Food Quality Standards in Equilibrium Models: A Discussion of Current Modeling Approaches

Throughout recent year food quality standards have become a ubiquitous phenomenon that nationally and globally influences agri-food markets. With equilibrium models commonly used in the quantitative analysis of market and trade effects, we review possible approaches to modeling standards existent in the literature, elaborate the reasoning behind them and discuss their suitability to reflect "real world" situations. While the modeling approaches identified may respectively depict a specific situation, they may not be appropriate in others. That is they capture certain effects of standards only. With increasing ability to account for the various effects of standards, the modeling approaches become more complex and the data requirements increase.food quality, standards, modeling approaches, equilibrium models, Food Consumption/Nutrition/Food Safety, F1, C6, Q18,

The Measures and the loss - Case Study on non-tariff barriers related to veterinary export certificates in Dutch exports

Case study research into the mandatory veterinary requirements on Dutch exports of live animals and animal products provides empirical evidence on the trade effects of nontariff measures (NTMs). The paper discusses the analytical approach to assess how veterinary health attestation may create (temporary) obstacles for Dutch exports, what these obstacles are, and whether competing exporters in EU countries have encountered similar barriers. We have a dataset on 166 cases in 2004-06 where the process of issuing veterinary certificates for Dutch exports to non- EU destinations was disrupted. Products covered are animal-based products, live animals and feed. We use a sample of 30 cases that continued after 2006, the ‘longlasting problems’, and 39 cases that came up and got solved between 2004 and 2006, the temporary problems. The main challenge is to link the available record of recognition problems to the disruptions in exports. In order to assess trade disruptions, statistical tests of outliers and trend breaches are performed on detailed monthly trade data, and the issue of not-observed trade needs to be addressed. This raises the need to address disruption patterns around the imposition of measures in trade. The alternative patterns under examination are (i) measures that have an immediate trade impact, (ii) measures due to which trade gradually expands or reduces, and (iii) measures that divert trade to alternative export destinations. Finally, we want to examine whether the impact of veterinary health attestation on trade can be specified towards the type of trade barrier. For that, we suggest to introduce a distinction between three different types of barriers, based on whether obstacles relate to the non-conformity of products to import requirements or a failure in the conformity assessment or both.non-tariff measures, conformity assessment, animal products, International Relations/Trade, Livestock Production/Industries,

Modeling Differentiated Quality Standards in the Agri-Food Sector: The Case of Meat Trade in the EU

This paper looks at trade impacts of quality related standards from the supply side of the exporting country. We argue that food quality standards imposed by an importing country have profound effects on the market structure of the exporting industry, and hence a significant impact on the supply response. For our analysis, we develop a stylized oligopoly model that allows for the co-existence of complying and non-complying suppliers. The model is applied to two alternative policy options to explore different mechanisms an importing county may use to enhance the quality of its imports. We take the Polish meat sector as an empirical example, since after Poland's accession to the EU the tight EU food quality standards indeed apply but the process of adjusting to them is far from complete - particularly in Polish meat production/processing. The simulations show that a subsidy scheme, such as the EU's SAPARD program in Poland, can be an effective instrument to promote the compliance with standards and to upgrade the industry in the exporting country.food quality standards, trade, market structure, Poland, meat sector, oligopoly, International Relations/Trade, Livestock Production/Industries, Q17, Q18, L1,

Trade openness and investment in North Africa: A CGE application to deep and comprehensive free trade areas (DCFTAs) between the EU and respectively Egypt, Morocco and Tunisia

The aim of this paper is to provide an impact analysis of deep and comprehensive free trade areas (DCFTAs) between the European Union (EU) and most of the North-African (NAF) countries – namely Egypt, Morocco and Tunisia. Scenarios are modelled with MAGNET, a general equilibrium model, and focus on trade liberalisation including non-tariff measures (NTMs) on the one hand, increases in foreign direct investments (FDIs) and capital flows on the other. They assume either broad productivity gains in all sectors of NAF countries, or targeted productivity gains in the agricultural sector aiming to reduce losses (waste) in NAF countries' agricultural production, post-harvest handling and storage. Results suggest that economic growth is stimulated mostly by widespread productivity gains, and boosted by trade liberalisation. Positive impacts on economic growth could thus be intensified by combining pro-investment policies with comprehensive trade liberalisation, especially the removal of NTMs. The effects on jobs and food security remain ambiguous.JRC.J.4-Agriculture and Life Sciences in the Econom

New Data and Analysis on Non-tariff Measures in Agri-food Trade

We outline new data on non-tariff measures (NTMs) in agricultural trade collected as part of the NTM-Impact project. The data cover product and process standards, conformity assessment measures, and country requirements for the EU and 10 other countries. We create a Heterogeneity Index of Trade (HIT) regulations to aggregate data on different measures, and estimate the impact of regulatory heterogeneity on trade using a gravity framework. Our results suggest that differences in standards reduce trade in beef and pig meat, but have little impact on trade in other agri-food products.Non-tariff measures (NTMs), import requirements, agri-food trade, gravity estimation, Agricultural and Food Policy, International Relations/Trade,

Non-tariff measures affecting agro-food trade between the EU and Africa Summary of a workshop

