eec food law and trade in food products

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339 EEC FOOD LAW AND TRADE IN FOOD PRODUCTS Alan Swinbank* University of Reading? The paper first considers some of the legislation, and associate measures, affecting the availability, the form and presentation, and the price of foods to consumers. Little workseems to have been undertaken, and published, which would seek to establish the costs and benefits of ‘food law’. Food law can act as a non- tariff barrier; and within the EEC, because of the elimination of other barriers to trade, national legislation now attracts much press and political comment. The EEC’s food law harmonisation programme, and the implications of the Cassis de Dijon case, are briefly reviewed. As with food law in general, there appears to be litlle economic appraisal of the EEC’s measures. Introduction Legislation concerning the form and presentation of foodstuffs was enacted in historical times, for example Giles (1976) has noted English legislation of 1266 “to protect the purchaser against short weight in bread and the sale of unsound meat” (p.4). He goes on to comment however that this legislation “was as ineffective as the various other statutes passed to deal with adulteration in specific food or drugs between the thirteenth and nineteenth centuries” (p.4). Most modern legislation dates from the turn of the century: the 1875 Sale of Food and Drugs Act in Britain (Giles, 1976, p.5) and the 1906 Food and Drug Act in the United States (Hinich and Staelin, 1980, p.5). for example. This early legislation was primarily concerned with the adulteration of foods, and the wholesomeness of the food supply. This concern with protecting the health of the consumer, and seeking to protect the consumer from deception, has continued to the present day; though the amount of legislation has multiplied several fold. Thus, most countries have legislation dealing with: the produce of diseased animals posing a threat to human health; the sanitary conditions in food preparation, packaging and handling; pesticide and hormone residues in foods; packaging materials which may pose a threat to health; food additives; and other food safety issues. Then there is legislation dealing with the labelling requirements for food products; and weights and measures legislation. In addition to the law concerned with the direct protection of consumer interests, there is other legislation controlling the availability and presentation * A number of colleagues-Simon Harris, Don Mills, Tim Stocker, Diana Welch-very kindly commented on an earlier draft. They are not to blame where I have failed to accept their helpful advice. t Department of Agricultural Economics and Management, University of Reading, 4 Earley Gate, Whiteknights Road, Reading RG6 2AR.

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Page 1: EEC FOOD LAW AND TRADE IN FOOD PRODUCTS

339

EEC FOOD LAW AND TRADE IN FOOD PRODUCTS

Alan Swinbank* University of Reading?

The paper first considers some of the legislation, and associate measures, affecting the availability, the form and presentation, and the price of foods to consumers. Little workseems to have been undertaken, and published, which would seek to establish the costs and benefits of ‘food law’. Food law can act as a non- tariff barrier; and within the EEC, because of the elimination of other barriers to trade, national legislation now attracts much press and political comment. The EEC’s food law harmonisation programme, and the implications of the Cassis de Dijon case, are briefly reviewed. As with food law in general, there appears to be litlle economic appraisal of the EEC’s measures.

Introduction Legislation concerning the form and presentation of foodstuffs was enacted in historical times, for example Giles (1976) has noted English legislation of 1266 “to protect the purchaser against short weight in bread and the sale of unsound meat” (p.4). He goes on to comment however that this legislation “was as ineffective as the various other statutes passed to deal with adulteration in specific food or drugs between the thirteenth and nineteenth centuries” (p.4).

Most modern legislation dates from the turn of the century: the 1875 Sale of Food and Drugs Act in Britain (Giles, 1976, p.5) and the 1906 Food and Drug Act in the United States (Hinich and Staelin, 1980, p.5). for example. This early legislation was primarily concerned with the adulteration of foods, and the wholesomeness of the food supply.

This concern with protecting the health of the consumer, and seeking to protect the consumer from deception, has continued to the present day; though the amount of legislation has multiplied several fold. Thus, most countries have legislation dealing with: the produce of diseased animals posing a threat to human health; the sanitary conditions in food preparation, packaging and handling; pesticide and hormone residues in foods; packaging materials which may pose a threat to health; food additives; and other food safety issues. Then there is legislation dealing with the labelling requirements for food products; and weights and measures legislation.

