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Impact of Food Standards on Patterns of International Trade in Marine Products
Abstract
Over the past two and half decades, rising non-tariff barriers, such as SPS and TBT measures appear to negate any benefits accruing from declining tariffs. The adoption of higher standards reflects efforts, generally by developed nations, towards protecting both human and environmental health. However, the burden of compliance falls on the upstream players of the supply chain, mostly located in the Global South. In this article, we explore if imposing food standards has a differential impact on the exporters of marine products from high-income and low-income countries. Using panel data analysis based on bilateral trade between 50 exporters and 188 importers of marine goods at HS6 level codes from 1995 to 2018, we conclude that imposing food standards has a significantly negative impact on exports of marine industries. Moreover, it appears that after 2008, food standards have become relatively more stringent, and their impact has varied based on economic size of the exporter. Relatively richer countries were able to expand their exports in the presence of standards. However, marine exports of poorer nations reduced. This contrasting impact of food standards on the high- and low-income countries significantly changed the pattern of global marine trade.
JEL Codes: F1, F14, Q17
In recent decades, there has been a palpable shift in the commodity composition of world agri-food trade away from the traditional (unprocessed) primary products towards processed food. This structural change in trade patterns and its policy implications have so far received scant attention in policymaking in most agricultural resource-rich developing countries. This article aims to draw attention to this oversight by examining the experience of Sri Lanka against the backdrop of the experiences in agri-food trade of other countries in the Asian region. The analysis uses a new dataset that systematically delineates processed food from the traditional primary good products. The analytical narrative of an inter-country pattern of export performance shows that, unlike primary commodity dependence, exporting processed food is positively associated with the stage of economic advancement of countries. The econometric analysis suggests that export success is determined by a combination of growth of world demand, the domestic agricultural resource endowment and the conduciveness of the policy regime for global economic integration.
JEL Codes: F13, F63, N45, O13, Q17
Commitment of South Asian Free Trade Agreement (SAFTA) from South Asian Preferential Trading Agreement (SAPTA) for trade liberalisation was one of the hopes in South Asia. This article highlights untapped trade potential in agro-trade between India and its trading partners in South Asia through Trade Potential Index (TPI). This article evaluates post-SAFTA effects of non-tariff measures (NTMs) on agro-products (HS 6-digit level) over the period 2004–2016. After 2004, many agro-products of South Asia have suffered trade restrictions which create challenges over SAFTA implementation. This article inquires whether NTMs in post-SAFTA has been trade creating or trade inhibiting in agro-trade for member countries as per the earlier commitments. Research methodology for this study includes qualitative and quantitative approach. Qualitative approach examines agri-trade constraints faced between India and rest seven South Asian countries and vice versa. Quantitative analysis explores prevailing trade barriers in selected agro-products during 2002–2016 applying Regional Trade Barrier Index and NTM Coverage Ratio. Results establish the presence of agri-trade barriers from South Asian countries against India as well as India’s barriers against rest seven countries of South Asia. Study concludes that agri-trade restrictions prevail in South Asia despite SAFTA which shows the slow process of trade liberalisation.
JEL Codes: F13, F14, Q17
U.S. seafood consumption has changed dramatically in recent decades and has become increasingly dominated by the consumption of a limited number of species that are primarily imported and predominantly sourced from aquaculture. In getting to this point, the United States has been, and still is, at the forefront of some of the most important trends in global seafood markets. Hence, discussing the factors influencing U.S. seafood consumption patterns is an interesting and informative endeavor and will most likely also have strong predictive power for the continued development of seafood markets in the United States. In this article, we will discuss the transitions in the U.S. seafood market, primarily focusing on the period from 1990 to the present, highlighting the main factors that facilitated this development. This article provides an overview of U.S. landings, aquaculture production, exports, and imports and also explores contributing trends in global export and import markets. This will be followed by a discussion of U.S. per capita consumption patterns and an examination of the consolidation of species consumed over time. Finally, implications for future trends in seafood consumption and production are discussed.
