Trade Liberalisation: The Effects of Free Trade Agreements on the Competitiveness of the Dairy Sector

In recent years, preferential trade agreements ( PTA s), free trade agreements ( FTA s) in particular, have proliferated while WTO negotiations have stagnated. This paper contributes to the literature on trade liberalisation and the agricultural sector by analysing the effects of FTA s on the competitiveness of the dairy sector across 76 countries and over a 20‐year period from 1990 to 2009. With a longitudinal econometric model, the results demonstrate that when a country has a revealed comparative advantage in the dairy sector, FTA s positively influence several indicators of competitiveness in the dairy sector, such as production, market share and trade balance. The results also indicate that multilateral FTA s are more beneficial than bilateral FTA s. There is strong empirical evidence that FTA s are more beneficial to developed countries than to developing countries. There is no statistical evidence to support the hypothesis about a relationship between FTA s and farm‐gate price.