Nontariff measures and product differentiation: Hormone‐treated beef trade from the United States and Canada to the European Union

Abstract

Abstract We investigate how a combination of the sanitary and phytosanitary (SPS) measure and product differentiation affects beef trade and the consequences for the United States (US)–European Union (EU) hormone‐treated beef trade dispute. We develop a partial equilibrium model to represent the global beef markets and product differentiation between non‐hormone‐treated beef, hormone‐treated beef, and other beef. The results show that removing the SPS measure increases EU hormone‐treated beef imports from the US and Canada and decrease beef consumption. In addition, EU hormone‐treated beef consumption and imports can be related to a few key indicators of product differentiation. The framework we develop can estimate EU hormone‐treated beef consumption and imports based on a minimum of parameters relating to product differentiation, thereby providing useful applied economic analysis of a key trade measure.

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