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Abstract

We investigate the interface between trade and invasive species (IS) risk, focusing on the existing tariff escalation in agricultural and food-processing markets and its implication IS risk. Tariff escalation in processed agro-forestry products exacerbates the risk of IS by biasing trade flows towards increased trade of primary commodity flows and against processed-product trade. We show that reductions of tariff escalation by reduction of the tariff on processed goods increase allocative efficiency and reduce the IS externality, a win-win situation. We also identify policy menus for trade reforms involving tariffs on both raw input and processed goods leading to win-win situations.

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