EU Trade Regulation for Baby Food: Protecting Health or Trade?

• Author: Sophie Drogue,Federica DeMaria
• Date: 01 July 2017
• Published date: 01 July 2017
• DOI: http://doi.org/10.1111/twec.12434

EU Trade Regulation for Baby Food:

Protecting Health or Trade?*

Federica DeMaria

1,2

and Sophie Drogue

2

1

Department of Economics, Statistics and Finance, University of Calabria, Arcavacata di Rende, Italy

and

2

UMR MOISA, INRA, Montpellier, France

1. INTRODUCTION

FOOD safety and food quality are the two sides of the same coin. Food safety is a funda-

mental requirement of food quality, and this is particularly relevant when children are

involved. A large number of medical studies have shown that pesticides and contaminants

contribute to various health problems including cancer, lung disease and reproductive , endocr-

inal and immune system disorders. They also agree that children are more vulnerable to the

dangers of pesticides and contaminants because as soon as they start eating solids, they con-

sume a limited number of food items, most of which are fruits and vegetables. This increases

children’s exposure to substances they are less capable of metabolising than adults (von

M€

uhlendahl et al., 1996; Koletzko et al., 1999).

To protect children from deleterious substance intake, the European Union (EU) has laid

down distinct rules for baby and infant processed food (hereafter called baby food). Since

2006, maximum residue limits (MRLs) of pesticides in baby and infant food in the EU have

been covered by Directive 2006/125/EC on processed cereal-based foods and baby foods for

infant and young children and Regulation EC 1881/2006 setting maximum levels for certain

contaminants in foodstuffs. This legislation bans processed cereal-based food and baby food

that contain residues of individual pesticides at levels exceeding 0.01 ppm (0.01 mg/kg). On

the one hand, this legislation helps to protect the most vulnerable part of the population, but

at the same time, non-European competitors may raise concerns about the trade barriers this

can create. The issue is of particular interest as the EU trade of baby food has increased by

30 per cent in recent years according to UN COMTRADE data. According to Les Echos.fr

(Schaub, 2007), the world average consumption of baby food was about 20 kg per baby and

per year, but reached 119 kg in the United States, 135 kg in Western Europe and 215 kg/

baby per year in France in 2006. There is still room for progress particularly in the emerg-

ing countries, and thus, this industry is considered a gold mine. Indeed, the baby food

industry which is dominated by a small number of multinationals as Nestl

e, Danone and

Heinz, and Kraft has seen its production increases rapidly in parallel with the rise in the

female employment rate. In 2010, the global baby food market represented US$36.7 billion,

We thank Isabelle Piot-Lepetit (INRA, UMR MOISA) and participants of the ETSG 14th annual confer-

ence in Leuven and of the 2nd AIEAA Conference in Parma for their useful comments and suggestions.

We gratefully acknowledge financial support from the European Commission: the European Social Fund

and the Region Calabria (Programma Operativo Regione Calabria FSE 2007/2013). The views expressed

in this paper are the sole responsibility of the authors and do not necessarily reflect those of the Euro-

pean Commission or the Region Calabria. We especially thank the associate editor Dr. Zhihong Yu and

three anonymous referees for their outstanding comments and suggestions.

*This article is dedicated to the memory of Professor Giovanni Anania, without whom nothing would

have been possible.

©2016 John Wiley & Sons Ltd

1430

The World Economy (2017)

doi: 10.1111/twec.12434

The World Economy

among which dried baby food accounted for 3.7 billion, milk formula 25.2 billion , prepared

baby food 6.5 billion and other baby food 1.4 billion. This sector is forecast to reach US$

55 billion by 2015. At the global level, the Asia–Pacific region accounted for 37 per cent,

Western Europe 22 per cent and North America 18 per cent (Agriculture and Agri-Food

Canada, 2011).

The impact of MRL on trade has largely been covered by the literature since the beginning

of the 2000s. For instance, the works of Otsuki et al. (2001), Wilson et al. (2003), Wilson

and Otsuki (2004) and Xiong and Beghin (2012) investigated the impact on trade of setting a

stricter limit on a specific substance. But as Li and Beghin (2014, p. 58) state, ‘picking just

one of the NTMs may lead to subjective selection bias and a mischaracterisation of the set of

NTMs regulating the market under study’. To tackle this issue, several authors have devel-

oped indicators that aggregate across food safety regulations and standards (Achterbosch

et al., 2009; Rau et al., 2010; Drogu

e and DeMaria, 2012; Vigani et al., 2012; Winchester

et al., 2012; Li and Beghin, 2014; Melo et al., 2014; Ferro et al., 2015). These indices can

capture asymmetries or dissimilarities between importing and exporting countries’ safety regu-

lations and be further used in econometric analysis.

In their 2009 working paper, Achterbosch et al. developed a heterogeneity index to com-

pare sanitary regulations and applied it to Chilean fruit exports. Rau et al. (2010) built a

similar measure and applied it to various agricultural products among which cheese is the

only processed food. Yet cheese does not raise the same kind of issues as baby food as the

former is closer to milk. Winchester et al. (2012) introduced the heterogeneity index devel-

oped by Rau et al. (2010) in a gravity equation assessing trade impacts of dissimilarity in

regulations between 10 regions and eight product groups (beef, pig meat, cheese, barley,

maize, rape and some fruits and vegetables). Drogu

e and DeMaria (2012) proposed the reg-

ulatory distance measure, which is the Pearson distance between the MRL of pest icides in

apples and pears. Winchester et al. (2012) studied the trade impact of genetically modified

organisms’ regulations and, finally, Li and Beghin (2014) built an original aggregation index

of non-tariff measures and applied it to an impressive list of 340 raw products. Melo et al.

(2014) innovated with an index that takes into account the subjective barriers, that is, the

exporters’ perception of the stringency of standards for Chilean fruits. Finally, Ferro et al.

(2015) enhanced the literature with a time-series index of restrictiveness that takes into

account all bilateral regulations on MRL over a set of 1,500 pesticides, 61 countries and 66

agricultural products.

In this paper, our objective is to take advantage of these recent contributions to the trade

literature by building an index able to synthesise the regulation on MRL set by Directive

2006/125/EC in order to assess its impact on the EU imports of baby food. Our paper rein-

forces this literature as it is, to the best of our knowledge, the only one to apply this method-

ology to agro-food processed products. The other original aspect of this study is that it is the

only one to deal with international trade in baby food, a market that in recent years has expe-

rienced notable annual growth in terms of consumption. In certain regions of the world (Bra-

zil, Russia, China and Argentina), this growth has exceeded 10 per cent (Agriculture and

Agri-Food Canada, 2011). Most papers dealing with baby foods analysed primarily consumer

preferences (Maguire et al., 2006; Peterson and Li, 2011).

The paper is structured as follows. After introducing the EU specific regulation on baby

and infant food in Section 2, we describe the construction of an index used to estimate the

degree of severity imposed by the EU on pesticides in food for children under the age of

three (Section 3). We propose the specification of a gravity equation and describe the set of

©2016 John Wiley & Sons Ltd

EU TRADE REGULATION FOR BABY FOOD 1431