Impact of Food Standards on Patterns of International Trade in Marine Products
| Published date | 01 November 2024 |
| DOI | http://doi.org/10.1177/00157325221121433 |
| Author | Aishwary Kant Gupta,Seema Sangita |
| Date | 01 November 2024 |
Impact of Food
Standards on Patterns
of International Trade
in Marine Products
Aishwary Kant Gupta1 and Seema Sangita1
Abstract
Over the past two and half decades, rising non-tariff barriers, such as SPS and
TBT measures appear to negate any benefits accruing from declining tariffs. The
adoption of higher standards reflects efforts, generally by developed nations,
towards protecting both human and environmental health. However, the burden
of compliance falls on the upstream players of the supply chain, mostly located
in the Global South. In this article, we explore if imposing food standards has a
differential impact on the exporters of marine products from high-income and
low-income countries. Using panel data analysis based on bilateral trade between
50 exporters and 188 importers of marine goods at HS6 level codes from 1995
to 2018, we conclude that imposing food standards has a significantly negative
impact on exports of marine industries. Moreover, it appears that after 2008,
food standards have become relatively more stringent, and their impact has var-
ied based on economic size of the exporter. Relatively richer countries were
able to expand their exports in the presence of standards. However, marine
exports of poorer nations reduced. This contrasting impact of food standards
on the high- and low-income countries significantly changed the pattern of global
marine trade.
JEL Codes: F1, F14, Q17
Keywords
International trade, gravity model, marine industry, food standards, SPS, TBT
Original Article
Foreign Trade Review
59(4) 534–561, 2024
© 2022 Indian Institute of
Foreign Trade
Article reuse guidelines:
in.sagepub.com/journals-permissions-india
DOI: 10.1177/00157325221121433
journals.sagepub.com/home/ftr
1 TERI School of Advanced Studies, New Delhi, Delhi, India
Corresponding author:
Aishwary Kant Gupta, TERI School of Advanced Studies, New Delhi, Delhi 110070, India.
E-mail: aishwary.gupta2@terisas.ac.in
Gupta and Sangita 535
Introduction
World Trade Organization’s (WTO) agreements of sanitary and phytosanitary (SPS)
measures and technical barriers to trade (TBT) have provisions for imposing stand-
ards on international trade in food with intent to protect human, animal and plant
health. These food and safety standards (FSS) could be a barrier to exports, espe-
cially for food originating from developing economies, where exporting firms may
face challenges with compliance (Alia et al., 2017; Czubala et al., 2009; Maertens
& Swinnen, 2008; Maskus et al., 2005). On the other hand, standards could act as a
catalyst to trade as they bring about symmetry in information between buyers and
sellers (Clarke, 2010; Henson & Reardon, 2005; Marette & Beghin, 2010). Standards
play a crucial role in agriculture and allied industries, where competition in high-
value commodities is dominated by quality differentiation rather than food price
(Busch & Bain, 2004; Kumar & Bharti, 2021). Marine products are particularly
risky in terms of perishability and scope for contamination, and hence, firms in this
sector are often required to comply with food safety regulations at every stage of
production (Raymond & Ramachandran, 2017). This article aims to assess the
impact of imposing standards on exports in marine industry. We find that food
standards act as a barrier to exports of marine products. Moreover, post 2008, their
impact varies based on the economic size of the exporter: relatively richer countries
are able to expand their exports in the presence of standards, while exports of the
low-income countries are affected to a larger extent due to the FSS.
The FSS establishes a benchmark for food quality. The 1995 SPS agreement
has set basic ‘common’ rules to safeguard human, animal and plant health in the
context of international trade (World Trade Organization [WTO], 2021). In Article
3.1, it encourages countries to adapt to internationally accepted standards such as
Codex Alimentarius, which is set up jointly by the Food and Agriculture
Organization (FAO) and World Health Organization (WHO) of United Nations
(UN). Article 3.3 permits countries to set their ‘own’ safety standards provided
that they are based on scientific evidence and are non-discriminatory in nature.
SPS measures may take many forms such as inspection of products, setting maxi-
mum residual limits for pesticides, requiring imports from a disease-free region
and asking producers to follow specific processing guidelines. These measures
when imposed are expected to apply to domestic as well as imported products.
These benchmarks tend to differ across countries. For instance, in 2014, accord-
ing to WTO’s SPS database, the European Union (EU) allowed only 0.10 mg/kg,
0.20 mg/kg and 0.30 mg/kg of maximum cadmium level in mackerel, bullet tuna
and anchovy, respectively, whereas South Korea permitted 0.1 mg/kg for freshwa-
ter and migratory fish and below 0.2 mg/kg for marine fish.
All technical measures that are not covered under the 1995 SPS agreement are
covered under the TBT. The main objective of the 1980 TBT agreement, as per
Article 6.3, is to ‘promote mutual recognition of requirements and conformity
assessment procedures between WTO members’, and these measures broadly
constitute labelling, quality and grading regulations. (World Trade Organization
[WTO], n.d.). Trade in agriculture and allied sector is being increasingly regulated
by SPS and TBT standards.
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