We quantify the effects of maximum residue levels (MRLs) for pesticides on agriculture trade. The analysis is conducted using extensive global data on trade flows, crop production, and MRLs for 101 crops within a structural economic model. Our findings demonstrate that MRL strictness and policy disharmnonization between specific countries have both significantly impacted global trade. In most cases, we find that strict and divergent MRLs have reduced trade, but that this is not always the case. In the context of a hypothetical change in the European Union's MRLs, we estimate the impact that MRLs can have on global prices, total trade, and welfare for three broad crop groups. The impacts are relatively large for the countries most directly affected by the policy change but vary considerably across countries. Less directly affected countries are generally able to mitigate the effects by adjusting their trade patterns.

Quantifying the Impacts of MRLs on International Trade

ACS Fall 2021

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