Tsunehiro Otsuki

Saving two in a billion:: quantifying the trade effect of European food safety standards on African exports

Abstract A growing concern over health risks associated with food products has prompted close examination of sanitary and phytosanitary standards in industrialized countries. This paper quantifies the impact of a new harmonized aflatoxin standard set by the EU on food exports from Africa. We employ a gravity model to estimate the impact of changes in differing levels of protection based on the EU standard, in contrast to those suggested by international standards. The analysis is based on trade and regulatory survey data for 15 European countries and nine African countries between 1989 and 1998. Our results suggest that the implementation of the new aflatoxin standard in the EU will have a negative impact on African exports of cereals, dried fruits and nuts to Europe. The new EU standard, which would reduce health risk by approximately 1.4 deaths per billion a year, will decrease these African exports by 64% or US

Assessing the Potential Benefit of Trade Facilitation: A Global Perspective

670 million, in contrast to regulation set through an international standard.

Trade Facilitation and Economic Development: Measuring the Impact

The relationships between trade facilitation, trade flows, and capacity building are complex and challenging to assess, both empirically and in implementation. The authors measure and estimate the relationship between trade facilitation and trade flows across 75 countries in global trade, considering four important categories: port efficiency, customs environment, regulatory environment, and service sector infrastructure. A gravity model is employed that accounts for bilateral trade flows in manufactured goods in 2000-01 between the 75 countries, using traditional factors such as GDP, distance, language, and trade areas, and is augmented by the trade facilitation measures in the four categories for each country. The results suggest that both imports and exports for a country and for the world will increase with improvements in these trade facilitation measures. Potential gains from trade facilitation reforms are predicted by using the estimated parameters. The gains from trade facilitation are presented by comparing the gains across geographical regions and trade facilitation categories, and by domestic and partner improvements. The total gain in trade flow in manufacturing goods from trade facilitation improvements in all the four areas is estimated to be

The Cost of Compliance with Product Standards for Firms in Developing Countries: An Econometric Study

377 billion. All regions gain in imports and exports. Most regions gain more in terms of exports than imports, in large part through increasing exports to the OECD market. The most important ingredient in getting these gains, particularly to the OECD market, is the countrys own trade facilitation efforts. The detailed presentation of the results of the analysis may help inform policy decisions and capacity building choices.

Balancing food safety and risk: do drug residue limits affect international trade in beef?

The authors analyze the relationship between trade facilitation, trade flows, and GDP per capita in the Asia-Pacific region for the goods sector. They define and measure trade facilitation using four broad indicators. These are constructed using country-specific data for port efficiency, customs environment, regulatory environment, and electronic-business usage. They estimate the relationship between these indicators and trade flows using a gravity model. The model includes tariffs and other standard variables. The authors find that enhanced port efficiency has a large and positive effect on trade. Regulatory barriers deter trade. The results also suggest that improvements in customs and greater electronic-business use significantly expands trade, but to a lesser degree than the effect of ports or regulations. The authors then estimate the benefits of specific trade facilitation efforts by quantifying differential improvement by members of the Asia Pacific Economic Cooperation (APEC) in these four areas. Based on a scenario in which APEC members below average improve capacity halfway to the average for all members, the authors find that intra-APEC trade could increase by

The Impact of Regulatory Heterogeneity on Agri-food Trade

254 billion. This represents approximately a 21 percent increase in intra-APEC trade flows, about half coming from improved port efficiencies in the region. Using Dollar and Kraays estimate of the effect of trade on per capita GDP, these improvements in trade facilitation suggest an increase in APEC average per capita GDP of 4.3 percent.

Global Trade and Food Safety: Winners and Losers in a Fragmented System

Standards and technical regulations exist to protect consumer safety or to achieve other goals, such as ensuring the interoperability of telecommunications systems, for example. Standards and technical regulations can, however, raise substantially both start-up and production costs for firms. Maskus, Otsuki, and Wilson develop econometric models to provide the first estimates of the incremental production costs for firms in developing nations in conforming to standards imposed by major importing countries. They use firm-level data generated from 16 developing countries in the World Bank Technical Barriers to Trade (TBT) Survey Database. Their findings indicate that standards do increase short-run production costs by requiring additional inputs of labor and capital. A 1 percent increase in investment to meet compliance costs in importing countries raises variable production costs by between 0.06 and 0.13 percent, a statistically significant increase. The authors also find that the fixed costs of compliance are nontrivial-approximately

THE IMPLICATION OF PROPERTY RIGHTS FOR JOINT AGRICULTURE-TIMBER PRODUCTIVITY IN THE BRAZILIAN AMAZON

425,000 per firm, or about 4.7 percent of value added on average. The results may be interpreted as one indication of the extent to which standards and technical regulations might constitute barriers to trade. While the relative impact on costs of compliance is relatively small, these costs can be decisive factors driving export success for companies. In this context, there is scope for considering that the costs associated with more limited exports to countries with import regulations may not conform to World Trade Organization rules encouraging harmonization of regulations to international standards, for example. Policy solutions then might be sought by identifying the extent to which subsidies or public support programs are needed to offset the cost disadvantage that arises from nonharmonized technical regulations.

Regional Integration in South Asia: What Role for Trade Facilitation?

There have been a number of high profile food safety disputes in trade over the past decade. These include the widely publicized case at the World Trade Organization between the US and EU over hormone-treated beef. In particular, consumers in some industrialized countries have expressed concern over the health implications of consuming beef produced with antibiotics and other artificial supplements. Developing countries are affected in a significant way in how these concerns are addressed, as well as the balance between risk and safety reflected in how standards are set. This paper examines the impact of drug residue standards on trade in beef and the trade effect of setting harmonized international standards. We find that if international standards set by Codex were followed in antibiotics, global trade in beef would rise by over

Food Safety Standards and International Trade: The Impact on Developing Countries’ Export Performance

3.2 billion. Among other developing countries, South African exports would rise by