In addition to the law concerned with the direct protection of consumer interests, there is other legislation controlling the availability and presentation

* A number of colleagues-Simon Harris, Don Mills, Tim Stocker, Diana Welch-very kindly commented on an earlier draft. They are not to blame where I have failed to accept their helpful advice.

t Department of Agricultural Economics and Management, University of Reading, 4 Earley Gate, Whiteknights Road, Reading RG6 2AR.

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of foodstuffs which is enacted because of wider policy considerations. Thus, governments are concerned to protect their plant and animal populations from disease or pests even when no direct risk to human health is involved: hence most nations have controls on the importation of live animals, meats, dairy products, fruits and vegetables. Some packaging legislation is justified on environmental grounds. Finally it should be noted that many nations have marketing standards which apply to domestic and imported produce alike: as Wilkinson (1980) has noted “in connection . . . with the operation of the Common Agricultural Policy, there is a range of product standards legislation aimed especially at improving the operation of the market in food products and at preventing frauds on public funds” (p.12). Of particular interest are the standards for fruits, vegetables and wines.

All the rules and regulations outlined above have the potential of affecting the availability, the presentation and the price of foods to consumers and so, for the purposes of this paper, are categorised as “food law”. Even non- mandatory standards will have such an effect if wholesalers and retailers refuse to handle goods which do not conform to the standards laid down. All these measures raise two questions (admittedly related) of interest to economists: do the social benefits deriving from the legislation (or standards) outweigh the costs; and, because of differing legislation (or standards) from country to country, is food law used inadvertently (or deliberately) as a non- tariff barrier?

The Costs and Benefits of Food Law There are costs and benefits associated with food law: indeed the raison d’Ctre of food law is to achieve certain perceived benefits. There is, however, some controversy associated with the issue. On the one hand the Friedmans (1980) have argued that, in the United States in particular, the costs incurred by society because of government regulatory action in all spheres probably outweigh the benefits. On the other hand some authors (for example Custot, 1980) have implied that, with respect to European food law, more action is required.

A formal assessment of costs would be wide ranging. Some authors (for example Gardner, 1979, p.47) have suggested that limitations on parliamen- tary time place constraints upon the legislative activities of governments. Thus, an addition or amendment to food law involves a reduction in the time devoted to some other parliamentary activity. Indeed Grose (1982), referring to a need to strengthen the law controlling the sale of food unfit for human consumption, commented: “The problem of finding Parliamentary time for such a necessary reform is alarming”. The policy-making process would certainly seem tp be a major constraint on the quantity and quality of legislation adopted by the Council of the European Communities.

Other costs would include the testing of new products or additives, that of control by the manufacturers, and of enforcement by the authorities. Indirect costs would include the losses associated with any cutback in new product development that some manufacturers believe may be involved (see for example the evidence of the British Essence Manufacturers’ Association to the House of Lords (1980) on the proposed legislation on flavourings); and the loss to consumers associated with a reduced, and higher priced, range of goods from which to choose. The Friedmans place a high value on the freedom of choice, illustrating their point, for example, by statements such as, “Something of a grey market already exists in drugs that are prohibited by the Food and Drug Administration; citizens already go to Canada or Mexico to buy drugs

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they cannot legally buy in the United States-just as people did during prohibition to get a legal drink” (Friedman and Friedman, 1980, p. 269).

The benefits are those that are usually associated with the public provision of a good. Because of the public provision of controls, the growers’ or breeders’ costs in maintaining a disease-free plant or animal stock, or the consumers’ search costs in finding a ‘safe’ food source, are reduced. These are benefits for which consumers would presumably be willing to pay a price. I t is difficult to envisage disease-free and disease-ridden plant and animal populations coexisting in the same region; but if faced with a choice in the supermarket consumers would be able to buy the additional service of contents labelling, ingredients testing and the lower risk associated (or thought to be associated) with certain products.

As well as the benefits to be reaped directly by the consumer, there may also be external benefits to society at large. Thus a healthier population may well be associated with a “safe” food supply thus reducing the costs of medical care and lost output when full-employment is a constraint.

