Is the WTO Still Relevant in Agri-food Global Value Chains?

By Dongin Kim

Why This Study Matters

When you buy a chocolate bar or a frozen pizza, you’re often consuming the result of a long, global journey. The wheat might be from the U.S., cocoa from Ghana, sugar from Brazil, and the final packaging done in Europe. This is global value chains (GVCs) in action, an interconnected network of production and trade across countries. As our food system becomes more global, the question arises: Who sets the rules? For decades, the World Trade Organization (WTO) and its predecessor, GATT, have been at the center of global trade governance. Yet with the growing popularity of regional trade agreements (RTAs), many countries are increasingly bypassing the WTO framework. Figure 1 (placeholder below) illustrates the rise of both multilateral and regional integration over time. This shift has prompted scholars to ask whether the WTO still holds sway in the modern trade landscape (Bagwell et al., 2016).

• This paper asks a fundamental question: - Is the WTO still relevant in shaping global food trade, or has its influence faded?

Figure 1: Multilateral (WTO) and Regional (RTA) Trade Integration Over Time

What We Did

To answer this, we analyzed trade flows across 189 countries from 1991 to 2020, using a cutting-edge economic model that traces how countries exchange intermediate goods, such as wheat flour, tomato paste, or meat, used to make final food products.

We focused on:

• Backward linkages: Imports of intermediate inputs

• Forward linkages: Exports of inputs that others use

• Overall GVC flow changes after countries join the WTO or sign RTAs

We also used an event study approach to track how GVC flows evolve before and after these trade agreements take effect.

Finding 1: WTO Membership Drives Stronger GVC Integration

WTO membership is associated with substantial increases in GVC participation:

• Backward linkages increase by 56.7%

• Forward linkages increase by 43.9%

  
  

In contrast, the effects of RTAs are more modest, increasing backward and forward linkages by 7.9% and 4.1%, respectively.

Finding 2: WTO Effects Are Gradual but Persistent

Our event study shows that WTO-related gains are not immediate. It takes around 4–6 years after accession for significant changes in trade flows to materialize. This gradual effect likely reflects the time it takes to harmonize regulations, build institutional capacity, and develop infrastructure for trade.

Earlier empirical work by Grant and Boys (2012) confirms this long-run view: while GATT/WTO membership is statistically linked to higher agricultural trade volumes, much of the adjustment takes place over time and depends on the country’s capacity to comply with rules.

Figure 2: Event Study Results- WTO Effects on Agricultural GVCs Over Time

Complementarity Between WTO and RTAs

Although the WTO provides a strong multilateral foundation for agri-food trade, RTAs play a complementary role. They can address specific regulatory hurdles, improve regional infrastructure, or include deeper provisions such as SPS or TBT chapters. Our related research (Kim, Steinbach, and Zurita, 2024) shows that RTAs with “deep” provisions, those that include enforceable commitments on investment, competition, and standards, are more likely to enhance agri-food GVC integration, especially when paired with WTO disciplines.

Policy Implications

Our findings suggest that multilateral and regional trade policies serve distinct yet complementary roles. Policymakers should:

• Reinforce WTO engagement to support stable global trade architecture.

• Use RTAs strategically to overcome specific barriers, particularly in regions with underdeveloped institutions.

• Recognize the time horizon of GVC integration, real gains from multilateral agreements may take several years to emerge, but their effects are enduring.

Final Thought

Although often perceived as slow-moving, the WTO remains a crucial component of the global food trade framework. Its influence may take time to materialize, but the long-term integration it supports is essential for stable, inclusive, and efficient global value chains.

Original Paper: Is the WTO Passé? The Impact of Multilateral Economic Integration on Agri-Food Global Value Chains – Dongin Kim and Sandro Steinbach (2025) (*Published in The World Economy – https://doi.org/10.1111/twec.13737)

References

Bagwell, K., C. P. Bown, and R. W. Staiger. 2016. “Is the WTO Passé?” Journal of Economic Literature 54, no. 4: 1125–1231.

Hirsch, C., and H. Oberhofer. 2020. “Bilateral Trade Agreements and Price Distortions in Agricultural Markets.” European Review of Agricultural Economics 47, no. 3: 1009–1044.

Grant, J. H., and K. A. Boys. 2012. “Agricultural Trade and the GATT/WTO: Does Membership Make a Difference?” American Journal of Agricultural Economics 94, no. 1: 1–24.

Kim, D., S. Steinbach, and C. Zurita. 2024. “Deep Trade Agreements and Agri-Food Global Value Chain Integration.” Food Policy 127: 102686.