ASSESSING TRADE BARRIERS FOR AGRICULTURAL PRODUCTS

• Sponsoring Institution: National Institute of Food and Agriculture
• Project Status: COMPLETE
• Funding Source: HATCH
• Reporting Frequency: Annual
• Accession No.: 0223625
• Project Start Date: Oct 1, 2010
• Project End Date: Sep 30, 2012
• Program Code: [(N/A)]- (N/A)

Recipient Organization
UNIVERSITY OF ILLINOIS
2001 S. Lincoln Ave.
URBANA,IL 61801

Performing Department
Agricultural & Consumer Economics

Non Technical Summary
The current economic crisis has prompted governments to implement protectionist measures, especially for vulnerable industries like agriculture. Some of these protectionist measures are implemented as tariffs, as well as non-tariff barriers. Non-tariff barriers to trade are policy instruments used by countries to restrict trade but not in the usual form of a tariff. Non-tariff barriers can take quite diverse forms, for example: quality standards, sanitary and phytosanitary regulations, quotas, import licenses, import inspections and regulations, etc. The idea that vulnerable sectors like agriculture need protection from foreign competition is not new. Countries have used all of these barriers to trade for years. As countries are forced to reduce or eliminate tariffs due to World Trade Organization commitments and trade agreements, non-tariff barriers are becoming more and more important in international policy. Most non-tariff barriers have not been widely studied in the literature. Data limitations, difficulties in quantifying non-tariff barriers and lack of understanding of how those barriers work are often the reason. Also, non-tariff barriers are frequently product and country specific, making it difficult to generalize results. Consequently, it is important to allocate resources to the data compilation and understanding of non-tariff barriers to trade for agricultural products.

Animal Health Component

50%

Research Effort Categories

Basic

50%

Applied

50%

Developmental

(N/A)

Classification

Knowledge Area (KA)	Subject of Investigation (SOI)	Field of Science (FOS)	Percent
606	6120	3010	100%

Knowledge Area
606 - International Trade and Development;

Subject Of Investigation
6120 - International economy and sectors thereof;

Field Of Science
3010 - Economics;

Keywords

sps barriers to trade

apple production

protectionist measures

non-tariff barriers

Goals / Objectives
1. To quantify the effects of SPS barriers to trade for apples. 2. To estimate revenue changes for producers and economic surplus for exporters and importers when analyzing different scenarios for SPS barriers to trade for apples. 3. To derive a theoretical framework for the imposition of SPS barriers to trade for apples and to analyze the economic incentives for countries to impose these SPS barriers. 4. To analyze the trade effects of import refusals for different agricultural products, including seafood.

Project Methods
There are several parts to this project. In the first part, this research will use survey techniques to quantify the cost of complying with the SPS regulations for apple producers. With the results obtained in the survey, I will use import and export demand models incorporating the direct estimate of complying with SPS costs to estimate the corresponding import and export demand elasticities. This allows for the calculation of revenue changes to producers with different SPS costs, and welfare effects by calculating changes in importers' and exporters' surplus. To fulfill the third objective this research draws on Industrial Organization theory. In particular, quality standards (and SPS barriers) can be modeled as barriers to entry by raising rivals' costs to derive a theoretical framework for the imposition of SPS barriers to trade for apples. With this model, I will be able to analyze the economic incentives for countries to impose these SPS barriers. Finally, this research follows the International Trade literature in the fourth objective. The gravity equation relates bilateral trade flows to certain country characteristics like economic size, distance between locations, and common border. This equation can be augmented to control for other characteristics like common language, and exchange rate among others. With this equation, this research will attempt to explain the trade effects of import refusals for different agricultural products.

