Working Paper Number
WP #12024, October 2012
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.
Published in 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.
Q17, Q18, F13
This draft: October 20, 2012.
Xiong, Bo and Beghin, John C., "Stringent maximum residue limits, protectionism, and competitiveness: the cases of the US and Canada" (2012). Economics Working Papers (2002–2016). 59.