Effects of food safety regulations on international trade in shrimp and prawns: the case of oxytetracycline regulation
Date
2010
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Publisher
University of Delaware
Abstract
The purpose of this thesis is to investigate the impacts of changes in the maximum residual limit (MRL) of the antibiotic oxytetracycline on international trade in shrimp and prawns. The MRL is a food safety regulation set by the importing country, which is not consistent among the major importing countries. Increasing limitations on traditional barriers to trade over the past twenty years have caused importers to use sanitary and phytosanitary (SPS) restrictions, such as food safety regulations, as barriers to trade. Much research has been done to identify SPS restrictions that limit trade and function as a barrier, but, while previous models have looked at the effect of different regulations on seafood, to the best of my knowledge, this is the first analysis on the effects of oxytetracycline regulation on international trade of shrimp. This is of importance because shrimp is a highly traded and valuable product that is created primarily in aquaculture. Focusing on a commodity mainly produced in aquaculture helps to isolate the effect of the regulation, which only applies to seafood produced in aquaculture. This thesis uses a gravity model to analyze a panel data set including trade values from top exporters of shrimp and prawns to top importers from 1995-2007. The resulting coefficient for the MRL of oxytetracycline indicates whether the restriction has a significant limiting effect on trade, and is then used in a series of simulations of regulation change. These simulations estimate the trade effects of harmonizing regulations on a number of different suggested MRL’s, as well as simulating the creation of an MRL for importers who have a zero tolerance policy in place. The results show the MRL to be a limiting factor, and that a harmonization on the recommended Codex Alimentarius standard would increase trade by 26% or $1.5 billion. Simulations of the creation of an MRL in countries with a zero tolerance policy would increase trade by 43% or $2.5 billion. This effect is dominated by imports to the US.