Trade effects of MRL harmonization in the EU

Liliana Foletti and Anirudh Shingal

Papers from World Trade Institute

Abstract: Combining original data on Maximum Residue Levels (MRLs) in pesticides with bilateral trade and standard gravity variables over 2005-11, this paper identifies the effect of the complete harmonization of MRLs across EU member states on inter- and intra-EU agri-food trade at both margins. We make an empirical contribution to the impact assessment of standards literature by identifying the trade effects of two different harmonization dynamics in health-related standards: complete harmonization of domestic and foreign regulation (intra-EU members) and harmonization of standards between a large number of foreign markets (non EU-members). Significantly, we find that the harmonization of MRL standards may have led to greater trade at both margins for all different sub-samples, even those including developing country exporters. Our results also suggest that having different MRL regulations is mostly costly at the extensive margin; this is found to be especially true for intra-EU15 agri-trade.

Date: 2014-05-27
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:wti:papers:720

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