The United States banned imports of beef from Argentina following a 2000 Argentine outbreak of the highly contagious foot-and-mouth disease (FMD), which has not been found in the United States since 1929. The United States refused to relax its import ban, and Argentina filed a dispute at the World Trade Organization (WTO) in 2012, more than six years after its last FMD outbreak. This paper first analyzes Argentina’s claim that the gap between its first requests, in 2002, to restore its trading rights and no action by the United States as of 2012 constituted “undue delay.” The authors describe the difficulties facing the World Organization for Animal Health (OIE) and the WTO’s Sanitary and Phytosanitary (SPS) Agreement in dealing with problems like FMD. Such an environment creates disincentives for socially efficient behavior that were clearly realized in this episode. The exporting country has an incentive to hide information on outbreaks and report being disease-free too quickly, and the importing country has no incentive to quickly undertake the costly effort of conducting the necessary inspections to restore the exporter’s market access. Given the importance of both infectious diseases and trade in animal products, partner countries need to reconsider national policies and global institutions tasked with creating the right incentives. Part of the costs of recertifying an exporting country after a disease outbreak could be shifted from the importing country to the exporting country, which might better incentivize globally efficient behavior by farmers as well as exporting and importing country governments.
The data underlying this analysis are available for download below.