Research

The Effect of Mutual Recognition Arrangements on Agricultural Exports of the Philippines: The Role of Laboratory Accreditation

Summary
This study focuses on accrediting agricultural laboratories and examines how mutual recognition arrangements (MRAs) affect trade facilitation in the Philippines. It assesses how accredited laboratory factors affect bilateral trade flows, using a modified gravity model and panel data estimations. The results show that by supporting accredited laboratory services, and highlighting their importance in upholding international standards for product safety and quality, MRA recognition encourages the export of agricultural products. Amid current global agricultural trade policies that prioritize sustainable development, the study emphasizes the importance of understanding provisions to maximize trade agreements. In summary, the study provides significant perspectives on trade behaviour patterns through the examination of significant trade-related obstacles, enhancing our understanding of complex dynamics in international trade.

Background
Global trade growth, driven by the World Trade Organization (WTO) commitments, faces challenges from non-tariff measures (NTMs), particularly in the agricultural sector. Developing countries, including the Philippines, struggle with NTMs, hindering exports and market access due to limited accredited testing laboratories.
Philippine agriculture faces challenges in international markets due to weak infrastructure and protection measures imposed by importing countries. NTMs disproportionately affect Philippine agricultural products, leading to decreased export growth. Accredited laboratories play a crucial role in trade facilitation, by ensuring product quality and meeting standard requirements. The Philippines, with limitations in accredited testing laboratories, experiences obstacles in international trade, impacting the agriculture sector’s contribution to the economy.

Hence, this study aims to provide empirical evidence on NTMs’ economic effects and contribute to a national framework for enhancing trade facilitation in the Philippine agriculture sector.

Strategy
This study employed a modified gravity model to assess the export push-effect of MRAs facilitated by ISO/IEC 17025 accreditation of laboratory quality standards covering agricultural commodities. Different estimation techniques were applied to ensure the overall robustness of the main findings. The study used log-linear and nonlinear models to test the hypothesis. The model was fully estimated with identified specifications, and the sub-models were created, determined by the best-fitting regression model. The data covered the years 2015-2019, focusing on the total agricultural products in the Philippines according to 2-HS Commodity Classifications.

Results and impact
Empirical evidence indicates a positive relationship between ISO/IEC 17025 accreditation and ILAC-MRA membership, benefiting international trade, with a minimal impact on the agricultural sector. Efforts to maintain accreditation gradually decline as the country’s infrastructure development quality influences perceptions of unrecognized benefits. However, accreditation effectively addresses the technical requirements set by the importing countries, eliminating the need for additional testing of Philippine agricultural products once market players are accredited. This serves as a policy tool to remove technical barriers to trade and facilitates local producers in accessing the global market. The study emphasizes how accreditation helps close technical gaps, establishing a high reputation for Philippine agricultural products and promoting confidence in international trade.

View the full research study here: PAB Research paper for case study