Short‐term impact of food safety standards on agri‐product exports: Evidence from Japan's positive list system on Chinese vegetable exports

We examine the short‐term impact of the Positive List System (PLS), a strict food safety standard implemented by Japan in 2006, on vegetable exports from China to Japan. By applying a difference‐in‐difference model to unique monthly export data at the firm‐product level, we found that the PLS decreased the probability of Chinese vegetable firms exporting to Japan by 3.4%, and decreased their export quantity and value by 9.7% and 8.6%, respectively. Most of the policy impact is through a decrease in the intensive trade margin (i.e., how much to trade), rather than the extensive trade margin (i.e., whether to trade). We also found that foreign‐invested enterprises and smaller enterprises are less affected than non‐foreign‐invested enterprises and larger enterprises. Our results alleviate the concern that stricter food safety standards may exclude many firms, especially small ones, from the export market.