Assessing the economic impacts of stronger alignment of production standards applied to imported products on the EU’s agricultural sector

This study assesses potential implications for EU trade, producers and consumers of lowering maximum residue levels (MRLs) for imported food and feed to the limit of quantification (LOQ) for the most hazardous pesticides banned in the EU. Drawing on a new dataset linking EU approval status, residue monitoring, authorisation for use in third countries and trade flows, it identifies 18 most hazardous active substances not approved in the EU with MRLs above the LOQ affecting 235 commodities and 86 exporting countries, and models three scenarios differing in assumed exporter adaptation. Across all scenarios, the direction of effects resulting from lowering the MRLs to the LOQ is similar — imports decline, EU production rises and consumer prices increase — but magnitude depends strongly on exporters’ adaptation assumptions, ranging from negligible to substantial impacts. When the reduction of MRLs to the LOQ leads to complete halt in the affected trade flows, we see a 41 % reduction in total EU agricultural imports. As producers in third countries are assumed to respond to this reduction by adjusting their practices, this reduction declines to 8 % and then to 0.4 % depending on the cost of adaptation and the extent of assumed use of the active substances in third countries. EU production partly substitutes this reduction in imports as crop output expands while livestock output contracts. Price impacts depend on the scenarios: sizeable at world and EU levels under the no adaptation bound, but small once adaptation is taken into account. Results differ strongly across active substances, commodities and countries, so no uniform assumption about exporter behaviour holds. A targeted analysis of the active substance cyproconazole, undertaken to assess the representativeness of the substitution costs assumed in the scenarios, indicates that EU-approved alternative active substances are available but could raise production costs by 20–40 %. The study offers evidence on potential market impacts for the objective that pesticides banned in the EU should not return through imports. However, it faces limitations notable from the lack of available evidence at active substance–commodity–country level on use and substitution cost. This points to the need for further assessment. The study is not an impact assessment, as it does not cover either environmental nor social dimensions, and its results should be considered as a range bounding plausible outcomes rather than predicting them.