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Are Standards Always Protectionist?

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Abstract

We analyze the effects of a domestic standard that reduces an externality associated with the consumption of the good targeted by the standard, using a model in which foreign and domestic producers compete in the domestic good market. Producers can reduce expected damage associated with the externality by incurring a cost that varies by source of origin. Despite potential protectionism, the standard is useful in correcting the consumption externality in the domestic country. Protectionism occurs when the welfare-maximizing domestic standard is higher than the international standard maximizing welfare inclusive of foreign profits. The standard is actually anti-protectionist when foreign producers are much more efficient at addressing the externality than are domestic producers. Possible exclusion of domestic or foreign producers arises with large standards, which may alter the classification of a standard as protectionist or non-protectionist. The paper provides important implications for the estimation and use of tariff equivalents of nontariff barriers.

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Bibliographic Info

Paper provided by Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University in its series Food and Agricultural Policy Research Institute (FAPRI) Publications with number 07-wp450.

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Date of creation: Jun 2007
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Handle: RePEc:ias:fpaper:07-wp450

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Keywords: externality; nontariff barriers; protectionism; safety; standard; tariff equivalent.;

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Cited by:
  1. Bergès, Fabian & Monier-Dilhan, Sylvette, 2010. "Trade Policy Reform: How to win wide-ranging support?," IDEI Working Papers 651, Institut d'Économie Industrielle (IDEI), Toulouse.
  2. Beghin, John C., 2012. "Non Tariff Measures with Market Imperfections: Trade and Welfare Implications," 2012: New Rules of Trade?, December 2012, San Diego, California 142787, International Agricultural Trade Research Consortium.
  3. Li, Yuan & Beghin, John C., 2012. "Protectionism Indices for Non-Tariff Measures: An Application to Maximum Residue Levels," Staff General Research Papers 35276, Iowa State University, Department of Economics.
  4. Johan F.M. Swinnen & Thijs Vandemoortele, 2009. "Trade, Development, and the Political Economy of Public Standards," LICOS Discussion Papers 23609, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  5. Gaigné, Carl & Larue, Bruno, 2013. "Quality Standards, International Trade and the Evolution of Industries," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150469, Agricultural and Applied Economics Association.
  6. Xiong, Bo & Beghin, John C., 2012. "Stringent Maximum Residue Limits, Protectionism, and Competitiveness: The Cases of the US and Canada," Working Papers 142384, International Agricultural Trade Research Consortium.
  7. Michael Bratt, 2014. "Estimating the bilateral impact of non-tariff measures (NTMs)," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 14011, Institut d'Economie et Econométrie, Université de Genève.
  8. Beghin, John C. & Disdier, Anne-Celia & Marette, Stephan, 2013. "The Economics and Potential Protectionism of Food Safety Standards and Inspections: An Application to the U.S. Shrimp Market," Working Papers 142502, International Agricultural Trade Research Consortium.
  9. Xiong, Bo & Beghin, John C., 2011. "Disentangling the Demand-enhancing Effect and Trade-cost Effect of Technical Measures in Agricultural Trade among OECD countries," Proceedings Issues, 2011: Agricultural Price Volatility, Trade Policy and Food Security in Developing Countries, December 2011, St. Petersburg, FL 116898, International Agricultural Trade Research Consortium.
  10. Bo Xiong & John C. Beghin, 2013. "Disentangling Demand-Enhancing and Trade-Cost Effects of Maximum Residue Regulations," Food and Agricultural Policy Research Institute (FAPRI) Publications 13-wp544, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  11. Li, Yuan & Xiong, Bo & Beghin, John C., 2013. "The Political Economy Of Food Standard Determination: International Evidence From Maximum Residue Limits," Staff General Research Papers 36181, Iowa State University, Department of Economics.
  12. Frank van Tongeren & John Beghin & Stéphane Marette, 2009. "A Cost-Benefit Framework for the Assessment of Non-Tariff Measures in Agro-Food Trade," OECD Food, Agriculture and Fisheries Papers 21, OECD Publishing.
  13. Katia Berti & Rod Falvey, . "Does Trade Weaken product Quality Standards?," Discussion Papers 11/24, University of Nottingham, GEP.

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