Dynamic and spillover effects of?USA import refusals on?China’s agricultural trade: Evidence from monthly data

摘要

Border inspections by?developed nations are an?essential export barrier to?developing countries. Import refusals, in?particular, not only exhibit dynamic impacts on exporters’ performance in?the refused destination but?may also spill over into exports toward third markets. Using a panel structural vector autoregression model, the?complete dynamics of?China’s agricultural export in?response to?United States Food and Drug Administration (FDA) import refusals is estimated at?the monthly level. Despite notable heterogeneities across sectors, negative and positive reactions that?last mostly less than a year are revealed respectively for?the quantity and price of?China’s exports to?USA on average. The?impact of?idiosyncratic component dominates that?of common component in?the refusal shock, highlighting the?sensitivity of?exports to?sector-specific border inspections. Relative to?other refusal charges, larger export contractions tend to?follow adulteration charges. The?trade effect of?FDA refusals spills over into other main export destinations of?China. While non-adulteration charges result in?trade deflections on average, a contagious export reduction is observed in?most non-US markets. These results provide insights for?exporters to?make strategies with a focus on specific sectors, charges, third markets and especially on the?short run to?cope with import refusals.