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Disentangling Demand-Enhancing and Trade-Cost Effects of Maximum Residue Regulations

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  • Bo Xiong
  • John C. Beghin

Abstract

Maximum residue levels (MRLs) regulations in plant products can create unnecessary trade barriers on one hand and enhance demand via risk mitigation or quality assurance on the other. We stipulate a generalized gravity equation model to disentangle the effects of MRLs on the import demand and foreign exporters' supply. Applying the framework to the MRLs on pesticides imposed by high-income OECD countries, we find that the MRLs jointly enhance the import demand and hinder foreign exporters' supply. In addition, exporters from the less and least developed countries are more constrained by the MRLs than their competitors from the developed world.

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  • Bo Xiong & John C. Beghin, 2013. "Disentangling Demand-Enhancing and Trade-Cost Effects of Maximum Residue Regulations," Center for Agricultural and Rural Development (CARD) Publications 13-wp544, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:13-wp544
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    Keywords

    maximum residue level; sanitary and phytosanitary; food safety; nontariff barriers; gravity model. JEL classifications: F14; Q17;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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