Short-term impact of food safety standards on agri-product exports: Evidence from Japan's positive list system on Chinese vegetable exports

Abstract

We examine the short-term impact of the Positive List System (PLS), a strict food safety standard implemented by Japan in 2006, on vegetable exports from China to Japan. By applying a difference-in-difference model to unique monthly export data at the firm-product level, we found that the PLS decreased the probability of Chinese vegetable firms exporting to Japan by 3.4%, and decreased their export quantity and value by 9.7% and 8.6%, respectively. Most of the policy impact is through a decrease in the intensive trade margin (i.e., how much to trade), rather than the extensive trade margin (i.e., whether to trade). We also found that foreign-invested enterprises and smaller enterprises are less affected than non-foreign-invested enterprises and larger enterprises. Our results alleviate the concern that stricter food safety standards may exclude many firms, especially small ones, from the export market.