How important are sanitary and phytosanitary barriers in international markets for fresh fruit?

Abstract

International markets for agricultural products are often subject to a range of trade barriers, and horticultural products are no exception. This paper examines the economic implications of tariffs and sanitary and phytosanitary (SPS) regulations that are applied to global markets for fresh apples and fresh oranges. We calculate regional-level tariff rates and ad valorem equivalents for SPS barriers following the price-wedge approach. A simulation model is developed and used to assess the price, quantity, and welfare implications of reducing tariffs, removing SPS barriers, and removing SPS barriers that have been identified as a Special Trade Concern (STC) by the World Trade Organization. Results suggest that a 36% reduction in global tariffs would lead to greater welfare gains than would the elimination of SPS measures in apple markets. However, in orange markets we find that SPS measures have much larger economic implications for producers and consumers. Here a 36% reduction in tariffs would lead to smaller overall welfare effects compared to removal of all SPS measures, and only slightly larger effects than those from removal of STCs alone.