The Impact of Regional Trade Agreements on Egyptian Trade Flows: A Gravity Modelling Approach

Egypt is interested in joining many trade agreements, whether bilateral or multilateral, with the aim of stimulating foreign trade. The study therefore seeks to investigate the impact of Egypt's accession to the main regional trade agreements on Egyptian foreign trade flows, using the gravity model of international trade. To achieve the research objective, the study adopted the approach of panel data (58 states) from 2000 to 2021. In this context, the results indicate that the combined GDP of the trading partners has a positive and statistically significant impact on Egyptian trade flows, as well as the combined population size and the inverse square of the distance between countries. Although common language could be a facilitating factor in international trade, its importance might diminish under certain circumstances. Similarly, although common borders were beneficial to trade, there are circumstances in which they might have a negative impact on trade relationships. Regarding the impact of Egypt's accession to regional trade agreements, the results indicated the positive impact of Egypt's agreement with the European Union, and the GAFTA agreement on Egyptian exports, imports, and foreign trade, COMESA agreement has a positive impact on exports and foreign trade but it has a negative impact on imports, while accession to the Agadir agreement had a positive impact on Egyptian total trade. On the other hand, the results indicated the negative impact of accession to the QIZ agreement on all Egyptian trade flows, and the EFTAagreement had a negative impact on Egypt's exports and total trade, there was an insignificant impact of the MERCOSURAgreement on all trade flows. Accordingly, the study recommends the need for a comprehensive assessment of the terms of trade agreements in the light of trade dynamics, as well as the focus on strategic planning and capacitybuilding initiatives to minimize the negative impact of some agreements and maximize the long-term benefits of others, andworking on reforming trade policies and measures and market diversification strategies, and exploiting the opportunitiesprovided by GAFTA in supporting economic growth and stability.