Agricultural support levels are at a crossroad with reduced distortions in OECD countries and increasing support for agricultural
producers in emerging economies over the last decades. This paper studies the determinants of distortions in the agricultural
markets by putting a specific focus on the role of trade policy. Applying different dynamic panel data estimators and explicitly
accounting for potential endogeneity of trade policy agreements, we find that an increase in the number of bilateral free
trade agreements exhibits significant short- and long-run distortion reducing effects. By contrast, WTO's Uruguay Agreement
on Agriculture has not been able to systematically contribute to a reduction in agriculture trade distortions. From a policy
point of view our findings thus point to a lack of effectiveness of multilateral trade negotiations.
Research group:Industrial Economics, Innovation and International Competition