Measurement and Political Economy of Disputed Technical Regulations

Article excerpt

Technical regulations are increasingly visible in agricultural trade, yet their idiosyncratic nature has limited prior aggregate analysis. This article draws on a unique data source for systematic enumeration of the technical regulations questioned by one exporter among all of its trading partners in mid-1996. Political economy analysis indicates that barriers decrease when the relative contribution of agriculture to an economy increases, when the anticipated future level of protection through other forms of government intervention increases, and when economies are more open. Despite increased scrutiny and discipline by the World Trade Organization, technical barriers remain a significant impediment in world agricultural markets.

Key Words: limited dependent variable, sanitary and phytosanitary, WTO

JEL Classifications: F13, F14, C21, C24

Technical regulations are nontariff barriers to international trade that are increasingly at the center of policy disputes, particularly in agriculture, where national regulations addressing plant, animal, and human health are widespread. A wide range of technical regulations are used by all nations to govern the sale of agricultural imports in domestic markets, and most of these measures are recognized to be justified regulatory interventions to protect health or to differentiate among products. Governments may also impose technical regulations as a nontransparent means to protect domestic producers from international competition or in response to pressure from other interest groups. In these latter cases, technical regulations are determined by political economy considerations, unnecessarily limit trade opportunities, and are likely to be welfare-decreasing, similar to tariffs and other trade impediments.

The World Trade Organization (WTO) agreements have increased the international scrutiny of technical trade regulations and provide disciplinary standards by which the legitimacy of individual measures are judged. Multilateral rules governing the application of technical regulations by member countries of the WTO were strengthened during the 19861994 Uruguay Round negotiations and remain points of discussion in the Doha Round, initiated in 2001.1 However, neither the prevalence of disputed regulations nor the economic impacts of such measures have been well quantified. This article presents empirical evidence on the extent and determinants of disputed technical regulations to U.S. agricultural exports in impact at the time that the WTO agreements were implemented. The enumeration of these regulations, even from the perspective of one country, offers insights on the measurement and discipline of technical barriers in world agricultural trade more broadly and provides an empirical basis to evaluate the political economy determinants underlying these regulatory decisions.

Several case studies have presented a conceptual framework for evaluating the impacts of technical regulations on markets and have provided empirical analyses of the scientific, economic, and political arguments relevant to specific disputes (e.g., Abbott; Calvin and Krissoff; Gallagher; Nielsen and Anderson; Orden and Romano; Paarlberg and Lee). Legal briefs and analyses presented in WTO proceedings and elsewhere have provided further evidence regarding the legitimacy of measures that have been formally challenged, most notably in the dispute of the United States and Canada with the European Union (EU) over the use of growth-stimulating hormones in beef cattle (McNiel; Roberts; Victor; World Trade Organization 1998). These case studies, briefs, and analyses offer valuable description and insights concerning individual technical regulations but cannot be used to explore the wider incidence of disputed regulations and their aggregate trade impacts on an economy or the role economic and political factors play across the spectrum of such regulatory decisions.

To assess these broader political economy issues, we undertook a unique survey that elicited comprehensive cross-sectional data on disputed technical regulations to U. …