An economic analysis of food safety issues following the SPS Agreement: Lessons from the Hormones dispute
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The long-running feud between the US and the EU was the first to be disputed formally
at the WTO. It provides a classic example of how cultural differences with respect to
food attributes have the potential to hamper trade and to challenge WTO agreements
designed to limit the disruptions, especially when scientific evidence is limited or
spurious.
After outlining the legal arguments used by the parties to the Hormones dispute, simple
economic models are used to represent the EU beef market and effects of the hormonetreated
beef ban and its removal under certain conditions. The implications for the
practical implementation of the SPS Agreement are then explored.