Empirical evidence on the trade impact of asynchronous regulatory approval of new GMO events

Abstract

This paper focuses on the ex-post empirical analysis of the trade impact of asynchronous regulatory approval of new genetically modified organism (GMO) events. We contribute to the literature in three ways: first, we define indices to assess the extent of asynchronicity and the relative strictness of the GMO approval authorizations of 40 countries considering GMO regulatory developments between 2000 and 2012 regarding cotton, maize and soybeans. Second, we introduce indices that are country-pair specific, product-specific, and year-specific in a gravity model to examine the trade impact of asynchronous regulatory approval across countries. By grouping the countries according to the state of their national regulatory GMO frameworks, we have an even more differentiated view on the trade impact of asynchronous approval that focuses not only on the existence of regulations but also on their restrictiveness. The results from the gravity model show that asynchronous approval has negatively impacted trade flows of cotton, maize and soybeans. It is observed that both asynchronous approvals and the restrictiveness of importing countries’ regulations to address the importation of GMO products matter, meaning those countries that have already adopted a comprehensive GMO regulatory framework and have policies to manage the importation of GMO crops tend to feel a higher negative impact on trade flows.