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To spray or not to spray? - pesticides, banana exports, and food safety

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  • Wilson, John S.
  • Tsunehiro Otsuki

Abstract

How governments regulate food safety and environmental protection, including pesticide residue levels, has important implications for trade. The World Trade Organization (WTO) Ministerial held in Doha, Qatar in November 2001, included statements on standards, and their impact on market access for developing countries. These issues will continue to be important in trade policy dialogues. It is assumed - and evidence from recent analysis confirms - that food safety standards can affect the ability of agricultural producers to meet regulatory standards, set by importing countries. The authors explore a fundamental question in food safety and environmental standards: Do regulations on pesticide have an effect on trade? They examine regulatory data from 11 OECD importing countries, and trade data from 19 exporting countries. The results suggest that a 10 percent increase in regulatory stringency - tighter restrictions on the pesticide chlorpyrifos - leads to a decrease in banana imports by 14.8 percent. This represents a significant impact on trade, and affect prospects of developing countries who continue to rely on exports of agricultural commodities, such as bananas. The findings also suggest that the lack of consensus on international standards, and divergent national regulations on pesticides is costly. For example, the authors estimate that if the world were to adopt a standard at a level of regulatory stringency suggested by Codex (the body charged with setting global standards in this area), in contrast with one set at the level in place in the European Union, there would be a U$S 5.3 billion loss in world exports.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2805.

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Date of creation: 31 Mar 2002
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Handle: RePEc:wbk:wbrwps:2805

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Keywords: Disease Control&Prevention; Pest Management; Health Economics&Finance; Environmental Economics&Policies; Water Conservation; Environmental Economics&Policies; Pest Management; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Health Economics&Finance; Crops&Crop Management Systems;

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  1. Wilson, John S. & Otsuki, Tsunehiro, 2001. "Global trade and food safety - winners and losers in a fragmented system," Policy Research Working Paper Series 2689, The World Bank.
  2. Borrell, Brent, 1997. "Policy-making in the EU: the bananarama story, the WTO and policy transparency," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 41(2), June.
  3. Kersten, Lutz, 1995. "Impacts of the EU Banana Market Regulation on International Competition, Trade and Welfare," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 22(3), pages 321-35.
  4. Otsuki, Tsunehiro & S. Wilson, John, 2003. "Food Safety and Trade: Winners and Losers in a Non-Harmonized World," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 18, pages 266-287.
  5. 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.
  6. Rikke Thagesen & Alan Matthews, 1997. "The EU's Common Banana Regime: An Initial Evaluation," Journal of Common Market Studies, Wiley Blackwell, vol. 35(4), pages 615-627, December.
  7. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
  8. 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.
  9. Steve McCorriston, 2000. "Market Structure Issues and the Evaluation of the Reform of the EU Banana Regime," The World Economy, Wiley Blackwell, vol. 23(7), pages 923-937, 07.
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