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Abstract
Abstract The Trans-Atlantic Trade and Investment Partnership (TTIP) agreement has the potential to intensify agricultural trade between the United States and the European Union. In particular, the cooperation on non-tariff barriers including food safety standards and sanitary and phytosanitary issues will expand agricultural trade. Using bilateral trade data at the U.S. state level, we empirically assess the impacts of a TTIP harmonization of food safety regulatory standards on US state agricultural exports to the E.U. We provide the first economic analysis of the possible TTIPagreement with policy implications for individual U.S. states. Quarterly trade series pertaining to major ports in the US and the MRLs that exemplify differences in food safety standards across the Atlantic are used. Deploying state-of-the-art gravity models and probit equations that address the high frequency of missing trade, we find that MRLs significantly diminish agri-food trade. The results reveal that a 10% reduction in MRL stringency would promote trade by nearly 6%. If the final provisions endorse the Codex MRLs, the TTIP agreement would boost US agricultural exports to the EU by more than one billion dollars a year. Coastal states with large agricultural sectors benefit the most from the reforms induced by a TTIP agreement.
Acknowledgement : The authors acknowledge the financial support from the National Institute of Food and Agriculture (USDA NIFA grant award 2015-38821-24356 and, U.S. Department of Agriculture, Evans-Allen project number SCX-101-08-15. Kermit Rose provided able computer programming and data tabulation assistance