Center for Agricultural Trade
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- Agricultural exports and retaliatory trade actions: An empirical assessment of the 2018/2019 trade conflictGrant, Jason H.; Arita, Shawn; Emlinger, Charlotte; Johansson, Robert C.; Xie, Chaoping (2021-01)We estimate the ex-post agricultural trade impacts of retaliatory measures imposed by foreign countries in response to United States' Section 232 and 301 tariffs using a theoretically consistent, monthly, product line gravity equation. Retaliation led to significant US agricultural export losses of $13.5 to $18.7 billion on an annualized basis. Considerable heterogeneity exists in the average treatment effect of retaliation. First, retaliatory trade actions presented a strong within-year seasonal impact. Nearly 70% of aggregate trade losses occurred during the US's peak export marketing season. Second, U.S. trade losses were particularly pronounced on homogeneous bulk commodities, whereas product differentiation dampened the impact of retaliation. Third, with few exceptions, the counterfactually estimated direct trade losses line up well with the U.S. Department of Agriculture's (USDA) trade damage estimates for trade aid programs distributed to farmers impacted by the trade dispute. Finally, we find little evidence that U.S. exports were able to be reoriented to alternative, nonretaliating markets-an indication of high bilateral trade frictions and the destructive consequences of retaliatory trade actions.
- Hidden Trade Costs? Maximum Residue Limits and U.S. Exports of Fresh Fruits and VegetablesHejazi, Mina; Grant, Jason H.; Peterson, Everett B. (Center for Agricultural Trade, 2018-07)Consecutive rounds of trade negotiations at the multilateral and regional level have resulted in significant reductions to agricultural tariffs. However, agricultural economists and policy makers alike agree that non-tariff measures (NTMs) are more obscure in nature and have the potential to be more trade distorting. Among the list of NTMs, Sanitary and Phytosanitary (SPS) measures play an influential role in agri-food product trade. In this article we focus on a specific type of SPS measure known as maximum residue limits (MRLs) that features prominently in multilateral and regional trade negotiations. The purpose of this research project is threefold. First, we construct a comprehensive database of country-and-product specific MRLs for global fresh fruit and vegetable trade that varies by pesticide chemical type: herbicides, insecticides and fungicides. Second, we develop a new index summarizing the extent of bilateral MRL stringency between importing and exporting countries on pesticide tolerances focusing specific attention on the U.S. and its bilateral trading partners. Third, formal econometric models are developed to quantify and test the degree to which more stringent MRL standards in importing countries as compared to comparable domestic standards that exist in exporting countries restrict fresh fruit and vegetable trade. The results suggest importer MRL standards that are stricter than exporter MRLs can impart significant reductions in bilateral fresh fruit and vegetable trade.
- New Estimates of the Ad-valorem Equivalent of SPS Measures: Evidence from Specific Trade ConcernsNing, Xin; Grant, Jason H. (Center for Agricultural Trade, 2019-10)Countries maintain a large and diverse set of non-tariff measures (NTMs) to safeguard the health of plants, animals and humans. However, policymakers and regulatory bodies often neglect the potential adverse trade effects of non-tariff measures. Despite a large literature investigating the trade flow effects of NTMs, less is known about the extent to which sanitary and phytosanitary (SPS) measures raised trade concerns by exporters reduce exporting countries' agricultural and food trade to importing markets maintaining these measures. This study utilizes the World Trade Organization's (WTO) SPS specific trade concerns database to identify economically meaningful and potentially consequential SPS measures on members' trade. We develop a product-line structural gravity model to estimate the trade effects of non-tariff SPS measures flagged as concerns by the top 30 agricultural exporting and importing countries covering products in meat, dairy, fruits & vegetables, and cereals & preparations. Results indicate that trade losses due to SPS measures of concern are significant, both globally and for specific countries, sectors and individual SPS measures. Conservatively, our estimates imply a 68% reduction in agricultural trade during years in which SPS measures of concern were active. Moreover, the estimated ad-valorem protection imposed by SPS trade concern measures ranges from a 33% to 106% equivalent tariff, on average. Significant heterogeneity in the estimated AVE of SPS measures exists across countries. Comparing SPS measures maintained by U.S., EU and China on imports, presents a rather stark asymmetric picture, with ad-valorem tariff equivalents of U.S. SPS measures estimated at 41%, compared to 76.4% and 130% ad-valorem equivalent protection imposed by SPS measures maintained by the EU and China, respectively. Finally, we identified six case-study SPS measures of concern to take a closer look at their trade impacts. These included (i) EU Aflatoxin limits on groundnuts and cereals; (ii) EU GMOs policies on cereal grains; (iii) BSE restrictions on beef (various countries); (iv) Japan’s positive list MRL standards; (v) Ractopamine restrictions on pork; and (vi) China’s restrictions on Avian Influenza in poultry. Results indicate that China's restrictions on poultry imports due to Avian Influenza concerns and EU, China, Russia, Taiwan, and Thailand zero tolerance for ractopamine in pork exports are the most prohibitive standards, with AVE tariffs 120.3% and 88.9%, respectively.
- The Role of State Owned and Private Enterprises in China’s Agricultural ImportsGrant, Jason H.; Xie, Chaoping (Center for Agricultural Trade, 2018-05)
- Trade Elasticities and Trade Disputes: New Evidence from Tariffs and Relative Preference MarginsGrant, Jason H.; Ning, Xin; Peterson, Everett B. (Center for Agricultural Trade, 2018-08)