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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.

Suggested Citation

  • 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.
  • Handle: RePEc:ags:iatr11:116898
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    File URL: http://purl.umn.edu/116898
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    References listed on IDEAS

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    Cited by:

    1. Bo Xiong & John C. Beghin, 2017. "Stringent Maximum Residue Limits, Protectionism, and Competitiveness: The Cases of the US and Canada," World Scientific Book Chapters,in: Nontariff Measures and International Trade, chapter 12, pages 193-207 World Scientific Publishing Co. Pte. Ltd..
    2. 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.
    3. Dou, Lei & Yanagishima, Koji & Li, Xin & Li, Ping & Nakagawa, Mitsuhiro, 2015. "Food safety regulation and its implication on Chinese vegetable exports," Food Policy, Elsevier, vol. 57(C), pages 128-134.
    4. Xiaohua Bao, 2014. "Special Issue: Issues in Asia. Guest Editor: Laixun Zhao," Review of Development Economics, Wiley Blackwell, vol. 18(2), pages 286-299, May.

    More about this item

    Keywords

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

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