Describing and analyzing effects of international differences in food safety requirements -the case of the EU versus US-

Abstract This paper compares SPS-requirements of the USA and of the EU from the perspective of the processing establishment, and analyzes the consequences of differences for national as well as firm policies. Differences in safety requirements may impede the competitiveness of the food industry. Backward, forward and location-specific requirements are described to see whether the US- and EU SPS-requirements are comparable. The paper shows that the systems are quite similar, although individual standards can defer. Such differences influence not only the compliance costs, but also prospected mending costs. Only the first category has been stressed by science and practice. It is shown that opposite effects of the two cost categories when safety levels increase, can lead to different interpretations by firms versus national authorities. It is concluded that differences in SPSs can be bridged by means of effective dispute settlement within the WTO. To assess the gravity of such disputes an economic analysis of the before-mentioned cost categories should be combined with a analysis of consumer perceptions. Differences in consumer perception (as is the case with hormone-use in the production of meat) can be addressed by means of improved compliance efforts, or by means of compensation. Economically, both could lead to the same economic equilibrium, as national as well as firms could desire the same safety levels.' Key words International trade, food safety, administrative burdens, competitiveness, food policy