Browsing by Author "Carlson, Mari"

Economic integration refers to the theoretical background which is based on the functioning of regional trade agree-ments (RTAs). Trade in context of economic integration embodies special characteristics in comparison to classical free trade. The special characteristics are contested whether they are welfare enhancing or diverting. RTAs are trade agree-ments between two or more countries and their number has been increasing during the last decades. Such agreements play an important role in international agro-food trade as already over 50% of agricultural products are traded within or between RTAs. The increase in number of RTAs and wider inclusion of agricultural trade in these agreements have revealed new agricultural trade policy measures which distort trade in agro-food products. These are so called non-tariff measures of which this study focuses on sanitary and phytosanitary (SPS) measures. The legitimate intention of such measures is to protect plant, animal and human health and prevent the spreading of harmful pathogens through international trade. This study attempted to create a theoretical framework for analysis of trade effects caused by SPS measures. The ef-fects were found to depend first of all on the burden of compliance and the nature of a SPS measure. Burden of com-pliance was divided into three dimensions of specific, uniform or universal measures according to whom the costs are due. For the nature of the SPS measures three categories were identified: cost-increasing, quantity-restricting and combining SPS measures. The developed theoretical framework was applied to analyze the case of poultry meat trade between the EU and the US in a case where the SPS measure becomes ineffective. The SPS measure of pathogen reduction treatments (PRTs) applied by the EU was identified as a combining measure. After having analyzed the trade effects in partial equilibrium framework, the changes in economic welfare for the EU poultry meat market were quanti-fied. The quantification of the economic welfare measures was made by using partial equilibrium comparative static analysis combined with Marshallian economic surplus framework. Economic surplus measures were calculated by comparing the initial welfare levels with the corresponding levels after the policy change. The analysis concentrated on short-term effects and the base year used was 2013. The calculations proceeded by defining supply and demand equations to calculate equilibrium price and quantity in the present policy regime which enabled calculations of consumer and pro-ducer surpluses. Then, the new trade policy regime was introduced by manipulating producer price. Equations defined in the first stage were used to calculate new quantities for production and consumption in the EU. Then, consumer and producer surpluses were calculated in the new trade policy regime. Finally the obtained results were compared with each other. The results of the welfare analysis show that the SPS measure concerning the use of PRTs in poultry meat has impact on producer and consumer welfare in the EU. Consumer welfare increased after the SPS measure became ineffective. The explanation is the decrease in price which lead to increase in consumption. However, producer welfare decreased as a consequence of lower price. The production of poultry meat decreased which meant that the gap between the EU production and consumption increased. This indicated that the import demand for poultry meat increased for the EU. If the imports were not restricted from the US, consumers would be able to obtain the higher welfare level than before the change in policy regime.