Second International Workshop on Conformity AssessmentRio de Janeiro, 11-12 December 2006Presented by: Ulrich HOFFMANN, UNCTAD secretariat
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Abstract 2
1. Trends of environmental, health, and food-safety requirements (EHFSRs) along supply chains
2. The interrelationship between mandatory and voluntary EHFSRs
3. Main problems arising from mandatory and voluntary EHFSRs
4. Becoming more pro-active and holistic: Activities of UNCTAD’s Consultative Task Force
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Concerns of Exporting Developing Countries 3
• Emerging environmental, health and food-safety requirements (EHFSRs) may be applied in a discriminatory manner against DgCs.
• DgCs lack the administrative, infrastructural, technical, and managerial capacities to comply with new and more stringent requirements
resulting from a transition from conventional to high-precision production methods.
• Adjustment and compliance costs may undermine the comparative advantage of DgCs.
• Institutional weaknesses and compliance costs may further marginalize weaker economic players, including smaller countries, enterprises and farmers.
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Key Reasons
“Perception” on recent food scares and
scandals
Demographic developments in OECD
countries
Risk and cost minimization management by major
retailers
More sophisticated detection and testing methods
Escalating Food Safety and Quality RequirementsEscalating Food Safety and Quality Requirements
55
Drivers of Private-sector Safety and Quality Drivers of Private-sector Safety and Quality RequirementsRequirements
55
Governments “Name and Shame” policy in some countries.
Retailers legal responsibility (due diligence legislation in some countries) and increasing retailer own labels.
Retailers do not want to compete on the basis of “who’s food is safer”.
Shuffling off certain risk management costs to producers.
Globalisation of retailing and production (i.e. global sourcing) requires rigorous quality assurance system.
New food-safety, health and environmental requirements are being used as value-chain governance tools.
66
Putting Environmental, Health and Food-safety Putting Environmental, Health and Food-safety Requirements into ContextRequirements into Context
66
• Enhanced globalization of investment and trade lead to transnational application of specific EHFSRs.
• Many EHFSRs are an attempt to alter market conditions to encourage sustainable production, trade and consumption patterns.
• With increasing liberalization of tariffs and quotas, EHFSRs have the potential of being turned into versatile non-tariff measures – difficult to distinguish justified from unjustified EHFSRs.
• A tool of companies in the competitive battle with rivals -- gain or temporarily maintain a competitive edge over rivals – certain EHFSRs may require anti-trust/competition law measures.
• EHFSRs are increasingly becoming an integral part of product quality. • DgCs need to exploit full national benefits of meeting EHFSRs in exportmarkets, notably in terms of resource efficiency, pollution intensity, occupational safety and public health -- important are dynamic effects that also reduce adjustment costs.
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Main Trends in EHFS Requirements [1]Main Trends in EHFS Requirements [1]77
More strict More strict (e.g. MRLs)(e.g. MRLs)
More complex More complex (e.g. traceability and auditing requirements)(e.g. traceability and auditing requirements)
More multi-dimensional More multi-dimensional (e.g. see next slide)(e.g. see next slide)
3 Trends: 3 Trends:
8
Multidimensionality of RequirementsMultidimensionality of Requirements
Pillars of Environmental, Health and Food Safety Requirements
Food Safety Plant/Animal Health
ProductQuality
Environment Social
MRLsHeavy metal limitsFood additivesHygiene requirementsTraceabilityHACCP
SurveillanceQuarantinePest risk assessmentSanitation
Product compositionProduct cleanlinessGradingLabeling requirementsControl of nutritional claimsISO 9002
Control of water and env contaminationProtection of biodiversityProtection of endangered speciesRecyclingOrganic prod requirements
Labour standardsFair trade standards
9999
0
50
100
150
200
250
Co
ntr
ol P
oin
ts
Holistic view of EUREPGAP Standard:Food Safety, Environment and Social CPs
Recom.
Minor
Major
Multidimensionality of Requirements cont’dMultidimensionality of Requirements cont’d
10101010
Main Trends in EHFS Requirements [2]Main Trends in EHFS Requirements [2]
• Growing importance of private sector standards and codes in the marketplace in general;
• Growing importance of requirements transmitted to producers and exporters in developing countries through the supply chain;
• An enhanced relationship between mandatory and voluntary requirements;
• Greater reliance on traceability and related certification; and
• Greater regulatory responsibility on food and feed controls, including system of registration of crop-protection products for the exporting country.
