The Impact of Regulatory Change on Trading Partners: Race to the Bottom or Convergence to the Top?

Abstract

Japan-China agricultural trade is on the increase. However, as is represented by the Japan-China “frozen spinach case” in 2002, food safety is causing a major trade conflict. In May 2006, Japan greatly strengthened its regulation on chemical residues in food by enforcing Positive List System for Agricultural Chemical Residues in Food. What impact will this regulatory change have on its trading partners and non-state actors? The objective of this paper is to explore the impact of Japan’s introduction of stringent food safety regulation on China’s regulations based on the arguments of International Relations. The paper offers a hypothesis for future scenarios and an analysis of key mechanisms through which “Race to the top” takes place. It argues that Japan’s positive list system requires China to improve its food process management system, which could be considerably costly. Nonetheless, the paper also suggests China has many reasons to improve its system. It concludes that in the short term, it is likely that food safety regulation for export is enhanced. Whether this measure is enforced throughout China in the long run depends on who is willing to accept the cost of the institutional, social and regulatory change in the whole food safety system.