Although there would appear to be a need to evaluate the economic implications of more or less food law, there seems to be very little work on the subject. The evidence that Grose (1982) presents indicates that very little is known about the costs and benefits of food law, at least in the United Kingdom. For example, she poses relatively simple questions, and concludes that evidence is lacking:

“At present we have little evidence to demonstrate that our hygiene regulations are cost-effective. For example, have the new poultry hygiene regulations reduced the number of diseased birds reaching the shops? Is the level of food poisoning lower in areas with environmental health officers making regular visits to food premises? We do not have the answers.”

Nonetheless some work has been done, and published. Hinich and Staelin (1980) have set out to explain “the nature of the benefits and costs that result from regulatory actions” whilst leaving “it to others to measure the magnitude of costs and benefits of the existing system or any proposed reform”. Bowbrick (1977) has examined the EEC’s grading standards for fruit and vegetables; Holtermann and Burchell (1981) have examined the costs of alcohol misuse; Turner and Strak (1981) have outlined the economic implications of animal welfare legislation; and some years ago Power and Harris (1973) evaluated alternative control policies for foot-and-mouth disease. But despite these examples-mainly concentrating on particular topics-there is as yet no systematic attempt to evaluate new or proposed policies.

Food Law as a Non-Tariff Barrier Economists have long recognised that health and hygiene regulations, safety standards, customs procedures, and many other measures can act as non- tariff barriers and so restrict trade. Hillman (1978) has studied non-tariff barriers to agricultural trade at length (though in addition to food law of the type described in this paper he was concerned with variable import levies, quotas, state procurement, import licensing, etc.).

In general, any provisions that apply more stringent standards to imports than to domestically-produced goods run counter to international obligations. There are, as is to be expected, difficulties in applying this

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precept. For example, there may be a real or imagined higher health risk associated with imported goods which is felt to justify more stringent controls on imports. I t is only to be expected that those incurring additional costs, or losing markets, will protest, and it is not easy for an outsider to arbitrate. Examples abound: in 1981 Japan refused to accept shipments of fruit and vegetables from areas of California infested by the Mediterranean fruit fly, and had at one stage indicated that it would ban all fruit and vegetable supplies from California (see The Financial Times, 19 and 20 August, 1981); Britain banned the import of poultry meat and eggs from countries practising a vaccination rather than a slaughter policy for Newcastle Disease (see The Financial Times, 28th August, 1981); and Italy banned the import of Spanish olive oil in the aftermath of the cooking oil scandal which killed hundreds of Spaniards (see The Financial Times, 10 October, 1981). In each exampJe the exporters claimed that the importers had over-reacted.

Even when a country applies the same standards to imported and domestically-produced products difficulties can arise. Two countries might have identical policy objectives, but apply rather different standards in seeking to achieve those objectives. This may lead to additional costs for the manufacturer wishing to export: if, for example, different production runs are necessary for the two markets, or the production run has to be interrupted to alter machine settings, then unit costs may be higher than with a single production run.

Because of the potential impact on trade flows, food law has been the subject of discussion in international bodies. Since 1963 the Codex Alimentarius Commission (a joint FAO-WHO body) has attempted to develop international food standards on a world-wide or regional basis. The main considerations that led to the establishment of the commission “were the need to facilitate international trade in food and to protect the consumer against health risks and fraud” (Kermode, 1976, p.185). One result of the Tokyo round of GATT negotiations was the adoption of a code on Technical Barriers lo Trade, the aim of which is “not to abolish all restrictions but to remove the unnecessary barriers for both agricultural and industrial products” (FAO, 1979, p.119). In a European context, the EEC has been active in food law harmonisation programmes.

The ‘Common Market’ in Food Products in the EEC Article 2 of the EEC Treaty specifies that

“The Community shall have as its task, by establishing a common market and progressively approximating the economic policies of Member States, to promote throughout the Community a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between the States belonging to it.”

Article 3 goes on to provide for the free movement of goods, persons, services and capital; the adoption of common policies for agriculture and transport; measures to prevent the distortion of competition; and “the approximation of the laws of the Member States to the extent required for the proper functioning of the Common Market” (see House of Lords, 1978 pp. 1-2). Ehlermann has noted that “Approximating laws is merely an instrument for achieving those (i.e., the EEC Treaty’s) objectives; it is therefore subservient in nature” (Ehlermann, 1978, p.44).

