Compositional Standards, Import Permits and Market Structure: The Case of Canadian Cheese Imports
AbstractThe imposition of new cheese compositional standards by the Canadian authorities has created divisions within the Canadian dairy industry and has motivated criticisms from several of Canadaâs trade partners. The standards impose minimum limits on the percentage of casein coming from fluid milk which vary across cheese types. We develop a theoretical model to investigate the implications of Canadaâs compositional cheese standards while accounting for Canadaâs tariff rate quota specificities. The âuse it or lose itâ clause on import permits makes it possible for cheeses not directly constrained by the standards to be strongly impacted. We also show that the regulations on cheese composition may or may not increase the domestic demand for milk. Without information on technical coefficients in the cheese industry, we were unable to resolve through empirical simulations the ambiguities arising from our theoretical results. Our empirical investigation focused instead on the pricing and composition of cheese imports. We identified structural breaks in the processes determining import unit values shortly before or shortly after the beginning of the implementation of the standards. We found differences in break dates across cheese types and also across countries supplying the same type of cheese. Thus, the standards had some impact on the market shares of our trade partners as well as inflationary effects on cheese prices.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal The World Economy.
Volume (Year): 35 (2012)
Issue (Month): 8 (08)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920
Other versions of this item:
- Felt, Marie-Helene & Larue, Bruno & Gervais, Jean-Philippe, 2012. "Compositional Standards, Import Permits and Market Structure: The Case of Canadian Cheese Imports," Working Papers 126948, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
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