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

TLDR

World Trade Organization rules allow countries to adopt regulations under the Sanitary and Phyto‑Sanitary (SPS) and Technical Barriers to Trade (TBT) agreements. The study analyzes the structure of SPS and TBT measures in agricultural trade. The authors estimate the stringency of these measures using a gravity equation. The inventory approach finds that European countries have among the lowest coverage ratios of all OECD, and that SPS and TBT measures significantly reduce developing countries’ exports to OECD members while having little effect on intra‑OECD trade, and that European imports are more negatively impacted by these measures than imports of other OECD countries.

Abstract

Abstract According to World Trade Organization rules, countries may adopt regulations under the Agreements on Sanitary and Phyto‐Sanitary (SPS) and Technical Barriers to Trade (TBT). We analyze the structure of these measures in agricultural trade. The inventory approach suggests that European countries have among the lowest coverage ratios of all OECD countries. Using a gravity equation, we also estimate their stringency. Our results suggest that they significantly reduce developing countries' exports to OECD countries, but do not affect trade between OECD members. Furthermore, European imports are more negatively influenced by SPS and TBTs than imports of other OECD countries.