This report contains the presentations and the summary of the IPTS workshop "Non Tariff Measures (NTMs) affecting agro-food trade between the EU and Africa" held in September 2010 in Seville. The workshop brought together experts from research, policy making and business in order to exchange knowledge and discuss about NTMs and the issues associated with them. The workshop first gave an overview of NTM classifications as well as the methods in the analysis of NTMs. With this background case studies were presented, focusing on NTMs from the perspective of African exporters of agro-food products.JRC.DDG.J.5-Agriculture and Life Sciences in the Econom

Heterogeneity Index of Trade and Actual Heterogeneity Index – the case of maximum residue levels (MRLs) for pesticides

Non-tariff measures (NTMs) beyond traditional trade policy instruments define the requirements that importing countries imposed on foreign products. Due to differences across countries, requirements for supplying foreign markets can lead to trade costs and thus hamper international trade. In this paper, we introduce two regulatory heterogeneity indexes which are subsequently applied to the case maximum residue levels (MRLs) of pesticides. The Heterogeneity Index of Trade (HIT) reflects the respective differences across countries based on the assumption that the mere fact of difference in requirements causes trade costs. Taking the HIT index as a starting point, the Actual Heterogeneity Index (AHI) specially considers the situation where the requirements demanded by the importing country are stricter than those of the exporting country. The focuses is on the pesticide MRLs that the EU27 and 10 trade partner countries (Argentina, Australia, Brazil, Canada, China, Japan, New Zealand, Russia and the US) apply on a set of agri-food products (cheese, beef, pig meat, potatoes, tomatoes, apples and pears, aubergines, peppers, maize, barley and rape seed). In particular, we take the EU export perspective as the benchmark for the comparison and calculate the indexes. The indexes identify if the respective MRLs are similar or dissimilar, equal, stricter or more lenient, and the results of our analysis thus point out potential areas for negotiating equivalence or other strategies in order to overcome the possible trade-restricting impact of diverging MRLs.Non-tariff measures (NTMs), maximum residue levels (MRLs), regulatory heterogeneity index, agri-food trade, index analysis, Agricultural and Food Policy, International Relations/Trade, Research Methods/ Statistical Methods,

Exploring alternative approaches to estimate the impact of non-tariff measures and further implementation in simulation models

This report generates estimates for the effect of non-tariff measures (NTMs) on trade unit values. Adding to the latest development of the NTM analysis, we account for different types of NTMs for pairs of countries/regions. Our estimates thus provide new insights about the bilaterally distinct effect of specific NTMs. This is particularly interesting for policy makers that like to know which types of measures are relevant for trade from or to specific countries/regions and whether they are trade-hampering or trade-facilitating. We elaborate on the estimation of the price effect (measured in trade unit values) vis-à-vis the standard gravity on trade quantities (measured in trade value). A panel dataset (2012-2015) using the last releases of trade unit values (Berthou & Emlinger, 2011) and UNCTAD NTMs global database is built, and alternative approaches to account for the distinct bilateral impact are tested on beef, white meat (poultry) and milk. The focus is on trade between the EU member states and relevant regions with which the EU is negotiating or has just completed trade agreements: MERCOSUR, ASEAN, Japan and New Zealand. In this report, we do not implement the specific Ad-valorem equivalents (AVE) estimates for NTMs in a simulation model but rather provide a literature review that elaborates on the different approaches to depict NTMs in simulation models. The next step would be the application of the AVEs estimated in a simulation model in order to gauge the economy-wide effects of the respective NTMs under review.JRC.D.4-Economics of Agricultur

Food security impact of global equities : executive summary

This study describes methodologies that have been developed to assess the food security impact of agricultural technologies supplied by stock exchange companies on the basis of publicly available revenue data. The methods have been developed for fertiliser, improved seeds, cooling and packaging. Given the lack of information on key variables at present it is only possible to apply the method for fertiliser to all companies that sell the technology in their portfolio. For the other three technologies additional information is necessary that is not publicly available

Conquering the EU market with new comprehensive trade agreements –simulating DCFTAs between the EU and neighbour countries

The EU has undertaken considerable efforts of establishing Deep and Comprehensive Trade Agreements (DCFTAs). The EU DCFTAs go beyond tariff liberalisation, specifically targeting “behind the border” measures, commonly referred to non-tariff measures (NTMs). While offering benefits, the contents and implementation of the DCFTAs has been controversially discussed, and this paper investigates whether DCFTAs will actually help partner countries to sell their products on the EU market. For the analysis, the general equilibrium model MAGNET (Modular Applied General Equilibrium Tool) is applied in a recursive dynamic general equilibrium framework. In the simulation, DCFTAs are depicted in terms of a tariff liberalisation and the elimination of NTMs between the EU and DCFTA partners. The latter represents the regulatory orientation towards the EU, whereby the standard “ice-berg costs” approach is implemented in the simulation. The simulation results show that the DCFTA partner countries will not equally benefit from increased trade with the EU. In particular small DCFTA partners do not seem to be able to tap into the potential of the improved trading relations without the DCFTA. Other DCFTA partners however will be able to considerably increase their export to the EU, and in this sense they will conquer the EU market