Agriculture is the backbone of Nigeria's socioeconomic development. This paper investigates the impact of agricultural exports on economic growth in Nigeria using OLS regression, Granger causality, Impulse Response Function and Variance Decomposition approaches. Both the OLS regression and Granger causality results support the hypothesis that agricultural exportsled economic growth in Nigeria. The results, however, show an inverse relationship between the agricultural degree of openness and economic growth in the country. Impulse Response Function results fluctuate and reveal an upward and downward shocks from agricultural export to economic growth in the country The Variance Decomposition results also show that a shock to agricultural exports can contribute to the fluctuation in the variance of economic growth in the long run. For Nigeria to experience a favourable trade balance in agricultural trade, domestic processing industries should be encouraged while imports of agricultural commodities that the country could process cheaply should be discouraged. Undoubtedly, this measure could drastically reduce the country's overreliance on food imports and increase the rate of agricultural production for self-sufficiency exports and its contribution to the economic growth in the country.
The gravity model has been extensively used in international trade research for the last 40 years because of its considerable empirical robustness and explanatory power. Since their introduction in the 1960's, gravity models have been used for assessing trade policy implications and, particularly recently, for analyzing the effects of Free Trade Agreements on international trade. The objective of this paper is to review the recent empirical literature on gravity models, highlight best practices and provide an overview of Free Trade Agreement effects on international trade as reported by relevant gravity model-based studies over the past decade.
Purpose
This paper aims to chart the wide range of food scares reported throughout the EU over the period 1986‐2006 and explores their impact on EU policy.
Design/methodology/approach
There is much extant research that solely investigates the occurrences of specific food scares, however; little emphasis is given to the responses of policy makers. This research aims to narrow this gap in the literature by reviewing the major food scares, which have occurred throughout the EU and the subsequent policy responses.
Findings
A number of food scares have dominated media reports over the last two decades, but this study reveals the increasing emergence of rare serotypes of foodborne pathogens, as well as a rising trend of EU‐wide contaminant and animal disease‐related food scares. Simultaneously, there is evidence of evolution from a product‐focused food policy to a risk‐based policy, which has developed into a tentative EU consumer‐based food policy. Inevitably, in a market of 25 member‐states the concept of food quality varies between countries and therein justifies the need for responsive policy development, which embraces the single market philosophy.
Research limitations/implications
A typology of EU food scares is advanced and discussed in detail, with comments being made on their impact. In addition, the paper highlights the complexity of a EU consumer, which has led to a need for research into the maximisation of the satisfaction of purchasers by reinsuring their individual “right to choose”.
Originality/value
This paper provides a unique insight into a wide range of European food scares (e.g. microbiological, contaminants, animal disease‐related) and EU policy makers' responses to such food scares.
We test the hypothesis that product standards harmonised to de facto international standards are less trade restrictive than ones that are not. To do this, we construct a new database of European Union (EU) product standards. We identify standards that are aligned with International Organisation for Standardisation (ISO) standards (as a proxy for de facto international norms). We use a sample-selection gravity model to examine the impact of EU standards on African textiles and clothing exports, a sector of particular development interest. We find robust evidence that non-harmonised standards reduce African exports of these products. EU standards which are harmonised to ISO standards are less trade restricting. Our results suggest that efforts to promote African exports of manufactures may need to be complemented by measures to reduce the cost impacts of product standards, including international harmonisation. In addition, efforts to harmonise national standards with international norms, including those through the World Trade Organisation Technical Barriers to Trade Agreement, promise concrete benefits through trade expansion. Copyright 2009 The author 2009. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.
This paper provides a minimalist derivation of the gravity equation and uses it to identify three common errors in the literature, what we call the gold, silver and bronze medal errors. The paper provides estimates of the size of the biases taking the currency union trade effect as an example. We generalize Anderson-Van Wincoop's multilateral trade resistance factor (which only works with cross section data) to allow for panel data and then show that it can be dealt with using time-varying country dummies with omitted determinants of bilateral trade being dealt with by time-invariant pair dummies.
Can the enforcement of product standards be protectionism in disguise? This paper estimates the costs of non-compliance with U.S. product standards, using a new database on U.S. import refusals from 2002 to 2014. We find that import refusals decrease exports to the United States. This trade reducing effect is driven by developing countries and by refusals without any product sample analysis, in particular during the Subprime Crisis and its aftermath. We also provide evidence that given product standards were enforced more strictly during the crisis while the quality of imported products did not deteriorate. These results are consistent with the existence of counter-cyclical, hidden protectionism due to non-tariff barriers to trade in the United States.