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Although great progress has been made towards the attainment of a “common market” there are still many distortions to competition; and this is the case in the agricultural and food sectors despite the existence to a ‘common agricultural policy’. Within the EEC market, as in the world economy as a whole, as conventional tariff barriers and quota restrictions have been reduced or eliminated, so increasing attention has been paid to non-tariff barriers and other policy measures which are thought to distort competition.

Businesses operating within the EEC food and farm sectors have three main complaints. First, that because of the green conversion rate/MCA system support prices under the Common Agricultural Policy have, for long periods, not been common-a subject well-aired in this Journal. Second, that ‘state aids’ to the farm and food sectors distort competition; and, third, that national standards and health and safety regulations-particularly when expressed in de jure or defucto import bans-mean that the common market is actually compartmentalised into a number of national markets. The latter hinders the Commission in its implementation of EEC competition policy because, if products have to be built to slightly different specifications for the different markets, manufacturers have the opportunity to practise price discrimination. This has been widely reported to be the case in the market for new motor cars, where type-approval certificates have been difficult to obtain (see The Economist, 12 December, 1981, p.62); and the same seems to apply for many farm inputs. A rather interesting case applies to the liquid milk market in Great Britain. The EEC-approved Milk Marketing Boards are able to exploit their monopoly position on the British market and charge a higher price for milk destined for direct human consumption compared to the price obtained for milk for manufacture. This is because the extra costs that would be incurred by other suppliers (including those in Northern Ireland) in importing heat-treated milk (to meet British regulations) and then re-heat- treating and packing under British supervision (to meet British regulations) mean that the Boards have a price advantage that can be exploited. (For details of the IegislhAon see Jackson, 1980.)

Thus, technical barriers to trade are not the only, or even the most important, obstacles to the common market. But the Commission does give a high priority to their elimination:

“The removal of technical barriers to trade is one of the requirements for the establishment of the Community’s internal market. Goods must be able to move freely so that the consumer can reap the benefits of competition . . . and . . . that the manufacturers in turn can take advantage of the economies of scale. . . This is why the Commission has always laboured to break down these insidious non-tariff barriers to Community trade, especially those of a technical nature” (Commission, 1980a, second p. 1).

The means to ‘break down’ the non-tariff barriers to Community trade are to be found in the EEC Treaty; the Treaty’s provisions may be clear to lawyers but it is difficult for the non-specialist to fully appreciate their importance. The difficulty may in part be explained by the fact that the political willingness of the Member States to co-operate in the adoption and implementation of policies is as important, if not more so, than the legal provisions of the EEC Treaty. There are two key articles (30 and loo), and a ruling of the European Court of Justice (in the Cassis de Dijon case) which seem to be relevant.

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The Commission draws a distinction between technical barriers which “are generally taken to mean barriers justified by reasons of health, safety, etc.” and unjustified barriers which “come under the ban in Article 30” (Commission, 1980a, second p. 1). The latter article prohibits quantitive restrictions, and measures having equivalent effect, in intra-Community trade. Thus, any Member State which sought to protect a domestic industry by the unjustified application of health or safety regulations against imports would be in breach of the Treaty. Unfortunately, cases are unlikely to be as simple as this: what appears as blatant protectionism to some (the potential exporters) seems to be perfectly reasonable on health or safety grounds to others (the potential importers.)

Article 100 empowers the Council to “issue directives for the approximation of such provisions laid down by law, regulation or administrative action in Member States as directly affect the establishment or functioning of the common market.” Another article is relevant in the context of the agricultural policy: Article 43, which enables the Council to adopt common standards when these are necessary for the establishment of the Common Agricultural Policy. Most attention, however, focuses on Article 100; and this is indeed the legal basis for most of the legislation dealing with the harmonization of laws with respect to processed food products. As Article 100 empowers the Council to issue directives rather than regulations, implementing legislation is necessary in the Member States.

The economic rationale for Article 100 is clear: that there may be instances when the proliferation of national legislation directly affects “the establishment or functioning of the common market”. Thus, the Commission’s proposals to the Council on the approximation of laws relating to flavourings for use in foodstuffs cite as justification:

“Whereas differences between national laws relating to flavourings hinder the free movement of foodstuffs and may create conditions of unequal competition, thereby affecting the establishment or functioning of the common market” (Commission, 1980b, second p.2).

