A Systematic Approach to Regulatory Heterogeneity Applied to EU Agri-Food Trade

This paper introduces a methodological framework based on indices for regulatory heterogeneity which is useful to evaluate technical, sanitary and phytosanitary requirements in international agri-food trade. The study uses the index of regulatory heterogeneity in trade (HIT index), constructed to combine binary, ordered and quantitative information, and the index of directional heterogeneity in trade (DHIT), which excludes regulations introduced by importing countries that are less stringent than those in the exporting country. These indices were applied to evaluate the regulatory heterogeneity of MRLs for pesticides under the perspective of the EU. The results indicated that despite of the relatively high number of regulations introduced by the EU for the set of products selected for the analysis, in general, the heterogeneity indices are not higher than 0.6 (on a scale from 0 to 1) for the HIT and are lower than 0.3 for the DHIT, suggesting that most of these regulations are stricter in the EU bloc and are not expected to have a negative impact upon the European exports.