Preemptive strike on pests

Is it blatant protectionism or right-thinking trade policy? I tend toward the former conclusion, but it is a novel concept: tax imports of fruits and vegetables based on a calculation of what economic harm may result to the domestic industry if a non indigenous species of pest hitches along with the produce. This 24-page USDA ERS report looks at the issue with a title: "Policy and Risk Processes of Trade-Related Biological Invasions." Here are some questions the report attempts to address:

From the report:

Of course a tariff is not the only pre-invasion policy instrument available – port inspections have been widely used for years to weed out infected shipments. One might expect the optimal tariff to depend on inspections intensity, and vice versa. To what degree are inspections and tariffs complementary or substitutable?

Later....

In what cases can import tariffs, imposed to control damage from NIS, backfire such that damage actually increases? When does freer trade (reduced tariffs) actually lead to less NIS damage?

Later.....

What is the optimal mix of tariffs and inspection intensity which balances minimizing NIS damage with maximizing consumer surplus from imported goods? Under what circumstance does optimal inspection intensity fall as the infectiousness of the goods increases?


TK: Will we see a time when the U.S. imposes a higher tariff on produce from country x than f/v from country y based on the relative risk of pests? Probably not, but the concept gets a complete airing in this report. Here is the summary list of findings.

Summary points:
• Increasing trade tariffs to control introductions can lead to increased damages in certain cases, for example, when increasing land under cultivation increases exposure to NIS damage.
• Levels of crop and ecological damage can move in opposite directions due to changes in trade policy (tariff).
• Crop damage alone can be a poor proxy for the severity of the NIS problem since, in isolation, it may mispredict the sign of change in damage from a particular policy.
• When both tariffs and monitoring are available to regulators, the optimal monitoring intensity may be, after a point, decreasing in the infection rate until, at some limit, no monitoring is desired.
• If an importer is allowed to discriminate amongst heterogeneous trading partners with its tariff, then it can use this instrument to select its optimal trading partner. However, if the importer is constrained by trading agreements, such that only its monitoring intensity may be partner specific, it must choose either a suboptimal trading partner or suboptimal instrument levels.
• In some (but not all) cases, we find evidence that the marginal invasion rate per unit of imports falls as trade history with a region accumulates. However, this attenuation is counteracted by a worsening invasion rate over time, which may serve as a proxy for technological changes in shipping and ecosystem vulnerability.
• There are significant differences in the current marginal invasion rate over imports across trading regions. Because variation also exists in how the marginal invasion rate changes over cumulative trade volume, historic invasions from a particular trading partner are an unreliable proxy for future risk.
• Simple volume restrictions on imports to reduce NIS introductions are not advisable based on coarse cost-benefit calculations.