SPS measures and agricultural trade in BIMSTEC: Uantitative evidence from WTO notifications

Though the economy of the BIMSTEC members heavily depends on the agricultural sector, the intra-regional trade among them is below par because of several bottlenecks. One such bottleneck is the Sanitary and Phytosanitary (SPS) Measures adopted by the members of the BIMSTEC for agricultural products. This article investigates the agricultural trade patterns and the impact of SPS measures on BIMSTEC intra-trade. In a three-step analysis, we first do a demand and supply analysis for agricultural products at HS-6 digits using Michelaye's index. It shows that each member country has several high-potential commodities that can be traded with other member countries, but they are not. Second, we analyze the trends and patterns related to the SPS measures notified by the member countries to the WTO from 1st January 1996 to 31st May 2024. Several stylized facts have been illustrated. Finally, using these SPS statistics in a modified gravity model, we find that both the emergency and the regular SPS notifications significantly and negatively impact the agri-exports, and the former one are more harmful than the latter ones. The notifications, which end up as a trade dispute, hurt trade sentiments significantly. The notifications having objectives such as `Animal health' and `Food safety' are trade-distorting, while the notifications with multiple objectives containing objectives such as `Plant protection' and `Protect humans' are, in fact, trade-inducing.