Reducing tariffs on imported goods is meant to eliminate trade barriers, but that doesn’t seem to be helping the seafood industry, which has experienced the same – if not more – import denials and border notifications, according to a study guided by an agricultural economist at Penn State.
The study, which explored tariff and non-tariff barriers in seafood trade, also documented the reasons for products being held up at borders, including food safety issues, noted Linlin Fan, assistant professor of agricultural economics at the College of Agricultural Sciences.
“As countries importing from the European Union to the United States honor trade agreements to reduce tariff rates, traditional tariff barriers could be replaced by non-tariff barriers,” she said. “While there are legitimate reasons for holding back products at a border, such as food safety, we are also seeing evidence that some releases appear to protect domestic industries from foreign competition.”
Fan explained that governments use tariffs – taxes imposed on imported goods and services – to generate revenue and protect domestic producers. Since these taxes are often passed on to the consumer in the form of higher prices, tariffs are often seen as a “protectionist tool” to encourage consumers to buy cheaper domestic goods.
Additionally, food import security is an ongoing concern, noted Kathy Baylis, a geography professor at the University of California, Santa Barbara, who led the study with Fan and Lia Nogueira, an associate professor at the University of Nebraska-Lincoln.
Baylis pointed to statistics from the Centers for Disease Control and Prevention that show outbreaks associated with imported seafood increased from 1996 to 2014. Beginning in 2005, the European Union set food safety standards, but each country of the EU is individually responsible for the interpretation and application of the standards for imported goods.
“While heightened border surveillance has the laudable goal of protecting health, food import denials may be subject to import protection pressures,” Baylis said. “In other words, food safety standards can be used to protect domestic industries as a substitute for tariffs.”
The researchers analyzed data from the portal of the EU’s Rapid Alert System for food and feed. The information included seafood trade statistics from 2006 to 2018, covering 2,136 exporting and importing trading partners.
Each data series was merged by importing country, exporting country, year and product code. The team also documented the reasons cited for rejected or flagged products, called “import notifications”.
The team characterized the releases bottom-up. Low risk are notifications where the concern is primarily an administrative issue, including labeling, packaging issues, and past date of sale. Medium risks include factors such as product deterioration. High risks include microbial and parasitic contamination, Salmonella, E. coli and toxins such as shellfish poisoning.
The results of the study, recently published in the American Journal of Agricultural Economicsdocumented a link between lower tariffs and a higher number of low-risk notifications being refused entry into the EU
Of the 3,410 notifications reviewed by the researchers, nearly 2,500 received a low or medium risk rating, while about 950 received a high risk rating. “It will be seen that the number of import notifications is much higher for reasons that are not associated with health risks, suggesting that non-tariff barriers and demand for import protection could be in play. game,” Fan said.
Economists included explanatory variables related to risk and protectionist characteristics to separate how these two factors affected notifications. They found evidence that poorer countries and countries that received notifications last year – which could be associated with a higher likelihood of a security issue – receive more notifications.
The researchers found similar results for high-risk products, determined primarily by perishability. So, they said, the results show that EU import notifications do indeed target risky products. However, more than risk appears to be in play, as the team found evidence that a reduction in tariff rates is associated with increased use of non-tariff barriers.
“The analysis also shows that when importers are threatened by cheaper goods, they are more likely to issue a notification,” Nogueira said. “These results suggest that demand for protection plays a significant role in the number of notifications issued. We also found that lowering tariffs leads to more notifications that were low risk but refused entry of products into the system. ‘EU’
Fan noted study limitations, including coding discrepancies on some product descriptions. The authors also noted that the study does not address what or who directly drives protectionism in the EU.
The scientists say their findings can help policymakers design standardized trade rules that reduce differences in member countries’ interpretation and implementation of import notifications.
“We recognize that protectionism is not necessarily a public health problem,” Fan said. “However, with limited inspection budgets, consumers would benefit in the long run if importing countries focused on notifications of products that clearly pose food safety concerns rather than imports that threaten domestic production.”
Kathryn Pace of Columbia University in New York also contributed to the research.
The Canadian Agricultural Trade Policy Research Network and the National Institute of Food and Agriculture of the United States Department of Agriculture supported the study.