Despite this, in its explanatory memorandum, the Commission admitted

“Many processed foods contain flavourings, and to now no evidence has been submitted that major problems in relation to free movement of such foodstuffs exist. However, the Commission is aware that more restrictive and differing legislation is being developed or envisaged in many Member States. Such widely differing legislation would impede trade in foodstuffs containing flavourings. The economic consequences of those potential barriers to trade are difficult to evaluate” (Commission 1980b. p.5).

that the evidence on the economic criteria cited was slight:

Not a convincing case on economic grounds. The Court ruling of February 1979 on the Cassis de Dijon case (Case

120/78), and that of June 1980 on a case involving cider vinegar (788179). seemed to some to limit the need for the harmonization programmes. In the Commission’s view* the judgement means

“that though Member countries may regulate the terms on which domestically produced goods are marketed, the case is different for products imported from Member countries; any such product must be admitted if it has been lawfully produced elsewhere in the Community,

Though the Court, and not the Commission, is the final interpreter of the law.

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and conforms to rules and processes of manufacture that are customarily and traditionally accepted in the exporting country, and is lawfully marketed in the territory of the latter” (Commission 1980c, P.2).

This is not a carte-blanche to the free trader, however, as certain exceptions

“are necessary, but not excessive, to satisfy such mandatory requirements as public health, protection of consumers or the environment, fairness of commercial transactions, etc.” (Commission, 1980c, p.3).

What this would seem to imply is that i f an importing State wished to liberalise trade in a particular good without attracting the opprobrium of its producers, or using scarce parliamentary time, this ruling would be a convenient excuse. If the importer did not wish to liberalise trade a delaying Court case would probably be necessary to judge whether the national measures were or were not justifiable.

A Cornmission official has commented “we cannot agree with those who have concluded from this new case law that the new principles set out by the Court bring practically all harmonisation activity within the scope of Article 30” (Mattera, 1981, p.10). I t is the Commission’s view that there remains a need for harmonisation programmes but that “harmonisation will now apply over a narrower but better defined field” (Mattera, 1981, p. 11).

are permitted, particularly if national rules

The Commission’s Food Law Harmonization Programme* Some of the first harmonization measures were taken with respect to food law: in 1962 a directive on colouring matters, in 1963 one on preserving agents, and in 1964 directives on intra-Community trade in cattle and pigs, and in fresh meat. In contrast, Dashwood (1977) points out, “the first directives on motor vehicles were not adopted until 1970 and on tractors not until 1974” (p.278).

The creation of the customs union on 1 July 1968 prompted the Community’s institutions to adopt, in 1969, a general Programme on the Removal of Technical Obstacles to Trade. One of the four resolutions concerned foodstuffs and specified a whole series of measures for which proposals were to be made by the Commission, and decided upon by the Council, before the end of December 1970 (Dashwood, 1977, p.278). Those original ambitions for the harmonization of food law can, in retrospect, be seen to be unrealistic; experience has shown that the complexities of the national legislation, and the slowness of the decision-making process, make the task long and laborious.

By 1980, the early preponderance of food law harmonisation measures had waned, the Commission commenting: “In the sector of industrial products, over 120 directives have been adopted . . . In the foodstuffs sector progress has been less spectacular, largely because of the structure of the food industry . . . Nonetheless the Council has adopted fifteen main directives and thirty-five amending directives” (Commission, 1980a, second p.2). I t should be noted, however, that the Commission in this communication is adopting a narrower definition of food law than is taken in this paper; the Commission’s tally only covers processed food products and not agricultural products.

A list of harmonization measures, and proposed measures, was given in House of Lords (1978). From time to time. lists are published in Brifish Business. Harris, Swinbank and Wilkinson (1982) detail some of the food law measures at greater length.

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Each directive has its own characteristics, depending upon technical and political factors. There is no single policy applied to all products, in the same way as there is no single method of support apolied to all products under the Common Agricultural Policy. In attempting to classify the legislation, distinctions are sometimes drawn between horizontal and vertical directives; and between the compulsory and the optional method.

The best examples of horizontal directives are those applying to food additives: colouring matters, anti-oxidants, emulsifiers, etc. In general, the directives “confine themselves to listing authorized additives. They very rarely lay down conditions for their use, for these are generally decided upon later, either in directives relating to individual food products or through additions to the horizontal directives on additives” (Barthelemy, 1976, p. 171).* Those relating to individual food products are known as vertical directives, the first of which was one on cocoa and chocolate adopted in 1973.

