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Disentangling the Demand-enhancing Effect and Trade-cost Effect of Technical Measures in Agricultural Trade among OECD countries

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  • Xiong, Bo
  • Beghin, John C.

Abstract

Domestic technical measures such as SPS and TBTs can enhance import demand via information disclosure and quality improvement, or hamper foreign export supply via imposing sizeable compliance costs, or both. The traditional gravity equation model estimates the net effect of these measures on international trade with a loss of useful inference on separate effects. We stipulate a generalized gravity equation model to disentangle the two effects. We apply the augmented approach to agricultural trade among OECD countries in 2004. We find that technical measures in agriculture often jointly enhance import demand and hinder export supply with the net effect of promoting the propensity to trade. Further disaggregated data analysis reveals heterogeneity across sectors in terms of net effects of technical measures, despite common demand-enhancing and supply-hindering effects. These measures in the net decrease the probability of intra-OECD trade in dairy products, whereas they increase that of intra-OECD trade in cereal preparations.

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Bibliographic Info

Paper provided by International Agricultural Trade Research Consortium in its series Proceedings Issues, 2011: Agricultural Price Volatility, Trade Policy and Food Security in Developing Countries, December 2011, St. Petersburg, FL with number 116898.

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Date of creation: 2011
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Handle: RePEc:ags:iatr11:116898

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Related research

Keywords: sanitary and phytosanitary; SPS; technical measures; NTM; TBT; standards; gravity equation; protectionism; OECD; International Relations/Trade;

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References

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  1. Aksoy, M. Ataman & Beghin, John C., 2005. "Global Agricultural Trade and Developing Countries," Staff General Research Papers 12228, Iowa State University, Department of Economics.
  2. Disdier, Anne-Celia & Fontagne, Lionel & Mimouni, Mondher, 2008. "AJAE Appendix: The Impact of Regulations on Agricultural Trade: Evidence from the SPS and TBT Agreements," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 90(2), May.
  3. Beghin, John C. & Disdier, Anne-Celia & Marette, Stephan & van Tongeren, Frank, 2011. "Measuring Costs And Benefits Of Non-Tariff Measures In Agri-Food Trade," Staff General Research Papers 32393, Iowa State University, Department of Economics.
  4. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, MIT Press, vol. 123(2), pages 441-487, 05.
  5. Stephan Marette & John Beghin, 2010. "Are standards always protectionist?," Working Papers 39380, Institut National de la Recherche Agronomique, France.
  6. Liu, Lan & Yue, Chengyan, 2009. "Non-tariff Barriers to Trade Caused by SPS Measures and Customs Procedures with Product Quality Changes," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(1), April.
  7. Anne-Célia Disdier & Stéphan Marette, 2010. "The Combination of Gravity and Welfare Approaches for Evaluating Nontariff Measures," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 713-726.
  8. Burger, M.J. & van Oort, F.G. & Linders, G.J.M., 2009. "On the Specification of the Gravity Model of Trade: Zeros, Excess Zeros and Zero-Inflated Estimation," ERIM Report Series Research in Management ERS-2009-003-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
  9. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-21, September.
  10. Fugazza, Marco & Maur, Jean-Christophe, 2008. "Non-tariff barriers in CGE models: How useful for policy?," Journal of Policy Modeling, Elsevier, vol. 30(3), pages 475-490.
  11. Everett B. Peterson & David Orden, 2008. "Avocado Pests and Avocado Trade," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(2), pages 321-335.
  12. Xiong, Bo & Beghin, John C., 2010. "Does European Aflatoxin Regulation Hurt Groundnut Exporters from Africa?," Staff General Research Papers 31595, Iowa State University, Department of Economics.
  13. Linda Calvin & Barry Krissoff & William Foster, 2008. "Measuring the Costs and Trade Effects of Phytosanitary Protocols: A U.S.–Japanese Apple Example," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(1), pages 120-135.
  14. Tsunehiro Otsuki & John S. Wilson, 2001. "What price precaution? European harmonisation of aflatoxin regulations and African groundnut exports," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 28(3), pages 263-284, October.
  15. Li, Yuan & Beghin, John C., 2012. "A meta-analysis of estimates of the impact of technical barriers to trade," Journal of Policy Modeling, Elsevier, vol. 34(3), pages 497-511.
  16. Chengyan Yue & John C. Beghin, 2009. "Tariff Equivalent and Forgone Trade Effects of Prohibitive Technical Barriers to Trade," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 930-941.
  17. Otsuki, Tsunehiro & Wilson, John S. & Sewadeh, Mirvat, 2001. "Saving two in a billion: : quantifying the trade effect of European food safety standards on African exports," Food Policy, Elsevier, vol. 26(5), pages 495-514, October.
  18. Czubala, Witold & Shepherd, Ben & Wilson, John S., 2007. "Help or hindrance ? the impact of harmonized standards on african exports," Policy Research Working Paper Series 4400, The World Bank.
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Cited by:
  1. Marco Fugazza, 2013. "The Economics Behind Non-Tariff Measures: Theoretical Insights And Empirical Evidence," UNCTAD Blue Series Papers 57, United Nations Conference on Trade and Development.
  2. Xiong, Bo & Beghin, John C., 2012. "Stringent Maximum Residue Limits, Protectionism, and Competitiveness: The Cases of the US and Canada," Staff General Research Papers 35584, Iowa State University, Department of Economics.

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