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http://ssrn.com/abstract=625272
 
 

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Trade, Standards, and the Political Economy of Genetically Modified Food


Kym Anderson


University of Adelaide - Centre for International Economic Studies (CIES); Centre for Economic Policy Research (CEPR); Australian National University

Richard Damania


World Bank; University of Adelaide - School of Economics

Lee Ann Jackson


World Trade Organization (WTO)

September 2004

World Bank Policy Research Working Paper No. 3395

Abstract:     
Anderson, Damania, and Jackson develop a common-agency lobbying model to help understand why North America and the European Union have adopted such different policies toward genetically modified (GM) food. Their results show that when firms (in this case farmers) lobby policymakers to influence standards, and consumers and environmentalists care about the choice of standard, it is possible that increased competition from abroad can lead to strategic incentives to raise standards, not just lower them as shown in earlier models. The authors show that differences in comparative advantage in the adoption of GM crops may be sufficient to explain the trans-Atlantic difference in GM policies. On the one hand, farmers in a country with a comparative advantage in GM technology can gain a strategic cost advantage by lobbying for lax controls on GM production and use at home and abroad. On the other hand, when faced with greater competition, the optimal response of farmers in countries with a comparative disadvantage in GM adoption may be to lobby for more-stringent GM standards. So it is rational for producers in the European Union (whose relatively small farms would enjoy less gains from the new biotechnology than broad-acre American farms) to reject GM technology if that enables them and consumer and environmental lobbyists to argue for restraints on imports from GM-adopting countries. This theoretical proposition is supported by numerical results from a global general equilibrium model of GM adoption in America with and without an EU moratorium.

This paper - a product of the Trade Team, Development Research Group - is part of a larger effort in the group to understand the economic implications of standards and technology policies in a multilateral trading environment.

Number of Pages in PDF File: 32

Keywords: GMOs, political economy, regulation of standards, trade policy

JEL Classification: F13, O33, O38, Q17, Q18

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Date posted: December 3, 2004  

Suggested Citation

Anderson, Kym and Damania, Richard and Jackson, Lee Ann, Trade, Standards, and the Political Economy of Genetically Modified Food (September 2004). World Bank Policy Research Working Paper No. 3395. Available at SSRN: http://ssrn.com/abstract=625272

Contact Information

Kym Anderson (Contact Author)
University of Adelaide - Centre for International Economic Studies (CIES) ( email )
School of Economics
Adelaide SA 5005
Australia
+61 8 8313 4712 (Phone)
+61 8 8223 1460 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Australian National University ( email )
Arndt-Corden Dept of Economics
Coombs Building
Canberra, AK ACT 2600
Australia
+61 8 8313 4712 (Phone)
HOME PAGE: http://publicpolicy.anu.edu.au/crawford_people/content/staff/acde/kanderson.php
Richard Damania
World Bank ( email )
1818 H Street, N.W.
Washington, DC 20433
United States
University of Adelaide - School of Economics ( email )
Adelaide SA, 5005
Australia
+61 8 8303 4933 (Phone)
+61 8 8223 1460 (Fax)
Lee Ann Jackson
World Trade Organization (WTO) ( email )
154 Rue de Lausanne
CH-1211 Geneva 21
Switzerland
41 22 739 6907 (Phone)
41 22 739 5760 (Fax)
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