The relevance of non-tariff barriers for global trade flows has increased in recent decades. However, the effect of food standards—as a particular important non-tariff measure—on agricultural trade flows remains unclear. We contribute to the debate with a unique dataset that contains the number of food processing firms of 87 countries from 2008 to 2013 that are certified with the International Featured Standard (IFS). We estimate a gravity model using the one-year lag of IFS as well as IFS certification in neighboring countries as an instrument to address potential endogeneity. We find that IFS increases c.p. bilateral exports on average of seven agricultural product categories in both specifications. However, the effect remains robust only for high- and middle-income countries and disappears for low-income countries. Hence, while IFS increases exports on average, low-income countries do not benefit in terms of higher export volumes. Moreover, once we separate the dataset by sector, the trade-enhancing effect remains for bakery, dairy, and beverage sectors only. Overall, we argue that food standards are not a suitable development tool to integrate low-income countries into high-value chains per se.
This paper explores the effects of non-tariff measures (NTM) on extensive and intensive margins of global exports of seafood in 1996-2011. The main result of this study is the differential and opposite effect of SPS and TBT measures. While SPS measures largely increase extensive margins of export and reduce intensive margins, TBTs mostly reduce exports at extensive margins and increase exports at intensive margins. Specific trade concerns (STC) have larger effect on exports than SPS and TBT notifications, both economically and statistically. Finally, there is substantial heterogeneity of response of exports to NTMs across HS six digit product lines, but the central tendency remains the same as for aggregated data.
With incidence of food-borne diseases, consumers have become more conscious of food safety. Share of high value food items in the export bounty from developing countries like India is on the rise. These high value food items such as fresh & processed fruits and vegetables, marine products, meat and its preparations are highly income elastic as well as sensitive from the viewpoint of food safety. Article 20 of GATT allows governments to act on trade in order to protect human, animal or plant life or health, provided they do not discriminate or use this as disguised protectionism. SPS Agreement sets out the basic rules concerning food safety and animal & plant health standards. It allows countries to set their own standards but also says that regulations must be based on science. With increased retail concentration ratio, large retailers in the developed countries are enforcing their own food safety standards and these standards are stringent as compared to standards of standard setting bodies of WTO. At times these standards are used for discrimination in international trade and are telling upon the exports from developing countries in terms of additional costs of compliance and lack of “harmonization” and difficulties in establishing “equivalence”. For the benefit of exporters from the developing countries and consumers of the developed countries, efforts must be made for encouraging harmonization in these private standards and reducing the resulting discrimination.
Empirically assessing sanitary and phytosanitary regulations has proven difficult because most data sources indicate whether
a regulation exists but provide no information on the type or importance of the respective measure. In this article, we construct
a novel database of U.S. phytosanitary measures and match these to 47 fresh fruit and vegetable product imports from 89 exporting
countries over the period 1996–2008. A product-line gravity equation that accounts for zero trade flows is developed to investigate
the trade impact of different pest-mitigation measures. While the results suggest that phytosanitary treatments generally
reduce trade, the actual restrictiveness of these measures diminishes dramatically as exporters accumulate experience, and
it vanishes when exporters reach a certain threshold. The results have important policy implications considering the number
of empirical studies that find a negative impact of non-tariff measures on trade.
In this paper we analyze the impact of private food standards on the export performance of asparagus export firms in Peru. We use 18-year panel data from 87 firms and apply fixed effects and GMM models. We do not find any evidence that certification to private standards in general and to specific individual private standards, has an effect on firms’ export performance, neither at the extensive margin nor at the intensive margin, and neither on export volumes nor on export values. Our case-study results imply that private standards do not act as a catalyst to trade.
