The Impact of Regulations on Agricultural Trade: Evidence from SPS and TBT Agreements

Abstract

According to WTO rules, countries are allowed to adopt regulations under the Sanitary and Phyto-Sanitary (SPS) and Technical Barriers to Trade (TBT) agreements in order to protect human, animal and plant health as well as environment, wildlife and human safety. Our paper offers an analysis of the structure and the importance of these measures in agricultural trade. We cover all notifying countries and products at the HS6 digit level. Results of the inventory approach show that EU countries have the lowest coverage ratios of all OECD countries except South Korea and Turkey. Using gravity equation, we also estimate the stringency of such measures. In contrast with previous works, our equation controls for the bilateral applied tariff protection and uses ad valorem equivalents of SPS and TBT measures. Our results first suggest that these measures have on the whole a negative impact on OECD imports. When we consider different groups of exporting countries, we show that OECD exporters are not significantly affected by SPS and TBTs in their exports to other OECD countries while developing and least developed countries' exports are negatively and significantly affected. Furthermore, EU imports seem to be more negatively influenced by tariffs and SPS & TBTs than imports of other OECD countries. Finally, our sectoral analysis suggests an equal distribution of negative and positive impacts of NTBs on agricultural trade.

Keywords: agriculture, sanitary and phyto-sanitary norms, technical barriers to trade

JEL Classification: F13, Q17