Trade Costs and Demand-Enhancing Effects of Agrifood Standards: Consequences for Sub-Saharan Africa

Abstract

Agrifoodstandardsimpedetradebyincreasingcompliancecosts,buttheycanalsoenhancetradebysignallingquality.Thispaperdisentanglesthetradecostsanddemand-enhancingeffectsoftwoimportantstandards—technicalbarrierstotrade,andsanitary and phytosanitary measures—on (i) global agricultural trade flows and (ii) fruit, nut, and vegetable trade between sub-Saharan Africa and high-income OECD countries. Combining estimates from unit value and trade value regressions set within structural gravity frameworks, we show that trading standards increase trade costs—which exporters pass on to consumers in the form of higher prices—but they also increase trade volume. For agrifood exports from sub-Saharan Africa, compliance with standards guarantees market access at higher prices to high-value OECD markets. disentangled the increased trade costs and demand-enhancing effects of sanitary and phytosanitary (SPS) and TBT measures imposed on fruit, nut, and vegetable trade between sub-Saharan African countries and high-income OECD member states. found that measures increase trade costs and unambiguously raise unit values—either through passed-on compliance costs, quality upgrading, or a combination of the two mechanisms—but they also increase trade volume. For technical barriers to trade (TBT) measures, strong a effect. There are also no associated price effects for TBT measures.