The legislation may specify the conditions under which products may be produced and marketed within the Member States. This would be the case for much of the food law associated with the application of the Common Agricultural -Policy: for example, the grading standards for fruit and vegetables. But even here the pattern is not uniform: the national intervention agencies, for example, have different specifications for the cuts of beef that they accept into intervention. It was the (real or imagined) threat of compulsory EEC standards that led to talk of Euro-beer and Euro-bread in the early 1970’s, and a public reaction against the harmonization programme. Since the mid-1970’s the Commission has tried to stress that it is not pursuing harmonisation for harmonisation’s sake.

The optional method lays down EEC standards and, once agreed, applies only to traded goods. Thus, two products could be on sale in a given Member State: imported goods complying with the EEC standards, and goods domestically-produced and sold complying with the national standards. Such an approach is not uncommon; red meats originating in EEC-approved slaughter-houses may enter into intra-Community trade (or be imported from third countries), whereas meats from nationally approved slaughterhouses may only be sold on the domestic market. To the Commission the political advantage of the optional method is that it “leaves special national characteristics intact as far as possible” (Ehlermann, 1978, p.5 1).

For the economist, the optional method raises an interesting possibility: that consumers could be offered the choice of a good produced to two different standards, presumably reflected in price. If the national legislation of the Member States is broadly similar, then, on grounds of consumer safety and protection of the domestic industry, the optional method of adopting an EEC standard would seem to raise no political difficulty. If, on the other hand, there are marked differences, the prospects for agreement seem slim. The Member State with the most stringent food safety standards is unlikely to accept an EEC standard with notably less rigorous conditions: it would be argued that it exposed consumers to greater risk, and the domestic manufacturers may well argue that it subjected them to unfair competition.

Thus there will be a tendency for agreement to be reached-if at all-on EEC standards corresponding to the most onerous national laws. This will be supported by importing states with lower national standards (as it will give increased protection to domestic industry); but be opposed, and perhaps vetoed, by the exporters who previously supplied the aforesaid importers.

Some would claim that this quotation reflects an over-optimistic view: that conditions for additives use are seldom decided upon, and even when they are. they are usually optional.

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At the other extreme the Cassis de Dijon case seems to offer the prospect of de fucto harmonisation according to the least onerous of national standards. Such products-provided that they did not threaten “public health, protection of consumers or the environment, fairness of commercial transactions etc.”-could be freely sold in other Member States. However, as argued above, it is unlikely that any Member State that felt its national interest to be threatened would allow such an eventuality without a prolonged fight in the European Court. The Economic Significance of Food Law Harmonization In the preceding paragraphs, three hypotheses, all in principle testable, have been advanced: a) that different national standards, even though setting out to achieve the

same objectives, may impose heavier costs upon manufacturers (and hence society) because of the difficulty of achieving optimum production runs and hence economies of scale; that national standards act, intentionally or unintentionally, as non- tariff barriers and hence impede the access of the lowest cost EEC producer to the markets of its partner countries; and

c) that national standards, when considered in the context of the oligopolistic or monopolistic nature of many national markets, enable monopoly profits to be earned through price discrimination, to the extent that parallel importers are not able to perform an arbitrage operation.

The three are not mutually exclusive. but have been isolated for the sake of exposition. How would one test these hypotheses?

The second and third cases are those easiest to deal with for they imply price differences between the national markets. If price differences exist, and they are perpetuated by the proliferation of national standards, then it can be argued that the national standards do act as non-tariff barriers. A tariff equivalent could, in theory, be calculated expressing the price difference between the high price and the low price markets. In practice, the exercise would probably be far from simple. Not only will transport costs, different tax structures, and differing wholesaling and retailing costs complicate the price comparisons; but there is always the problem that the prices of products with slightly different attributes are being compared. Sometimes the evidence will be such that most people, allowing for all the corrections that have to be made, will agree that a price difference does exist. This is more likely to the the case however with high priced consumer durables than with fresh or processed foodstuffs. In the absence of a thorough study, milk is one of the few examples that comes to mind.

