Economic Impact and Global Trade Implications of Phytosanitary Treatments for Wood Packaging Material

Anna Strutt, James A. Turner, Lynn Garrett, Robert A. Haack and Lars Olson

No 332013, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: With increases in global trade, wood packaging material (WPM) has become an increasingly significant pathway by which bark- and wood-boring insects move between countries. Recognising this threat, an international standard for the treatment of WPM (ISPM 15) is being implemented by many countries. This standard requires that WPM associated with exports be heat treated or fumigated with methyl bromide. In addition, the United States is currently considering the application of this standard to WPM used in its domestic trade. Our study uses a domestic margin-inclusive version of the GTAP model, along with the version 7 GTAP database, to estimate the effects of ISPM 15. We model international implementation of ISPM 15 in varying levels of stringency, along with the impact of United States domestic implementation of this standard. Changes in transport margins due to ISPM 15 are based on empirical estimates of the share of WPM in sectoral transport costs. Preliminary results indicate that the implementation of ISPM 15 is likely to have a small but negative effect on exports and traditional measures of economic welfare for most countries. However, there is significant regional and sectoral variation, depending in part on the product mix traded, along with the relative size of the pallet margins in these sectors. Implementation of ISPM 15 that involves higher heat treatments leads to somewhat more adverse impacts, while the more extreme scenario of requiring plastic pallets leads to much more significant impacts. When ISPM 15 implementation includes United States domestic trade, the impacts on the United States are stronger, as expected. However, these results must to be tempered with the benefits of the regulation in terms of potential averted damages due to non-native bark- and wood-boring insects and reduced spread of already established insect pests. These averted damages are being estimated in a separate study.

Keywords: International Relations/Trade; Research Methods/Statistical Methods (search for similar items in EconPapers)
Pages: 26
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:332013

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