Incorporating Science, Economics, and Sociology in Developing Sanitary and Phytosanitary Standards in International Trade Proceedings of a Conference (2000) / Chapter Skim
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7 Accounting for Consumers
7 Accounting for Consumers
Pages 170-198
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From page 170... ...
This includes sanitary regulations and, more generally, a larger set of technical rules embedded in national regulations. A few years ago, little was known on the Lade effect of domestic regulations, but this issue is now becoming more and more documented.
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From page 171... ...
Other agencies, such as the U.S. International Trade Commission and the Office of the U.S.
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From page 172... ...
The SPS Agreement covers health risks (food safety) arising from additives, contaminants, toxins, and pathogens contained in food products.
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The resulting national regulations can pose problems for exporters. The complexity of the issues make the right policy response difficult, especially in the absence of convincing evidence of health risks, but when consumer concerns look nevertheless genuine.
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, which is sometimes less costly and alters the product less, and point to the inconsistency of seeking to achieve zero risk in one area while tolerating high risk in others.5 The diverging conceptions of risk management are particularly obvious in many debates within Codex committees, such as the one on food hygiene or the one on dairy products. The case of cheese made from unpasteurized milk provides an illustration of the fundamental differences that exist with regard to food safety thresholds between the EU and the United States (note that this is also the case within the EU itself)
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From page 175... ...
However, it is clear that consumers in other countries are not willing to accept the level of risk associated with raw milk cheese, possibly because they are less sensitive to quality attributes such as "taste" and "authenticity." Technical Regulations and Local Conditions National regulations on authorized pesticide residues, for example, differ widely. However, the fact that it is difficult to measure the risks in this area makes any attempt to define standards highly controversial (Mazurek, 1996~.
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From page 176... ...
In some EU countries, economic sanctions are very limited in the case of food safety problems. In France, liability is limited, and in nonlethal food poisoning problems, plaintiffs seldom take legal action.
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Cultural Differences Arguably, the fact that Islamic countries tend to erect barriers to pork meat imports is not seen as an unfair nontariff barrier. One may wonder whether a ban on genetically modified organisms (GMOs)
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Substantial trade flows could be affected.7 Farmers, especially in England and Sweden, where the regulations are already stricter than in the rest of the KU, claim that consumer concerns should lead to similar requirements for imported products. Growing numbers of consumers are also concerned about the possible adverse effects of their purchases, on the destruction of natural resources in other countries, for example, or on child labor (Maine and Ortalo-Magne, 1998~.
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From page 179... ...
, and assurances from governmentappointed scientists made the mistrust of science a very sensitive issue in the food sector. Consumer concerns about GMOs and growth activators cannot be understood without taking this into account.
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From page 180... ...
Threats from the European Commission to restrict the sale of unpasteurized cheese are said to be "responsible for 5 out of 6 French votes against Maastricht." The estimate quoted by Vogel (1995) may not be completely statistically exact, but it truly reflects how anti-Et/ populist groups exploited fears of being "condemned to eat standardized, aseptic, industrialized cheese." The 1997 panel on hormone treated beef also had a strong negative impact in European public opinion.
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has shown that imperfect consumer information about product quality could even result in total closedown of the market (absence of trade) if, because of a lack of information, buyers' willingness to pay was insufficient to cover production costs.
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WHAT ARE THE SOLUTIONS FOR RECONCILING CONSUMER CONCERNS AND INTERNATIONAL TRADE RULES? Consumer Concerns in the United States and Europe Different consumer organizations have expressed their displeasure with international trade rules about food safety and quality.
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From page 183... ...
. Although one cannot ignore consumer concerns, fears about food safety give trade protectionists a wonderful opportunity to cheat; and trade restrictions motivated by social, cultural, ethical, or environmental considerations can be a form of protectionism in disguise.
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More generally, a trade-off between costs and benefits is sometimes implicit behind the scientific criteria in the form of the setting of standards, which take economic factors into consideration and reference to risk analysis in the settlement of disputes. Risk analysis includes a risk management component; this corresponds to the ways in which risk may be reduced to an "acceptable" level, which includes economic considerations, and in the last resort the decisions taken are often of a political nature.
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From page 185... ...
As a result, labeling and consumer information policies are often portrayed by international organizations as preferable alternatives to regulation because they are cheaper for producers, leave the choice to consumers, and are less likely to constitute trade barriers (OECD, 1997b)
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Expanding GATT Criteria Some consumer values may well be out of step with GATT principles. In the environmental sphere, rulings in disputes brought within the framework of GATT and the WTO hold that a country is not entitled to use trade measures restricting imports to protect natural resources outside its territory, even in the case of resources that some consider to be "common to humanity." In the cultural sphere, a county may introduce regulations that are more stringent than international standards on ethical, moral, or religious grounds under only very limited conditions.
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Socially aware consumers who would like to be able to wield such a weapon find it hard to understand why international trade rules should prevent them from doing so. Vogel (1995)
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Here we consider the possibility of a broader use of economic assessment in food quality regulations as well as in dispute settlement on nontariff Earners. Cost-benefit analysis is already used to enable public authorities to make decisions concerning national regulations.
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One application could be the animal welfare issue, an awkward case where public opinion is being represented by vociferous consumer lobbies in Europe, and where scientists have proved to be of little help. More economic assessment would make it possible to assess the real importance of this concern throughout the entire population.~4 t4The French Institut National de la Recherche Agronomique (INRA)
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From page 191... ...
mentions economic assessment, such considerations have only a limited place in the settlement of sanitary and technical disputes, and cost-benefit analysis is far less central than risk analysis. International agreements on sanitary and technical measures do not oblige countries to adopt only those regulations whose benefits exceed their costs (Roberts, 1997~.
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From page 192... ...
Genuine consumer aversion, for sanitary as well as for cultural reasons, is reflected in a willingness to pay in order to avoid the products. Although there are still some technical difficulties and conceptual obstacles, contingent valuation techniques or experimental economics may help people from different cultures to find a common "metric" for defining more objectively how genuine the concerns of their consumers are, and for finding solutions to complex issues which largely reflect cultural differences.
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which are becoming a major area of contention in international trade (Baghwati and Hudec, 1996~. In any case, measuring the risk gives no indication of the loss of utility for consumers.
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1995. Choice and Efficiency in Food Safety Policy.
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1997. An Economic Assessment of Food Safety Regulations: the New Approach to Meat and Poultry Inspection.
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1997. Nontariff agricultural trade barriers revisited.
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From page 197... ...
1997. A first step in understanding technical barriers to agricultural trade.
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