Progress 10/01/10 to 09/30/12

Outputs
OUTPUTS: Invited Presentations: "Foot-and-Mouth Disease and the Mexican Cattle Industry." Invited Seminar University of Kentucky, November 11th, 2011. "Tariff vs. Non-Tariff Barriers in Seafood Trade." Invited Seminar University of Kentucky, June 9th, 2011. "Food Import Refusals: Evidence from the European Union." Agricultural and Applied Economics Association Annual Meeting, Invited Paper Session, July 2010, with Kathy Baylis. "The Trade Diversion Effects of Food Import Refusals: Are We Exporting Our Food Safety Issues" Invited Seminar Illinois State University, April 16th, 2010. Conference Selected Paper Presentations: "The Economic Impact of New Technologies on U.S. Apples." Western Extension and Research Activities Committee on Agribusiness Annual Meeting, June 2012, with Nichole Busdieker. "The Effects of Agricultural Commercialization on Household Food Security in Rural China." International Agricultural Trade Research Consortium Annual Meeting, December 2011, presented by Linlin Fan. "Welfare Effects of New Fire Blight Control Methods on the U.S. Apple Industry." Western Extension and Research Activities Committee on Agribusiness Annual Meeting, June 2011, presented by Nichole Busdieker. "Tariff versus non-Tariff Barriers in Seafood Trade." International Agricultural Trade Research Consortium Annual Meeting, December 2010, with Kathryn Pace. "Trumping Tortillas: Substituting Away from Poverty." El Impacto de la Crisis sobre la Pobreza y la Desigualdad, Network of Inequality and Poverty, Mexican Chapter, October 2010, presented by Benjamin Wood. "Welfare Implications of Washington Wheat Breeding Programs." Western Extension and Research Activities Committee on Agribusiness Annual Meeting, June 2010. Conference Selected Poster Presentations: "The Effects of Agricultural Market Liberalization and Commercialization on Household Food Security in Rural China." Agricultural and Applied Economics Association Annual Meeting, Poster, August 2012, with Linlin Fan. "Food Import Refusals: Effects and Implications for Seafood Trade." Agricultural and Applied Economics Association Annual Meeting, Poster Tour, July 2011. "The Economic Impact of New Technology Use in the U.S. Apple Industry." Agricultural and Applied Economics Association Annual Meeting, Poster, July 2011, with Nichole Busdieker. Other Presentations: "Revenue and Welfare Effects of Sanitary and Phytosanitary Barriers to Trade on Apples." Agricultural and Applied Economics Association Annual Meeting, Track Session, July 2010. PARTICIPANTS: Not relevant to this project. TARGET AUDIENCES: Not relevant to this project. PROJECT MODIFICATIONS: Not relevant to this project.

Impacts
Several presentations were given to inform the different stakeholders about the sub-projects involved in this project. Four professional articles were published, as well as two conference proceedings.

Publications

• Nogueira, L., Barichello, R.R., Baylis, K. and Chouinard, H.H. 2012. Policy risk in the Canadian dairy industry. Applied Economic Perspectives and Policy 34(1):147-166.
• Wood, B.D.K., Nelson, C.H. and Nogueira, L. 2012. Poverty effects of food price escalation: The importance of substitution effects in Mexican households. Food Policy 37(1):77-85.
• Nogueira, L., Marsh, T.L., Tozer, P.R. and Peel, D. 2011. Foot-and-mouth disease and the Mexican cattle industry. Agricultural Economics 42(2011):33-44.
• Baylis, K., Nogueira, L. and Pace, K. 2011. Food import refusals: Evidence from the European Union. American Journal of Agricultural Economics 93(2): 566-572.
• Busdieker, N., Nogueira, L., Onal, H. and Bullock, D. 2011. Welfare effects of new fire blight control methods on the U.S. apple industry. Western Extension and Research Activities Committee on Agribusiness Annual Meeting Proceedings.
• Nogueira, L. and Marsh, T.L. 2010. Welfare implications of Washington wheat breeding programs. Western Extension and Research Activities Committee on Agribusiness Annual Meeting Proceedings.

Progress 01/01/11 to 12/31/11

Outputs
OUTPUTS: Invited Presentations: "Foot-and-Mouth Disease and the Mexican Cattle Industry." Invited Seminar University of Kentucky, November 11th, 2011. "Tariff vs. Non-Tariff Barriers in Seafood Trade." Invited Seminar University of Kentucky, June 9th, 2011. Conference Selected Paper Presentations: "Welfare Effects of New Fire Blight Control Methods on the U.S. Apple Industry." Western Extension and Research Activities Committee on Agribusiness Annual Meeting, June 2011, presented by Nichole Busdieker. Conference Selected Poster Presentations: "Food Import Refusals: Effects and Implications for Seafood Trade." Agricultural and Applied Economics Association Annual Meeting, Poster Tour, July 2011. "The Economic Impact of New Technology Use in the U.S. Apple Industry." Agricultural and Applied Economics Association Annual Meeting, Poster, July 2011, with Nichole Busdieker. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
Several presentations were given to inform the different stakeholders about the sub-projects involved in this project. Two professional articles were published, as well as one conference proceeding.

Publications

• Nogueira, L., Marsh, T.L., Tozer, P.R. and Peel, D. 2011. Foot-and-mouth disease and the Mexican cattle industry. Agricultural Economics, 42(2011):33-44.
• Baylis, K., Nogueira, L. and Pace, K. 2011. Food import refusals: Evidence from the European Union. American Journal of Agricultural Economics, 93(2): 566-572.
• Busdieker, N., Nogueira, L., Onal, H. and Bullock, D. 2011. Welfare effects of new fire blight control methods on the U.S. apple industry. Western Extension and Research Activities Committee on Agribusiness Annual Meeting Proceedings.