Food safety regulations and trade effects: The case of Indian seafood industry with special reference to Kerala, South India
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This study represents an attempt to estimate the effects of SPS measures in terms of trade elasticity of regulations and competitiveness of exports. In spite of the generalized acknowledgment of growing liberalization of trade between countries, there are still numerous obstacles to trade, more of the non-tariff type. This study aims to contribute to the literature on quantifying the economic impact of health and environmental regulations expressed in the form of SPS measures on international trade in agro-food products, by taking Indian seafood exports case study. The gravity analysis, complemented with the CMS model, helped to obtain an insight into the overall dynamics of the export markets, trade flows and competitiveness of fish and fishery products (aggregate level), shrimp and cephalopods. For the regulatory variable, the maximum residue limit (MRL) on cadmium in the model is used as an independent variable. Thus, it was made much insightful in understanding the relationship between trade restrictiveness of regulatory stringency and export competitiveness of the commodities. A detailed study on micro level dynamics of Kerala seafood export sector has been carried out, particularly to understand what the industry level changes are experienced during the food safety regime The results indicate that regulations on cadmium appear to be moderately trade restrictive. At the same time results are divergent at the disaggregate level, which is significant from the point of view of policy. The most important aspect of the existing chain in Kerala’s seafood sector is the gradual disappearance of the independent pre processing sector which has been an important stake holder of the seafood value chain of Kerala. The pre processing node of the value chain is getting integrated to the processing sector causing a major restructuring of the existing value chain.