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Heterogeneity Index of Trade and Actual Heterogeneity Index – the case of maximum residue levels (MRLs) for pesticides

Author

Listed:
  • Burnquist, Heloisa Lee
  • Shutes, Karl
  • Rau, Marie-Luise
  • Souza, Mauricio Jorge Pinto de
  • Faria, Rosane Nunes de

Abstract

Non-tariff measures (NTMs) beyond traditional trade policy instruments define the requirements that importing countries imposed on foreign products. Due to differences across countries, requirements for supplying foreign markets can lead to trade costs and thus hamper international trade. In this paper, we introduce two regulatory heterogeneity indexes which are subsequently applied to the case maximum residue levels (MRLs) of pesticides. The Heterogeneity Index of Trade (HIT) reflects the respective differences across countries based on the assumption that the mere fact of difference in requirements causes trade costs. Taking the HIT index as a starting point, the Actual Heterogeneity Index (AHI) specially considers the situation where the requirements demanded by the importing country are stricter than those of the exporting country. The focuses is on the pesticide MRLs that the EU27 and 10 trade partner countries (Argentina, Australia, Brazil, Canada, China, Japan, New Zealand, Russia and the US) apply on a set of agri-food products (cheese, beef, pig meat, potatoes, tomatoes, apples and pears, aubergines, peppers, maize, barley and rape seed). In particular, we take the EU export perspective as the benchmark for the comparison and calculate the indexes. The indexes identify if the respective MRLs are similar or dissimilar, equal, stricter or more lenient, and the results of our analysis thus point out potential areas for negotiating equivalence or other strategies in order to overcome the possible trade-restricting impact of diverging MRLs.

Suggested Citation

  • Burnquist, Heloisa Lee & Shutes, Karl & Rau, Marie-Luise & Souza, Mauricio Jorge Pinto de & Faria, Rosane Nunes de, 2011. "Heterogeneity Index of Trade and Actual Heterogeneity Index – the case of maximum residue levels (MRLs) for pesticides," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103742, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea11:103742
    DOI: 10.22004/ag.econ.103742
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    Cited by:

    1. Laura M. G. Hidalgo & Rosane N. de Faria & Roberta Souza Piao & Christine Wieck, 2023. "Multiplicity of sustainability standards and potential trade costs in the palm oil industry," Agribusiness, John Wiley & Sons, Ltd., vol. 39(1), pages 263-284, January.
    2. Choi, Jong Woo & Yue, Chengyan, 2016. "Investigating the impact of maximum residue limit standards on the vegetable trade in Japan," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 20(1), November.
    3. Foletti, Liliana & Shingal, Anirudh, 2014. "Stricter regulation boosts exports: the case of Maximum Residue Levels in pesticides," MPRA Paper 59895, University Library of Munich, Germany.
    4. Anirudh Shingal & Malte Ehrich & Liliana Foletti, 2021. "Re‐estimating the effect of heterogeneous standards on trade: Endogeneity matters," The World Economy, Wiley Blackwell, vol. 44(3), pages 756-787, March.
    5. Annalisa Zezza & Federica Demaria & Maria Rosaria Pupo d'Andrea & Jo Swinnen & Giulia Meloni & Senne Vandevelde & Alessandro Olper & Daniele Curzi & Valentina Raimondi & Sophie Drogue, 2018. "Research for AGRI Committee - Agricultural trade: assessing reciprocity of standards," Working Papers hal-02787948, HAL.
    6. Paulo Ricardo S. Oliveira & Jose Maria F. J. da Silveira & David S. Bullock, 2020. "Innovation in GMOs, technological gap, demand lag, and trade," Agribusiness, John Wiley & Sons, Ltd., vol. 36(1), pages 37-58, January.

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