   
  
G/SPS/GEN/1883  
 
4 March 2021 
(21-1833) Page: 1/1 
Committee on Sanitary and Phytosanitary Measures  Original: English  
 
 
US INTERNATIONAL TRADE COMMISSION (USITC) REPORT,  "GLOBAL  
ECONOMIC IMPACT OF MISSING AND LOW PESTICIDE  
MAXIMUM RESIDUE LEVELS (MRLS), VOL. 2" 
SUBMISSION  BY THE UNITED STATES  OF AMERICA  
The following document , received on 3 March  2021, is being circulated at the request of the 
Delegation of the United Sta tes of America . 
 
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1.1.  The United States would like to call attention to the recently released second volume of the 
US International Trade Commission (USITC) report entitled, "Global Economic Impact of Missing and 
Low Pesticide Maximum Residue Levels ". The Office of the United States Trade Representative 
(USTR) requested this assessment to gain a greater understanding of e xisting and emerging 
challenges to the current international and country -specific frameworks for MRLs and determine 
whether current frameworks provide adequate support for agricultural trade. More details on the 
background of this report and on the first v olume can be found in the US submission to the 
WTO SPS committee in November 2020 ( G/SPS/GEN/1842 ). 
1.2.  The second volume covers costs and effects of missing and low MRLs on US producers and 
includes nine case studies for US specialty crops; empirical and simulation gravity models to ass ess 
the impact of low and missing MRLs on trade, production, and farm income; a supply response 
analysis; and a farm income statement analysis. The following are the key findings of the second 
volume.  
1.3.  The costs and effects of low or missing MRLs can vary w idely by country and crop. 
MRL violations and testing can be particularly challenging for exports of specialty crops. 
Noncompliance with MRLs in foreign export markets presents a highly risky scenario that can 
substantially reduce a farmer 's profitability.  Missing or low MRLs have significant impacts on farmers 
by disrupting their Integrated Pest Management (IPM) program mes as pesticides are an important 
component of many IPM program mes. 
1.4.  The gravity trade models show that MRLs have affected bilateral trade through: 
a) the heterogeneity (divergence) in MRLs between importing and exporting countries ; and 
b) the stringency of MRLs in the importing country. MRL heterogeneity deters bilateral trade for the 
majority of the 30 largest crops (based on average annual  value of trade and domestic shipments) 
included in the analysis, including a variety of fresh fruits and vegetables, grains, and oilseeds. 
For the majority of crop types, stricter MRLs in importing countries are associated with lower imports.  
1.5.  In their rep ort, the USITC modelled  a hypothetical scenario wherein the E uropean Union 
reduced by 90 percent all of its MRLs for three broad crop groups: tropical fruit, temperate fruit, and 
beans and peas. This modelling  exercise demonstrated that such a change would have potentially 
significant impacts on EU members and their closest trad ing partners. However, other countries may 
be able to mitigate the effects of the changes by shifting their trade patterns towards other partners.  
1.6.  The supply response analysis, which considers producers ' reactions to changes in global prices 
for their crops, indicates that MRL changes in export markets alone would likely result in relatively 
modest production impacts, particularly if these industries are able to adjust by shifting export 
destinations in a  global market. The farm income statement analysis shows that changes in MRLs in G/SPS/GEN/1883  
 
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  export markets (and MRL removals in particular) can have a range of effects that can impact a farm 's 
production, costs, and profitability.  
1.7.  The United States views the USITC re port as an important contribution to the Committee 's 
ongoing discussions around MRLs and welcomes comments from Members on ways in which to 
continue and enrich this important conversation.  
1.8.  USITC is an independent, non -partisan Federal agency in the United States. The second volume 
is accessible at https://www.usitc.gov/publications/332/pub5160.pdf  and we encourage Members 
to review the full report.  
 
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