Abstract:
Stringent sanitary and phytosanitary standards (SPS) have proliferated in the
aftermath of the Uruguay Round Agreement on Agriculture (URAA). These
standards are currently becoming a major stumbling block in agricultural trade for
developing countries. Limited by inadequate resources and expertise, among other
things, these countries also have poor participation rate in discussions related to SPS
that impedes the representation of their interests and concerns in setting international
standards for agricultural products. Using a gravity model, this paper estimates the
trade effect of total aflatoxin level set by five OECD countries (Ireland, Italy, Sweden,
Germany and USA), on South African food exports. The findings support the
hypotheses that stringent SPS standards are limiting trade markedly. The trade
elasticity of aflatoxin standard is 0.41 and statistically significant. Moreover, the
simulation result based on the assumption that these five OECD countries adopt the
total aflatoxin level recommended by CODEX, shows that South Africa would have
gained an estimated additional amount of US$ 69 million per year from food exports to
these countries from 1995 to 1999.
