of
bananas, beans and peppers from Uganda and beans from Tanzania. On the contrary, it
deters asparagus and bean imports from Kenya. Given that the findings concur with
findings of other scholars, it is imperative to argue that the use of preference margin,
based on all policy instruments (tariff rates, MFN, specific duties and Tariff Rate
Quotas) embedded within the EU-GSP scheme provides apt commodity specific
inferences regarding the effect of the EU-GSP scheme on horticultural imports into the
EU-market.
- Kenya and Uganda exhibit existence of un realised trade potential within the EU market.
For Kenya, asparagus has room for further market expansion across all EU-member
states while Uganda's beans and pepper can further be imported many EU member
states like France, Germany, Luxembourg, Portugal and Greece, among others. A
similar scenario applies to beans from Tanzania. This implies there is still have room to
expand East Africa's horticultural trade within the EU-market.
- The three East African states evidently exhibit poor trade performance within the EUmarket
in the various commodities. This suggests that there exists some barriers to trade
which limit the proliferation of East Africa's horticultural imports into the EU. Thus, it
is incumbent upon East African states to foster cooperation in horticultural trade with
the EU member states.. Conclusively, it is commendable that anomalies in temperature and precipitation may be used
as climate change proxies, particularly when evaluating the impact of climate change on
international trade skewed towards agricultural commodities rather than using other based on
Kyoto Protocol policies. It is also recommended that assessment of the influence of nonreciprocal
preferential trade agreement(s) granted to developing countries, based on
preference margins should always take into account all the policy instruments embedded
within the agreement.
Description
Keywords
Thesis (Ph.D. (Agricultural Economics))--University of the Free State, 2014, Climatic changes -- Economic aspects -- Africa, East, Horticulture -- Kenya, Horticulture -- Tanzania, Horticulture -- Uganda, International trade -- Africa, East, European Union