Impacts of the SADC free trade agreement on South African agricultural trade
Department of Agricultural Economics, University of the Free State, PO Box 339, Bloemfontein, South Africa
Trade is an essential component of modern society, with nations signing bilateral trade agreements to engage in various forms of economic integration. Developing countries in southern Africa are also involved in economic integration to underpin development. The Southern African Development Community (SADC) became a free trade area in 2008 for the economic integration of its members. This study evaluates the impact of the SADC Free Trade Agreement (SADC FTA) on South African agricultural trade using the Poisson Pseudo-Maximum Likelihood (PPML) specification of gravity model to determine the significance of variables within the model. Bilateral trade data were obtained from the United Nations Commodity Trade Statistics (UN Comtrade) database and the Department of Agriculture, Forestry and Fisheries (DAFF), while data on gross domestic product and population were sourced from the World Bank Development Indicators (WDI) database. The results show that there has been a net trade-creating effect and increasing intra-SADC bloc trade in beef. Intra-regional trade in maize has also been stimulated by the implementation of the agreement.