Standards, a catalyst for the winners -
a barrier for the losers?
An empirical analysis of the impact of higher SPS measures
on the trade performance of developing countries
Christine Chemnitz and Nana Künkel
Humboldt University, Berlin, Germany, Department of Agricultural Economics and Social Sciences
Abstract. Within the debate about developing countries export competitiveness the increasing
importance of food safety and quality standards especially in OECD countries appeals to be one of
the major sources of concern. The paper analyses the trade performance of 73 developing countries
within the context of stricter SPS measures. The analysis concentrates on the meat and fruit/
vegetable sectors as especially high value product sectors are determined by standards. The periods
under consideration are 1993- 1995, as a period before the implementation of the SPS Agreement
and 2002- 2004, as a period after the implementation. A cluster analysis groups the countries
according to the variables "ratio" and "difference" of the export value to OECD countries including
the possibility to explore trade performance regarding to the absolute level of change and relative
dynamics. Subsequently, interconnections with EU and US border rejections as well as with STDF
(Standards and Trade Development Facility) investment are explored. For the results three major
findings should be underlined: e) The group of developing countries shows as well in total as in
relative terms a very heterogeneous picture of their export development and there is no linear
relation between total export value and direction of development. ee) Ten groups were identified in
the cluster analysis, like e.g. small winners, large winners, small losers, large losers. eee) Most large
exporters increased their market share, but very successful groups were also found among small
exporters, especially in the fruit/ vegetable market. eeee) Both, border rejections as well as STDF
investments did not reflect a particular structure related to market share development of individual
countries.
Keywords : Food Safety, SPS, Developing Countries, Cluster Analysis, Competitiveness.
1 Introduction
In the current debate about better market access for and the competitiveness of
developing countries’ agricultural exports two common perspectives are prevailing. The
one is the "standard as a barrier" perspective, and the other is the perspective of
developing countries as "standard takers ". Both points of views imply that developing
countries have to adjust to developed countries standards and that they thereby are the
specific "losers" of higher standards in agricultural trade. While the number of WTO
notifications underlines the latter perspective (only one third of the sanitary and
phytosanitary (SPS) notifications come from developing countries) little empirical
evidence exists about the former. In literature standards are commonly seen as a trade
impeding factor for developing countries’ exports. Several case studies analyze the
impact of higher SPS measures on trade flows of individual developing countries export
sectors [1, 21, 12, 5, 6]. However, little research exists which could lead to a more differentiated
perspective of the impact of higher SPS measures among the group of developing
countries. Recent literature [21, 9, 18] starts to resolve the strict perspective of standards as a
trade barrier. More emphasis is put on the heterogeneous effects of standards which can
act like a catalyst and like a barrier at the same time. The effect depends mainly on the
ability of the individual country to comply with the standard and to prove this
compliance to its trading partners. But which are the countries that perform well and
which countries end up to be even more marginalized?
The objective of the paper is to shed more light on the question which countries might
be positively or negatively affected by higher SPS measures. Hence, the paper analyses
the development of exports of 73 developing countries to the OCED countries (which
were perceived as the most important standard setters) between two time spans - before
and after the implementation of the SPS Agreement. The analysis concentrates on two
commodity groups that are strongly influenced by standards - fruit/ vegetable and