Apples, Pears and Pesticides Impact of Heterogeneous Regulations Governing Pesticide Residues on World Trade

Rules governing food production and trade are more and more stringent as regards safety. This is particularly the case of pesticides used in agriculture which may cause harmful effects if their concentration in food is excessive. Warnings about the effects of pesticides on health led the legislator to regulate pesticide residue content in farm produce by fixing Maximum Residue Limits (MRL). These MRL apply to both domestic and foreign products. Compliance with these regulations generates a cost for the producer or exporter which directly impacts the product price at final consumer level. This compliance is made all the more difficult as the MRL are not harmonized at international level and there are almost as many regulations as nations. There is an “international regulation” fixed by the Codex Alimentarius but it is not compulsory and nations preserve their sovereignty. Here we study the impact of regulations governing the maximum pesticide residue limits on world trade. An empirical analysis carried out on forty countries exporting and/or importing apples, pears and processed products show that overall, regulatory heterogeneousness may be trade-impeding and that international harmonization of the MRL might have a positive impact on trade. But a case-by-case analysis shows that adopting a single regulation would not have a positive impact for all countries. Harmonization would even have a negative impact on exports of pears and apple from Japan and the United States.