Trade effects of geographical indication policy: The EU case

Using a new detailed dataset on country‐product information on European Union (EU) Geographical Indications (GIs), we study the impact of this food quality policy on trade margins over the 1996–2014 period. We consider the effect of GIs on both intra‐ and extra‐EU trade margins (extensive and intensive), as well as on export (and import) unit values. Our main results show that GIs affect trade flows differently depending on whether GIs are produced by the exporter or importer country. The presence of GIs in the exporter country systematically exerts a positive trade effect on both the extensive and intensive trade margin. When registered only in the importer country, GIs seem to act weakly as a trade‐reducing measure, at least at the intensive trade margin. In addition, GIs positively affect export prices, consistent with the idea that GI products are perceived by consumers as higher quality goods. Importantly, extra‐EU trade margins react similarly to those on intra‐EU trade. These results have clear and interesting implications concerning the EU strategy of promoting the protection of GIs worldwide.