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Cost-benefit analysis and the SPS Agreement

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  • Sinner, Jim

Abstract

The WTO Agreement on the Application of Sanitary and Phytosanitary Measures requires member governments to base trade measures on scientific risk assessment. Relevant assessment factors include the costs of entry and establishment of pests, including costs of controlling such pests, but the benefits of importing risk goods appear to be excluded from consideration. This exclusion may be desirable in order to promote consistency and to reduce the chances of measures being used for protectionist purposes. However excluding benefits goes against economic logic, which suggests that both benefits and costs should be considered when choosing the appropriate level of protection from risk. The paper reviews recent economic literature on the use of cost-benefit analysis, the relevant clauses of the SPS Agreement, and recent rulings in disputes over SPS measures. Tensions between economics and the SPS Agreement are identified and a possible resolution is suggested.

Suggested Citation

  • Sinner, Jim, 1999. "Cost-benefit analysis and the SPS Agreement," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 171901, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare99:171901
    DOI: 10.22004/ag.econ.171901
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    References listed on IDEAS

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    1. James, Sallie & Anderson, Kym, 1998. "On the need for more economic assessment of quarantine/SPS policies," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 42(4), pages 1-20.
    2. Julie A. Caswell & Jaana K. Kleinschmit v. L., 1997. "Using Benefit-Cost Criteria for Settling Federalism Disputes: An Application to Food Safety Regulation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 24-38.
    3. Caswell, Julie A., 1998. "Valuing the benefits and costs of improved food safety and nutrition," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 42(4), pages 1-16.
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    Cited by:

    1. Cook, David C., 2000. "An Economic Evaluation of the Benefits from Import Clearance Activities in Western Australia," 2000 Conference (44th), January 23-25, 2000, Sydney, Australia 123628, Australian Agricultural and Resource Economics Society.
    2. Monika Binder, 2002. "The role of risk and cost-benefit analysis in determining quarantine measures," International Trade 0203002, University Library of Munich, Germany.

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