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Trade Effects of SPS Measures in Regional Trade Agreements

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  • Santeramo, Fabio

Abstract

Trade negotiations in the agri-food sector have resulted in an exponential increase of sanitary and phytosanitary (SPS) measures and a growing diffusion of regional trade agreements (RTAs). The combined trade effects of SPS measures and RTAs are difficult to ascertain: SPS measures may be either catalysts for or barriers to trade; RTAs also have a dual effect on trade, sometime favouring intra-bloc trade (i.e. among the signatories of the RTA), other times enhancing extra-bloc trade (i.e. among signatories and non-signatories of the RTA). Moreover, RTAs increasingly contain specific SPS commitments whose trade effects may vary according to the depth of the provisions. The joint effect of SPS measures and RTAs on trade is therefore an open empirical question. After assessing the general effects of SPS measures on agri-food trade, this study examines potential differences in SPS-specific effects between nonsignatories and signatories of RTAs. The study also explores whether the trade effects of SPS measures change when trading partners establish an RTA. Lastly, the study evaluates the extent to which RTAs go beyond WTO trade liberalization requirements. The results reveal that benefits to signatories of RTAs tend to be reduced by SPS measures that affect indiscriminately all trading partners and are not tailor made for a specific trade relationship. Overall, both SPS measures and RTAs are catalysts for trade. More importantly, if trading partners implement both types of policy interventions in a staggered fashion, the effects of one policy reinforces the impact of the other. RTAs potentially offer more versatile frameworks for negotiating SPS commitments that facilitate trade, creating conditions for signatory countries to satisfy each other’s requirements on adequate levels of safety, thus boosting trade. To conclude, SPS measures and RTAs tend to facilitate market access, the former by setting standards to ensure an adequate level of safety, the latter by setting a more versatile framework for negotiations related to SPS measures. Although the trade potential offered to RTA signatories seems obstructed by nondiscriminatory (multilateral) SPS measures, the entry into force of a trade agreement can help signatories meet stringent standards, further facilitating market access. This is allowed, in particular, by the provision of concrete commitments with respect to SPS measures within RTAs, the most promising of which are mutual recognition of standards and the institution of joint SPS committees to implement technical cooperation between signatories on SPS issues. Moving towards these solutions would stimulate trade among countries.

Suggested Citation

  • Santeramo, Fabio, 2020. "Trade Effects of SPS Measures in Regional Trade Agreements," Commissioned Papers 304053, International Agricultural Trade Research Consortium.
    • Handle: RePEc:ags:iatrcp:304053
    DOI: 10.22004/ag.econ.304053
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