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SPS measures and trade: Implementation matters

Pramila Crivelli and Jasmin Gröschl
Authors registered in the RePEc Author Service: Jasmin Groeschl

No ERSD-2012-05, WTO Staff Working Papers from World Trade Organization (WTO), Economic Research and Statistics Division

Abstract: 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.

Keywords: International Trade; Sanitary and Phytosanitary Measures; Conformity Assessment; Heckman Selection Model (search for similar items in EconPapers)
JEL-codes: C23 F14 Q17 (search for similar items in EconPapers)
Date: 2012
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