An analysis of eu-china agricultural trade relations in the context of brexit – the perspective of trade specialisation dynamics

This paper uses trade data from 2001 to 2017 to analyse comparative advantage of both the EU27 (excluding the UK) and China by employing Balassa’s revealed comparative advantage index (BRCA) and the normalised revealed comparative advantage index (NRCA). Two broad types of trade specialisation dynamics have been analysed by using OLS regression analysis, together with Markov transition probability, Shorrocks’ mobility index, and regression trend analysis. The results show that the majority of the agricultural products are in the comparative disadvantage category, and that although the EU has a strong comparative advantage in several agricultural products, its probability to keep these advantages is lower than for China.