GATT AND THE ECONOMICS OF FOOD SAFETY

Food safety is of increasing importance in higher-income countries where consumers demand higher quality and safer food. They will do so through the market when information makes it possible. They will demand better assurances of safety through government regulations where externalities and health risks prevail. The microeconomics of this demand for increased food safety is discussed in terms of how it can lead to non-tariff barriers to trade that might ultimately be regulated by the GATT. The public goods nature of food safety is explored along a continuum of food quality characteristics for the purpose of identifying when government regulations are needed.