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Stricter regulation boosts exports: the case of Maximum Residue Levels in pesticides

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  • Foletti, Liliana
  • MILE 02, Anirudh Shingal

Abstract

Constructing an original panel on Maximum Residue Levels (MRLs) in pesticides for 50 countries over 2006-2012, this paper studies the effect of heterogeneity in MRL regulation on bilateral trade. We find evidence of regulatory heterogeneity diminishing trade at the extensive margin when the exporter faces more stringent regulation abroad, suggesting compliance costs in entering the destination market. Significantly, however, we also find strong evidence of regulatory heterogeneity increasing trade at the intensive margin for exports coming from countries that set the strictest standards, alluding to the positive informative effect of such regulation.

Suggested Citation

  • Foletti, Liliana & MILE 02, Anirudh Shingal, 2014. "Stricter regulation boosts exports: the case of Maximum Residue Levels in pesticides," Papers 836, World Trade Institute.
  • Handle: RePEc:wti:papers:836
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    3. David Karemera & Bo Xiong & Louis Whitesides, 2020. "A State‐Level Analysis of the Impact of a U.S.‐EU Harmonization of Food Safety Standards on U.S. Exports of Fruits and Vegetables," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(4), pages 856-869, December.
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    5. Tao, Hongjun & Luckstead, Jeff & Zhao, Liang & Xie, Chaoping, 2016. "Estimating Restrictiveness of SPS Measures for China's Dairy Imports," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(B), pages 1-24, August.
    6. Hejazi, Mina & Grant, Jason H. & Peterson, Everett, 2016. "Hidden Trade Costs? Maximum Residue Limits and US Exports to Trans-Atlantic and Trans-Pacific Trading Partners," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235847, Agricultural and Applied Economics Association.

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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