Academic journal article Journal of Agricultural and Resource Economics

Assessing the Impact of SPS Regulations on U.S. Fresh Fruit and Vegetable Exports

Academic journal article Journal of Agricultural and Resource Economics

Assessing the Impact of SPS Regulations on U.S. Fresh Fruit and Vegetable Exports

Article excerpt

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Introduction

The focus of agricultural trade policy concerns has shifted from tariffs and quantitative restraints, which dominated much of the research and policy agenda in the lead-up to the Uruguay Round Agreement on Agriculture (URAA), to non-tariff barriers and a plethora of other policies that are "behind a nation's border" (World Trade Organization, 2012, p. 6). Among the potential list of non-tariff barriers affecting agricultural trade, sanitary and phytosanitary (SPS) measures occupy a special place. SPS measures are prominent in agri-food trade because of the sensitive nature of issues such as food safety and the protection of plant and animal health from pest and disease risks. Additionally, the World Trade Organization (WTO) Agreement on the Application of SPS Measures permits countries to adopt their own standards to protect human, animal, or plant health, provided these standards are based on a risk assessment, not discriminatory toward countries with similar conditions, and are minimally trade distorting to prevent the disingenuous use of these measures as instruments of protectionism (Josling, Roberts, and Orden, 2004).

While the ability of countries to adopt their own set of SPS measures was instrumental to securing the SPS Agreement, it has led to contentious trade disputes when countries have adopted measures that severely limit market access to achieve small or speculative health or safety benefits. Since 1995, WTO members have lodged 320 official complaints related to SPS measures. Almost one-third of these complaints are related to fruits and vegetables, a disproportionately high share for a sector that has accounted for roughly 10% of global agri-food trade over the past two decades (World Trade Organization, 2012). In the case of the United States, exports of fresh fruits and vegetables (FFVs) have faced substantial SPS regulations in international markets. The long history of the U.S.-Japan apple dispute over fire blight, codling moth, and mitigation procedures such as orchard inspections, buffer zones, and chlorine treatment is just one example of SPS restrictions that have seriously affected U.S. competitiveness and, in some cases, completely shut-off global exports (Calvin and Kirssoff, 1998; Calvin, Krissoff, and Foster, 2008). Further, SPS requirements for a given commodity can vary widely across trading partners. For example, U.S. apples must undergo a chlorine dip if exported to Chile; face regional bans in Canada; and undergo cold treatment and methyl bromide fumigation if exported to Egypt. The United States has registered a number of official complaints at the WTO about measures that have increased costs or limited market access for its fruit and vegetable exports, including Australia's restrictions on U.S. exports of table grapes, Indonesia's policies for recognition of pest-free areas, Japan's restrictions on U.S. citrus exports, and China's varietal restrictions on exports of U.S. apples (World Trade Organization, 2009).

A growing body of research has emerged to quantify the trade effects of non-tariff measures (NTMs). Moenius (2004) examined the trade impact of shared standards in twelve Organisation for Economic Cooperation and Development (OECD) countries and found a negative effect from national standards on trade in food and beverages, crude materials, and mineral fuels. Fontagne, Mimouni, and Pasteels (2005) found similar results for sixty-one product groups. Disdier, Fontagné, and Mimouni (2008) used notifications on NTMs and their ad valorem tariff equivalents to estimate the impact of these regulations in agri-food trade. They found that NTMs generally have a negative influence on exports to OECD members. Jayasinghe, Beghin, and Moschini (2010) departed from the aggregate impact and focused instead on the trade impact of NTMs on a particular product-U.S. seed corn exports. They found that U.S. seed corn exports are a decreasing function of the number of foreign SPS/TBT standards required. …

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