The price stabilization effects of the EU entry price scheme for fruit and vegetables

Abstract

The article assesses the stabilization effects of the EU import regime for fresh fruit and vegetables based on the entry price system (EPS). The analysis is carried out on the EU prices of tomatoes and lemons and those of imports from some of the main competing countries on the EU domestic markets: Morocco, Argentina, and Turkey. It is based on the estimation of a threshold vector autoregressive econometric model that is shown capable of taking the workings of the import regime into account. The model shows that prices behave differently when import prices are above/below the trigger entry price. This article allowed to highlight the cases for which the isolation effect of EPS seems reached and the resulting stabilization effects

The entry price threshold in EU agriculture: Deterrent or barrier?

“…From this perspective, the results of this analysis are coherent with those presented in Cioffi et al (2011), although the statistical properties are improved. Therefore, the considerations made in that paper on the limited stabilization effects of the EPS remain still valid.…”

“…Cioffi et al , 2011;Goetz and Grethe,2009) and confirm the relevant role played by such a trade policy. Indeed, these preliminary outcomes need to be considered with caution, as the linearity tests may suffer from low statistical power: a deeper investigation is attained through the estimation of the threshold vector autoregressive model.…”

“…As showed in Cioffi et al (2011), for some products and importing countries the EPS affects prices, because when the SIVs are below the 92% of the TEP and the Maximum Tariff Equivalent (MTE) is applied, the price determination process of EU products follows a pattern different from the normal one, which occurs when SIVs are higher. Such a particular price behavior implies an isolation of the internal market from import prices.…”

“…Therefore it is worth to analyze if the main effects of the EPS are obtained at a level higher than the 92% of the TEP. While in Cioffi et al (2011) the analysis was based on the exogenous threshold of the 92% of the TEP in order to conclude on the presence of two different price determination processes, in this paper we address a twofold problem: for cases in which an isolation effect exists, we assess whether there is an endogenous threshold higher than the 92% of the entry price, in other terms whether the isolation is obtained at a level higher than the entry price. While for cases in which the entry price system seemed not effective, we test for the presence of an endogenous threshold at which a sheltering of the EU the domestic prices from low priced imports is shown.…”

A political economy approach to measuring EU food standard enforcement and their implications on agri-food trade.

“…The implementation of NTMs on EU agri-food imports has been widely examined in previous literature. It has paid attention to Mediterranean exports to the EU by assessing the welfare effects of NTMs elimination (Kavallari et al, 2013) or the analysis of specific trade policy instruments (Garcia-Alvarez-Coque et al, (2009, 2010; Cioffi et al, 2011;Santeramo et al, 2014). Another line of research aimed to study the policy substitution between tariffs and NTMs in some MPCs .…”