Impacts of Import Refusals on Agricultural Exports during Pandemics: Implications for China

• Published date: 01 July 2021
• Author: Rui Mao,Ziyi Jia,Kevin Chen
• Date: 01 July 2021
• DOI: http://doi.org/10.1111/cwe.12381

©2021 Institute of World Economics and Politics, Chinese Academy of Social Sciences

China & World Economy / 113–141, Vol. 29, No. 4, 2021 113

*Rui Mao, Professor, China Academy for Rural Development, Zhejiang University, China. Email: rmao@zju.edu.cn;

Ziyi Jia, PhD Candidate, China Academy for Rural Development, Zhejiang University, China. Email: 11922030@zju.

edu.cn; Kevin Chen (corresponding author), Professor, China Academy for Rural Development, Zhejiang University,

China; International Food Policy Research Institute (IFPRI), USA. Email: k.chen@cgiar.org. This research was

supported by the National Natural Science Fund of China (No. 71873119), the Ministry of Education Social Science

Fund (No. 19JHQ060), and Zhejiang University–IFPRI Center for International Developm ent Studi es.

Impacts of Import Refusals on Agricultural Exports

during Pandemics: Implications for China

Rui Mao, Ziyi Jia, Kevin Chen*

Abstract

Pandemic outbreaks disrupt agricultural trade. The possible strengthening of import

barriers to products from countries at the epicenter of a pandemic by their trade

partners could aggravate this situation. This paper examines the responses of the US

Food and Drug Administration (FDA), import refusals, and subsequent trade impacts

on the agricultural exports from the developing countries that were the epicenters of

four pandemics in the past two decades. Using monthly data for the period 2002–2020,

we fi nd increased import refusals and amplifi ed trade-impeding impacts on agricultural

exports during pandemic outbreaks. Increased import refusals and the amplifi cation of

the trade-impeding effect of import refusals were especially large when China was the

epicenter. We further examine possible differences in these results across products and

FDA inspection methods, and the main conclusions remain robust. This paper offers

a better understanding of the economic outcomes of pandemic outbreaks and provides

policy suggestions for China.

Key words: agricultural export, developing countries, FDA import refusal, pandemic

outbreak

JEL codes: I18, Q17, Q18

I. Introduction

During the past two decades, developing countries have experienced four major

pandemics: severe acute respiratory syndrome (SARS), influenza A (H1N1), Ebola,

and COVID-19. All these outbreaks resulted in negative impacts on the economy

of epicenter countries due to labor shortages, production stagnation, consumption

Rui Mao et al. / 113–141, Vol. 29, No. 4, 2021

©2021 Institute of World Economics and Politics, Chinese Academy of Social Sciences

114

weakening, and logistic strains. They might also have triggered additional trade barriers

to prevent the cross-border transmission of pathogens. For example, in early May 2003,

when SARS hit China heavily, Japan issued import bans on China’s meat, poultry, and

egg products, and extended the time limit for customs clearance on China’s vegetable

and eel products.1 During the outbreak of COVID-19, Egypt, Indonesia, South Korea,

and Russia established import bans in January and February 2020 on wild or live

animals, animal-derived products, and vegetable products such as garlic, carrots, and

green ginger from China.2 Mauritius imposed import restrictions against animal products

from Iran, South Korea, Switzerland, and the EU in March 2020.3 Such measures would

increase both trade costs and uncertainty for the export sector of pandemic-hit countries

and consequently exacerbate the negative effects on their economy. Specifically,

importing countries might increase unilateral border controls such as import refusals

against exports of pandemic-hit countries; such measures feature relatively greater

room for discretion than sanitary and phytosanitary (SPS) and technical barriers to

trade (TBT) measures regulated by the multilateral framework of the World Trade

Organization (WTO). In this paper, we examine import refusals by the US Food and

Drug Administration (FDA) on agricultural exports from developing countries that were

epicenters of these four pandemics, and we evaluate subsequent trade impacts.

There are four reasons for our focus on FDA import refusals instead of other

barriers to agricultural trade. First, with the average tariffs on agricultural products being

substantially reduced around the world, technical measures on agricultural trade have

received increasing research attention (Ghodsi, 2020). A number of empirical studies

have revealed that increased technical measures impeded agricultural exports, which

was particularly significant for developing countries (Baylis et al., 2010; Grant and

Anders, 2011; Tran et al., 2012). Second, while SPS and TBT measures are currently

the most prevalent technical barriers to agricultural trade, they are unfortunately de

jure regulative actions in that their presence alone could not refl ect whether and how

strictly they are enforced. Specifically, it is possible that during pandemic outbreaks,

importing countries enforced existing yet inactive SPS or TBT measures, instead of

imposing new ones. In contrast, FDA import refusals are de facto border control actions

that more precisely signal trade costs and uncertainty. Third, the WTO’s multilateral

1News reports about these import restrictions are available from: https://business.sohu.com/11/72/

article210597211.shtml (online; cited May 2020).

2News reports about these import restrictions are available from: https://mp.weixin.qq.com/s/rPZt-

4m8gpgKzu3ShG0phA (online; cited May 2020).

3The notifi cation of this import restriction is available from: https://www.macmap.org/covid19 (online; cited

May 2020).