Academic journal article The Cato Journal

Rent Seeking in U.S.-Mexican Avocado Trade

Academic journal article The Cato Journal

Rent Seeking in U.S.-Mexican Avocado Trade

Article excerpt

This article examines the use of sanitary and phytosanitary (SPS) standards as a method for protectionism through the lens of political economy. Technical measures, especially SPS, remain a potential barrier to free trade, in spite of substantial progress on trade liberalization under the Uruguay round of trade negotiations. In fact, in the 1986-93 Uruguay Bound negotiations, separate disciplines were negotiated for the management of SPS standards, which are highly technical and relatively nontransparent compared with other international standards. This study examines the political economy of one contentious trade dispute that has arisen under the SPS Agreement, the import of Mexican Haas avocados into the United States. The history of the dispute is traced and new evidence is provided on the rent-seeking activity of U.S. producers.

The SPS Agreement and Developing Countries

By the 1980s technical standards were recognized as one of the last remaining opportunities for countries to protect domestic producers (Goldstein 1996: 4). The Punta del Este Declaration, which launched the Uruguay Bound, specifically addressed the issue of SPS measures in liberalizing agricultural trade (Zarilli 1999: 3). The final document launching the new World Trade Organization included both a revamped Agreement on Technical Barriers to Trade (TBT) (WTO 1995a) and an Agreement on the Application of Sanitary and Phytosanitary Measures (WTO 1995b), along with a new dispute settlements procedure designed to strengthen the dispute body rulings.

At the outset it is important to distinguish SPS measures as defined in the SPS Agreement from the technical measures governed by the TBT Agreement. Technical trade barriers are "regulations and standards governing the sale of products into national markets that have as their prima facie objective the correction of market inefficiencies stemming from externalities associated with the production, distribution, and consumption of those products." (1) SPS standards, although a type of technical battier to trade, are treated separately from the technical barriers controlled under the TBT Agreement (Zarilli 1999: 6).

SPS measures are defined as any measures that

* protect animal or plant life or health within the territory of the Member from risks arising from the entry, establishment, or spread of pests, diseases, disease-carrying organism, or disease-causing organism;

* protect human or animal life within the territory of the Member from risks arising from additives, contaminants, toxins, or disease-carrying organisms in food, beverages, or feedstuffs;

* protect human life or health within the territory of the Member from risks arising from diseases carried by animals, plants, or products thereof, or from the entry, establishment, or spread of pests;

* prevent or limit other damage within the territory of the Member from the entry establishment or spread of pests [GATT 1994: 78].

Sanitary or phytosanitary measures include all relevant laws, decrees, regulations, requirements, and procedures, including end-product criteria; processes and production methods; testing, inspection, certification, and approval procedures; quarantine treatments including relevant requirements associated with the transport of animals or plants, or with the materials necessary for their survival during transport; provisions on relevant statistical methods, sampling procedures, and methods of risk assessment; and packaging and labeling requirements directly related to food safety. For the purpose of these definitions, "animals" includes fish and wild fauna; "plant" includes forests and wild flora; "pests" includes weeds; and "contaminants" include pesticide and veterinary drug residues and extraneous matter (GATT 1994: 78).

Whether a measure is subject to the disciplines of the SPS or TBT Agreement depends upon the stated purpose for which it was adopted according to the laws of the domestic country. …

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