In an attempt to disentangle the impact of sanitary and phytosanitary (SPS) measures on trade patterns, we estimate a Heckman selection model on the HS4 disaggregated level of trade. We find that aggregated SPS measures constitute barriers to agricultural and food trade consistently to all exporters. But conditional on market entry, trade flows are positively affected by SPS measures. Additionally, we find that SPS measures related to conformity assessment hamper market entry and trade flows, while SPS measures related to product characteristics pose an entry barrier but increase bilateral trade flows conditional on meeting the standard
This study employs a novel nested variable elasticity of substitution (VES) utility model to investigate the impacts of food safety standards on international trade and social welfare. The nested VES utility model is applied to investigate the impact of the European Union (EU) Hazard Analysis Critical Control Point (HACCP) standard on EU orange juice (OJ) trade and social welfare. Our results show that the standard's impact on trade and welfare is underestimated when the elasticity of substitution is restricted to be constant. Our findings indicate that the implementation of the EU HACCP standard increases EU OJ imports as well as consumer welfare. We also find that the EU HACCP standard has a greater impact on intra-EU OJ imports than on extra-EU OJ imports. , Oxford University Press.
Abstract The last decade has witnessed a dramatic rise in global trade in food and agricultural products. While much analysis has focused on the role of the World Trade Organization (WTO) in this process, we argue that other forms of regulation are of far greater consequence. In this paper, we examine changes in the agrifood system made possible by the WTO and we assess the rise of global private standards. We argue that the new global rules, regulations, and institutions implemented by the WTO have facilitated the ability of the private agrifood sector to consolidate and expand internationally. Of particular importance is the growing influence of food retailers as they rapidly become more global and oligopolistic. The article concludes that today it is the private sector, and retailers in particular, together with private standards that are at the center of the transformation of the global agrifood system.
The United States mandated a Hazard Analysis Critical Control Points (HACCP) food safety standard for seafood in 1997. Panel
model results for 1990 to 2004 suggest that HACCP introduction had a negative and significant impact on overall imports from
the top thirty-three suppliers. While the effect for developed countries was positive, the negative effect for developing
countries supports the view of “standards as barriers” versus “standards as catalysts.” A different perspective emerges from
individual country-level analysis. Regardless of development status, leading seafood exporters generally experienced a positive
HACCP effect, while most other smaller trading partners faced a negative effect.
A growing concern over health risks associated with food products has prompted close examination of sanitary and phytosanitary standards in industrialized countries. This paper quantifies the impact of a new harmonized aflatoxin standard set by the EU on food exports from Africa. We employ a gravity model to estimate the impact of changes in differing levels of protection based on the EU standard, in contrast to those suggested by international standards. The analysis is based on trade and regulatory survey data for 15 European countries and nine African countries between 1989 and 1998. Our results suggest that the implementation of the new aflatoxin standard in the EU will have a negative impact on African exports of cereals, dried fruits and nuts to Europe. The new EU standard, which would reduce health risk by approximately 1.4 deaths per billion a year, will decrease these African exports by 64% or US$ 670 million, in contrast to regulation set through an international standard.
This paper provides a brief introduction to the evolution and nature of private food safety and quality standards, highlighting the resultant impacts on the structure and modus operandi of supply chains for agricultural and food products and the challenges posed for processes of agricultural development. It serves as an introduction to a series of papers that provide a comprehensive overview of the current state of knowledge regarding private food safety and quality standards in both an industrialised and developing country context. In so doing, it aims to provide a catalyst for further research on this rapidly evolving field of inquiry.
It is a well-established theoretical result that the trade policy of a large country can directly affect its own and other countries' welfares by affecting international goods' prices. However, there exist very few empirical studies that analyze the effect of trade policy on international prices. With detailed data on unit values and tariffs, I show how policy actions in Europe disrupted the global shrimp market in a non-negligible way and set the stage for the anti-dumping case in the United States. The loss of Thailand's preferential trade status in Europe and the international differences in food-safety standards during the antibiotics crisis shifted especially Thai, Vietnamese, and Chinese shrimp exports away from Europe toward the United States in the late 1990s and early 2000s. I document how those shifting markets have decreased US prices for shrimp significantly compared to those in Europe.
