Impact of technical barrier on agricultural cost and production: A simulation method

This paper explores possible economic impacts on China’s agricultural producers that would be triggered by compulsorily complying with Japan’s stricter trade standards. Although the impacts of technical measures have been widely acknowledged in developed countries, China lags far behind the developed countries at this point. This paper begins with a discussion of potential effects from the technical barrier on developing countries. Specifically, the paper investigates the potential influence of Japan’s stricter MRL on exports of vegetables in China. Then, it proposes an econometric-simulation framework which could be used to analyze the impacts of pesticide reduction approaches on vegetable cost and production. The model is based on econometric production regressions estimated with spatially referenced, statistically representative samples of farms in China. The research results indicate that a potential accession to Japan’s market with technical barrier would cause great damage to the output and profit of China’s vegetable production under certain efficiency and technology in a short term.