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© 1998 Oxford University Press and the Foundation for the European Review of Agricultural Economics

research-article

Non-tariff trade barriers and consumers' information: The case of the EU-US trade dispute over beef*

JEAN-CHRISTOPHE BUREAU1, STEPHAN MARETTE2 and ALESSANDRA SCHIAVINA3

1Jean-Christophe Bureau Institut National de la Recherche, Agronomique (INRA), Departement d'Economie 788850 Grignon, France
2INRA and THEMA, Université Paris X-Nanterre France
3Autorità Garante della Concorrenza e del Mercato Italy

Received August 1, 1998;

Summary

Building on the empirical case of the EU-US trade dispute on hormone-treated beef, an analytical framework, where consumers are imperfectly informed about the quality of imports, is used to investigate the welfare effect of trade liberalisation in the case of a credence good. Opening the domestic market to foreign products that are perceived to be of lower quality than domestic products may lead to market inefficiencies (e.g., adverse selection) and multiple equilibria, even though these products are actually safe. This may offset some of the benefits of trade liberalisation. The welfare effects of ruling against national regulatory barriers are analytically ambiguous because of information problems. More globally, the settlement of international disputes on sanitary issues should include more cost-benefit analysis, rather than relying only on scientific considerations.

Keywords: trade, food safety, labelling, non-tariff barriers


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