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The Role of Risk and Cost-Benefit Analysis in Determining Quarantine Measures

Staff research paper

This paper by Monika Binder was released on 19 February 2002.

Quarantine regimes must conform with World Trade Organization (WTO) requirements arising from the completion of the Uruguay Round of Multilateral Trade Negotiations in 1995. A fundamental aspect of those requirements is the need for a science-based approach to setting measures which potentially restrict trade in animals, plants and their products.This approach is commonly described as import risk analysis (IRA). 

In some quarters, it is argued that a broad economic perspective should be incorporated in IRAs.

This paper looks at the WTO requirements and supporting international guidelines, describes in broad terms the existing IRA approach to determining quarantine measures and addresses some options for improvement and associated problems.

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The Staff Research Paper, The Role of Risk and Cost–Benefit Analysis in Determining Quarantine Measures, examines the World Trade Organization Agreement on the Application of Sanitary and Phytosanitary Measures and supporting international guidelines, describes the existing import risk analysis approach to determining quarantine measures and considers some options for improvement — such as the incorporation of cost–benefit analysis — and associated problems.

Background information

Leonora Nicol (Media, Publications and Web) 02 6240 3239 / 0417 665 443

Preliminaries
Cover, Copyright, Contents, Acknowledgements, Abbreviations, Key Messages, Overview

1 Introduction

2 Legal and policy setting
2.1 WTO requirements
2.2 Domestic regulation of imports

3 What is import risk analysis?
3.1 International guidelines
3.2 Import risk analysis in practice: New Zealand apples
3.3 Concluding remarks

4 A cost–benefit framework
4.1 An economic rationale for quarantine measures
4.2 Cost–benefit analysis of quarantine measures
4.3 Accommodating risk aversion in cost–benefit analysis
4.4 Concluding remarks

5 Issues in import risk analysis
5.1 The 'appropriate level of protection' 
5.2 The use of cost–effectiveness analysis
5.3 Conservatism in import risk analysis
5.4 Quantitative versus qualitative risk estimation
5.5 Information gaps
5.6 Community understanding about risk
5.7 The scope for incorporating a broad economic perspective
5.8 Concluding remarks

A International guidelines on import risk analysis
A.1 International Office of Epizootics
A.2 International Plant Protection Convention

B A partial equilibrium framework

References