Food quality regulation under trade agreements: Effects on the supply of food safety and competitiveness
As progress has been made on tariff reduction by recent trade agreements, barriers to freer international trade arising from nontariff sources have become more prominent. Regulation of product quality and in particular food safety can be a major source of such barriers. Lowering them requires that trading partners develop methods of cooperation, termed rapprochement, in setting and reforming national-level quality regulation. A better understanding of the effects of such rapprochement efforts on trade in food products requires a melding of economic theory and empirical work on regulation, international trade, industrial organization, product quality, rent-seeking, and competitiveness. The immediate importance of this understanding is due to the new treatment of food quality regulation under trade pacts such as the North American Free Trade Agreement and the Uruguay Round of the General Agreement on Tariffs and Trade. These agreements recommend the increased use by countries of guidelines adopted by international standards organizations such as Codex Alimentarius. Contracting parties have the ability to set stricter standards if they have sufficient scientific evidence that such measures are justified. This dissertation examines the language on sanitary and phytosanitary regulation included in recent trade agreements in order to analyze how they attempt to manage potential nontariff barriers to trade. A conceptual model outlines how the welfare impacts of these trade barriers may be characterized and the joint determination of the scientific and policy merit of food safety regimes in light of the level of rapprochement attained by the trade agreement. Case studies of a particular trading relationship (U.S.-New Zealand) and quality management systems for food producers and processors (HACCP and ISO 9000) illustrate the application of this model. These case studies show that, far from creating a close harmonious trading environment, national-level regulations currently allow for the maintenance and possible development of trade barriers.
0511: Economic theory