Impact of developed countries' sanitary phytosanitary measures on developing countries: case studies of egyptian potatoes and goundnuts
This study analyzes the impacts of developed countries' Sanitary and Phytosanitary (SPS) measures on high value agricultural and food exports from developing countries. These impacts are assessed for their effect on behaviour of decision makers at the firm level, on redirecting exports from developing countries, and on the structure and response of the supply chain. The findings of the study, which uses firm and market level analyses, are based on a comparison of potato and groundnut exporting firms in Egypt, as well as a comparison of Egyptian exports of potatoes and groundnuts to the EU and the rest of the world (ROW). The firm level analyses were based on a questionnaire-based survey that was designed for Egyptian potato and groundnut exporting firms to address the impact of EU SPS measures at the firm level. The first model analyzed the impacts of the EU SPS measures requirements and other economic factors on exported share of product of potatoes and groundnuts. The main findings of the exported share of product analysis suggest that firm size, and firm human capital factors are positively related with the share of production exported. The second model characterized the effects of the EU SPS measures requirements and other economic factors on per-unit cost of compliance. The results of the per-unit cost of compliance analysis suggest that cost of production in new, pest-free land is a main factor in raising the per-unit cost of compliance. The market level analysis examines the direct and indirect impact of developed country SPS standards on developing country agricultural exports. Egyptian potato and groundnut exports to the EU and the rest of world are considered as case examples, and reflect the impact of acute SPS problems and/or the harmonization of EU standards, and subsequent import bans on Egyptian groundnut and potatoes. Gravity models are developed to quantify the direct impact of EU measures on Egyptian potato and groundnut exports to the EU and ROW. Inclusion of the impact of EU measures on Egypt-ROW trade accounts for potential trade diverting effects from the EU's measures against Egypt. The study finds that the measures implemented by the EU negatively affected Egypt's international trade share. However, the trade diversion effect of these regulations varied depending on industry structure and the nature of the measures applied.