The first instance presents even greater difficulties for, by definition, economies of scale cannot be achieved in the EEC market and hence there are unlikely to be lowest-cost European suppliers whose prices can be recorded. The evidence lies in cost data, which most firms would regard as confidential.

Two questions arise: first, could firms achieve economies of scale if they amalgamated or enlarged production runs; and second, if so and if EEC food law was harmonised, would they? This raises questions about the market structure and competitive behaviour of the food industries that are beyond the scope of this paper. A major feature of competition in the food industries is the jockeying for position on supermarket shelves. Thus some authors talk of ‘product proliferation’ as manufacturers strive to maximise their range of product attributes and their chances of retaining shelf space in the stores. This,

b)

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some argue,‘entails waste in the forms of self cancelling advertising, high failure rates, and suboptimal production levels’ (Conner, 1981, p.607).* If this is so, do the suboptimal production runs associated with national food law aggravate the situation, or are they subsumed within the system?

Concluding Comments This paper has taken a preliminary look at food law legislation in general, and at the EEC’s food law harmonisation programme in particular. The main justification for the EEC’s legislative activity is to guarantee the free movement of goods and the liberalisation of intra-Community trade. The enactment, and implementation, of food law entails the use of resources, and hence costs, for the attainment of certain perceived benefits. The Community’s programme rests essentially on economic criteria. And yet there seems to be relatively little economic appraisal of the costs and benefits of food law, or of food law harmonization. I t is hoped that this paper will stimulate further study, and thus rapidly render itself obsolete.

References Barthelemv. M. 119761. Harmonisation in the EEC of National Leeislation of Foodstuffs in

Minisiiy of ’Agriculture, Fisheries and Food, Food Quality and Safety: A Century of Progress, London: HMSO.

Bowbrick, P. (1977). The Case Against Compulsory Minimum Standards, J . Agric. Econ.. 28, 113-1 18. ..-

Commission of the European Communities (1980a). Removal of Technical Barriers to Trade. COM (80) 30. Brussels.

Commission of the European Communities (1980b). Proposal for a Council Directive on the Approximation of the Laws of the Member States Relating to Flavourings for use in Fooaktuffs and to Source Materials for Their Production. COM (80) 268, Brussels.

Commission of the European Communities (1980~). Landmark in Liberating Trade. The Carsis de Doon Case. Background Report ISEC/B64/80. London.

Conner, J. M. (1981). Food Product Proliferation: A Market Structure Analysis, Am. J . Agric. Econ., 63.

Custot, F. (1980). Opinions of the Consumers and the Operators with Regard to Food Law Enforcement: Consumers in Commission of the European Communities Symposium on Enforcemenr of Food Law, Brussels.

Dashwood. A. (1977). Hastening Slowly: The Communities’ Path Towards Harmonization in Wallace, M., Wallace, W. and Webb, C. (eds) Policy-Making in the European Communities, London: John Wiley.

Ehlennann, C. D. (1978). Community Policy with Regard to the Approximation of Laws in House of Lords Select Committee on the European Communities, Session 1977-78, 22nd Report, Approximation of Laws Under Article 100 of the EEC Treaty HL 131, London: HMSO.

Food and Agriculture Organization of the United Nations (1979). New Protectionism and Attempts at Liberalization in Agricultural Trade, in FA0 Commodity Review and Outlook 1979-80, Rome: FAO.

Friedman, M. and Friedman, R. (1980). Free to Choose. Harmondsworth: Penguin. Gardner, T. W. (1979). Agricultural Policy, Formative Influences in Britain. Bulletin 169,

Department of Agricultural Economics. University of Manchester. Giles, R. F. (1976). The Development of Food Legislation in the United Kingdom in Ministry

of Agriculture, Fisheries and Food. Food Quality and Safety: A Century of Progress. London: HMSO.

Grose, D. (1982). Food Legislation as a Policy Instrument in Bums, J. A,, Mclnerney, J. P. and Swinbank, A. The U.K. Food Industries; Economics and Policy. Slough: Commonwealth Agricultural Bureaux (forthcoming).

Harris, S. A.. Swinbank, A. and Wilkinson. G. (1982). The Farm and Food Policies of the European Community. London: John Wiley (forthcoming).

* Conner is here reviewing ‘the reasons given by critics who regard product proliferation as one failing of the food system’.

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