Trade and invasive species risk mitigation: Reconciling WTO compliance with maximising the gains from trade

Abstract

This paper analyses the issue of balancing the gains from trade with the risk of pest and disease transference. Two decision frameworks for determining whether or not to permit trade in a potentially invasive species-carrying good are presented. The first considers only the potential production losses resulting from an invasive species entering through a trade pathway, as is prescribed by WTO compliance. The second is a unilateral welfare-maximising approach which considers the consumer gains from trade, the loss of domestic producers' market share and expected damage from the invasive species. It is shown that these alternative decision frameworks can be reconciled such that they produce the same outcome regarding whether or not trade is to be permitted. The key parameters which influence these decisions are also highlighted.