1887

WTO Working Papers

WTO working papers usually represent research in progress. Such research may be conducted in the preparation of WTO Secretariat reports, studies or other material for WTO members. The papers are circulated for comment because the WTO considers critical review of professional research to be extremely important.

English

SPS Measures and Trade

Implementation Matters

In an attempt to disentangle the impact of sanitary and phytosanitary (SPS) measures on trade patterns, we estimate a Heckman selection model on the HS4 disaggregated level of trade. Using SPS measures obtained from the SPS Information Management System of the WTO and controlling for zero trade flows, we find that SPS concerns reduce the probability of trade in agricultural and food products consistently. However, the amount of trade is positively affected by SPS measures conditional on market entry. This suggests that SPS measures constitute an effective market entry barrier. Additionally, we split SPS measures into requirements related to (i) conformity assessment, and (ii) product characteristics. Both types of measures are implemented by policy makers to achieve a desired level of health safety, yet, entail diverse trade costs. We find that conformity assessment measures hamper not only the likelihood to trade but also the amount of trade, while measures related to product characteristics do not affect the market entry decision, but have a strong positive impact on the trade volume. This suggests that trade outcomes crucially depend on the measure policy makers decide to implement.

English

Keywords: Heckman SelectionModel, Conformity Assessment, Sanitary and PhytosanitaryMeasures, International Trade
JEL: F14: International Economics / Trade / Empirical Studies of Trade; Q17: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Agriculture / Agriculture in International Trade; C23: Mathematical and Quantitative Methods / Single Equation Models; Single Variables / Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error