We analyze the effect of heterogeneity of foreign and domestic producers on product standard and investigate whether the standard chosen by the welfare-maximizing policymaker is protectionist. In a partialequilibrium set-up, both domestic and foreign producers compete in selling a product in the domestic market, in the presence of consumption externalities. The policymaker chooses a minimum domestic standard that has to be met by both domestic and foreign producers. Protectionism occurs when the welfare-maximizing domestic standard is higher than the international standard maximizing welfare inclusive of foreign profits. We show that the standard is anti-protectionist when foreign producers are much more efficient at addressing the externality than are domestic producers. Possible exclusion of domestic or foreign producers arises with large standards, which may alter the classification of a standard as protectionist or non-protectionist. The
paper identifies multiple caveats for the estimation of tariff equivalents of nontariff barriers.
Two opposite principles are guiding the common commercial policy in Europe: the community preference and the security of supply for the European market. During the market crisis of 1993-1994 in France when the prices dropped down, fishermen asked for more protection in order to reduce fish imports. This paper deals with the impact of import protection on the European imports of fishery products. A quantitative assessment is developed through a panel data import function. The main conclusion is that import protection has little effect on imports. However, the results show a different impact of trade barriers on seafood imports according to the level of processing; the protection is expectedly more effective for processed fish than for primary goods, because trade barriers are higher. Moreover, whatever the commodities, other effects appear to be far more influential than trade barriers on import levels. These are price effects (including exchange rate), or the distance between countries.
Consumers evaluate product quality with information signals such as brand name giving an advantage to established firms over other firms even when introducing a new product. Another signal is 'country of origin' and, as high-income countries focus more heavily on higher quality goods, there is a tendency for consumers to associate quality with a country's income per capita. Thus new firms from developing countries face particular problems in export markets. International standardization offers a potential solution to their problem. However, analysis of the use of ISO 9000 suggests that it is difficult to eliminate the informational asymmetry. Copyright © 2003 John Wiley & Sons, Ltd.
Estimating the panel gravity model with bilateral pair and country-by-time fixed-effects separately for each seafood product, we found that food safety regulations have differential effects across seafood products. In all three industrialized markets, shrimp is most sensitive, while fish is the least sensitive to changing food safety policies. The enforcement of the US HACCP, the EU Minimum Required Performance Level and the Japanese Food Safety Basic Law caused a loss of 90.45%, 99.47%, and 99.97% to shrimp trade in these markets, and a reduction associated with fish trade was 66.71%, 82.83%, and 89.32%.
Over the past decade, exports of fish and fishery products from developing countries have increased rapidly. However, one of the major challenges facing developing countries in seeking to maintain and expand their share of global markets is stricter food safety requirements in industrialized countries. Kenyan exports of Nile perch to the European Union provide a notable example of efforts to comply with such requirements, overlaid with the necessity to overcome restrictions on trade relating to immediate food safety concerns. Although food safety requirements were evolving in their major markets, most notably the European Union, most Kenyan exporters had made little attempts to upgrade their hygiene standards. Likewise, the legislative framework of food safety controls and facilities at landing sites remained largely unchanged. Both exporters and the Kenyan government were forced to take action when a series of restrictions were applied to exports by the European Union over the period 1997 to 2000. Processors responded by upgrading their hygiene controls, although a number of facilities closed, reflecting significant costs of compliance within the context of excess capacity in the sector. Remaining facilities upgraded their hygiene controls and made efforts to diversify their export base away from the European. Legislation and control mechanisms were also enhanced. Hygiene facilities at landing beaches were improved, but remain the major area of weakness. The Kenyan case illustrates the significant impact that stricter food safety requirements can have on export-oriented supply chains. It also demonstrates how such requirements can exacerbate existing pressures for restructuring and reform, while prevailing supply and capacity issues constrain the manner in which the supply chain is able to respond. In Kenya most of the concerted effort to comply with these requirementswas stimulated by the sudden loss of market access in very much a crisis management mode of operation, illustrating the importance of responding to emerging food safety requirements in a proactive and effective manner.
Trade effects of food regulations and standards: Assessing the impact of SPS measures on market structure
- D Y Alia
- Y Zheng
- Y Kusunose
- M R Reed
The CEPII gravity database
- M Conte
- P Cotterlaz
- T Mayer