Center for Agricultural Trade

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https://hdl.handle.net/10919/85060

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    Agricultural exports and retaliatory trade actions: An empirical assessment of the 2018/2019 trade conflict
    Grant, 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.
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    COVID-19 & Agricultural Exports under the U.S.-China Trade Deal
    Grant, Jason H.; Orden, David R.; Marchant, Mary A. (Virginia Tech. Center for Agricultural Trade, 2020-05)
    This report from the Center for Agricultural Trade provides an update on COVID-19 and related impacts on US-China trade.
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    Evaluating the Trade Impacts of Bovine Spongiform Ecephalopathy (BSE) Using Historical Simulations
    Peterson, Everett B.; Grant, Jason H.; Sydow, Sharon (Virginia Tech, 2017-10)
    In December of 2003, the US Secretary of Agriculture announced the presence of Bovine Spongiform Encephalopathy (BSE) within a cow in the state of Washington. The announcement prompted the stoppage of beef imports by some of the US’s largest traditional beef trading partners, resulting in sizeable losses to industry. While this was the first confirmed case of BSE reported in the United States, the international policy response was significant in nearly every major U.S. beef export market. NAFTA partners Mexico and Canada opened their markets to U.S. beef rather quickly following the announcement. However, other markets, including many of the top US export destinations such as Japan, Korea, Taiwan and China, remained closed for much longer periods and China’s market remained closed until September 2016. In this paper, a partial equilibrium model of global meat production and trade is developed to conduct a series of historical simulations over the period 2001 to 2013 to capture the observed impacts of the BSE outbreak on global meat trade. Then a set of counter-factual experiments are constructed that adjusts the changes in preferences and technical change in the historical simulation to determine what beef meat trade would have looked like if the BSE outbreak had not occurred. Over the 2004-2013 period, total US beef exports would have been approximately 2 million metric tons higher and the total value of beef exports would have been $6.1 billion higher if the BSE outbreak had not occurred. Canadian beef exports would also have been 350,000 metric tons higher and with the total value of exports increasing by $1.7 billion if the BSE outbreak had not occurred. Conversely, the value of beef exports from Australia, New Zealand, the EU, and South America would have be substantially lower.
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    Has Covid19 Caused a Great Trade Collapse? An Initial Ex Post Assessment
    Arita, Shawn; Grant, Jason H.; Sydow, Sharon (Virginia Tech. Center for Agricultural Trade, 2020-11)
    This paper conducts an early econometric examination of the impacts of COVID-19 on international trade. We find the pandemic reduced global agricultural trade by 4.2% in the 2nd and 3rd quarters of 2020. Agricultural trade was found to be significantly more stable than nonagricultural trade; however, the level of disruption varies substantially across commodities.
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    Has global agricultural trade been resilient under coronavirus (COVID-19)? Findings from an econometric assessment of 2020
    Arita, Shawn; Grant, Jason H.; Sydow, Sharon; Beckman, Jayson (Elsevier, 2022-02)
    Global agricultural trade, which increased at the end of 2020, has been described as "resilient" to the impacts of the COVID-19 coronavirus pandemic; however, the size and channels of its quantitative impacts are not clear. Using a reduced-form, gravity-based econometric model for monthly trade, we estimate the effects of COVID-19 incidence rates, policy restrictions imposed by governments to curb the outbreak, and the de facto reduction in human mobility/lockdown effect on global agricultural trade through the end of 2020. We find that while agricultural trade remained quite stable through the pandemic, the sector as a whole did not go unscathed. First, we estimate that COVID-19 reduced agricultural trade by the approximate range of 5 to 10 percent at the aggregate sector level; a quantified impact two to three times smaller in magnitude than our estimated impact on trade occurring in the non-agricultural sector. Second, we find sharp differences across individual commodities. In particular, we find that non-food items (hides and skins, ethanol, cotton, and other commodities), meat products including seafood, and higher value agri-food products were most severely impacted by the pandemic; however, the COVID-19 trade effect for the majority of food and bulk agricultural commodity sectors were found to be insignificant, or in a few cases, positive. Finally, we also examine the effects across low vs high income countries, the changing dynamics of the pandemic's effect on trade flows, and the effects along the extensive product margins of trade.
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    Hidden Trade Costs? Maximum Residue Limits and U.S. Exports of Fresh Fruits and Vegetables
    Hejazi, 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.
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    New Estimates of the Ad-valorem Equivalent of SPS Measures: Evidence from Specific Trade Concerns
    Ning, 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.
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    The Role of State Owned and Private Enterprises in China’s Agricultural Imports
    Grant, Jason H.; Xie, Chaoping (Center for Agricultural Trade, 2018-05)
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    Trade Elasticities and Trade Disputes: New Evidence from Tariffs and Relative Preference Margins
    Grant, Jason H.; Ning, Xin; Peterson, Everett B. (Center for Agricultural Trade, 2018-08)
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    Trade impact of maximum residue limits in fresh fruits and vegetables
    Hejazi, Mina; Grant, Jason H.; Peterson, Everett B. (Elsevier, 2022-01)
    Interfering maximum residue limits (MRLs) for pesticides with agricultural trade is becoming important for food and trade policies in the early 21st century. Differing levels for pesticide residues among countries have the potential to disrupt trade significantly. We employ a non-linear and disaggregated stringency index to quantify the degree of regulatory heterogeneity levels for pesticides between trading nations for fruits and vegetables in 2013 and 2014 and investigate the trade-restricting nature of this measure using the structural gravity framework. Our findings indicate that stricter importer MRLs reduce bilateral trade to the tune of 8.8%. Looking closer at MRLs with US partners, the effect of stricter MRLs is quite elastic concerning its impact on the US -EU trade. In particular, the estimates imply that a more stringent MRL's policy decreases the US export of fruits and vegetables to the EU members by a striking 13.8%. At the disaggregated level of MRL indices over different classes of chemicals, the results indicate that there is a significant gap in regulations regarding MRLs among several major US foreign markets for fruits and vegetables, particularly in the EU and the Trans-Pacific trading partners.