Title

Stringent maximum residue limits, protectionism, and competitiveness: the cases of the US and Canada

Campus Units

Economics

Document Type

Book Chapter

Publication Version

Submitted Manuscript

Publication Date

2013

Journal or Book Title

Non-Tariff Measures with Market Imperfections: Trade & Welfare Implications in the Frontiers of Economics & Globalization

Editors

John Beghin

Publisher

Emerald Group Publishing Limited

Place of Publication

Bingley, West Yorkshire, UK

First Page or Article ID Number

245

Last Page

259

DOI

10.1108/S1574-8715(2013)0000012018

Abstract

Maximum Residue Limits (MRLs) on pesticides and veterinary drugs in plant and animal products are established to promote food safety and animal and plant health. In practice, however, they are often accused of creating unnecessary trade barriers. The controversy is more prominent when a given MRL is stricter than the corresponding international standard developed by Codex. Using the score indices constructed by Li and Beghin (2012), we empirically assess the implications of stringency in MRLs in plant and animal products, relative to Codex levels, for Canadian and U.S. trade performance. We find little evidence that U.S. imports are influenced by domestic stringency or those imposed by its trading partners. However, U.S. exports are negatively affected by stringency in destination markets. Canada's stringent MRLs facilitate its exports of plant and animal products and these exports do not seem to be impeded by MRL stringency in destination markets. Canada's imports do not appear to be systematically influenced by either its own or its trading partners' MRL stringency. We draw implications for the potential harmonization of MRLs between the two countries.

JEL Classification

F13, Q17, Q18

Comments

This is a working paper published as Non-Tariff Measures with Market Imperfections: Trade and Welfare Implications. Chapter 10 in Volume 12 (2013): 245-259 in Frontiers of Economics and Globalization series Emerald Press. John C. Beghin, editor, Emerald Press, Bingley, West Yorkshire, UK, doi: 10.1108/S1574-8715(2013)0000012018.