Mutual recognition of standards and international trade: what can we learn from the Organic Equivalency Policies?

Abstract: The development of product standards and their widespread adoption can play a vital role in facilitating transactions and enhancing trade, both domestically and internationally. This paper aims to examine whether mutual recognition of product standards could facilitate international trade of organic products. The measure of mutual standards used in this thesis is a number of organic equivalency arrangements between the United States and five of its trading partners. The relationship is estimated by applying Pseudo-Poisson Maximum Likelihood and Ordinary Least Squares to the gravity model of trade. The data sets include organic trade data between the United States and around 60 of its trade partners during 2011-2016. This study does not find an effect on imports. However, my findings suggest that there may be a positive impact of an equivalence of standards on exports.