11
Diverse Standards in National and International MarketsDiverse Standards in National and International Markets
Standardsas
applied
PrivateSector
Competitive Strategies
Local Customs and Consumer
Preferences
Laws and
Regulations
Enforcement Capacity
There is an ongoing process to put in place harmonized requirements and codes, yet the application is occurring at different speed and depth.
Source: Jaffee, S.
• Differential application of requirements/standards is the norm, rather than the exception.
• Weak compliance enforcement by governments, strong by retailers.
TBT and SPS Agreements contain disciplines on the preparation, adoption and application of technical regulations, standards and conformity assessment procedures.
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EHFSRs and the Limits of WTO DisciplinesEHFSRs and the Limits of WTO Disciplines
Four sets of problems:• Many DgCs cannot take advantage of the disciplines because a baseline of institutional capacity does simply not exist. • The procedural aspects of voluntary standards can be as important as for technical
regulations, yet they are de facto outside WTO disciplines (also: non-governmental bodies that set voluntary requirements are not part of WTO debate).
• Notification and transparency requirements need to be further improved - Access to information is difficult- No difference in notification between complex and simple EHFSRs- Format of notification should be changed (even problematic for
industry representatives)• Justification, legitimacy and the role of scientific evidence under TBT / SPS
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Hierarchy of Trade-related SPS Management FunctionsHierarchy of Trade-related SPS Management Functions
SPS
Diplomacy
Technically
Demanding Risk Management Functions
Institutional Structures and Role Clarity
Suitable and Effectively Implemented Regulation
Application of Basic “Good Practices” for Hygiene and Safety
Awareness and Recognition
Source:Jaffee, S. et.al.
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Pillars of EHFS RequirementsPillars of EHFS RequirementsIssue Details
Food safety MRLsHeavy metalsFood additivesHygiene requirementsTraceabilityHazard analysis and critical control points (HACCP)
Plant health SurveillancePlant quarantinePest risk assessmentSanitation
Product quality
GradingFreshnessProduct compositionProduct cleanlinessLabelling requirementsControl of nutritional claims
Environment Control of water and environmental contaminationRecycling requirementsOrganic production requirementsProtection of biodiversityProtection of endangered species
Social Labour standardsFair trade standardsCorporate social responsibility
Source:Jaffee, S. et.al.
15151515Main Problems Arising from Mandatory EHFSRsMain Problems Arising from Mandatory EHFSRsin Key Export Marketsin Key Export Markets
• Stringent phyto-sanitary measures in certain countries, such as Japan and the United States impose restrictions on imports based on the country of origin – individual country listings of FFV approved for entry – cumbersome approval process for new products
• More stringent food-safety requirements:– HACCP has become mandatory for all food categories (of both animal
and non-animal origin). Use of HACCP is not mandatory in the case of primary production, which covers most of FFV; exception – packaging for semi-processed fruit.
– Registration of plant protection products: problematic for those pesticides used in production of “minor crops”, which applies to most FFV exported by DgCs.
– Regulation (EC) No 882/2004 on official food and feed controls obliges DgCs to provide information on the general organization and management of their national food control system, including assurance of compliance or equivalence with the requirements of Community legislation.
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Spectrum of Private-sector Requirements
Whole Chain Assurance
PRE-
FARM
GATE
POST
FARM
GATE
Growers
Farmers
Food Packing and Processing
Retail
Stores Consumers
REQUIREMENTS
Key componentsoPre-Farm and Post Farm
Gate Standards o Traceabilityo Documentation o Residue Monitoring
EurepGAPSQF 1000Integrated Farming of FARREUK Assured ProduceTESCO’s Nature’sChoice
HACCPBRCISO 9000SQF 2000
HACCPISO 9000SQF 3000
Currently some 400 private food schemes
Collective
Individual
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Implications for DgC Producers/ExportersImplications for DgC Producers/Exporters
• Move towards high-precision agricultural production methods.
• Explicit objective to meet higher food-safety and quality requirements with environmentally beneficial practices (EurepGAP refers to itself as the “Partnership for Safe and Sustainable Agriculture”).
• Supply-chain requirements tend to reinforce existing strengths and weaknesses of competing producers. Risk of marginalization.
• Multitude of standards increases certification costs. Need for equivalence and harmonization, such as EurepGAP. Also increasingly important for enhanced South-South trade (particularly relevant in Asia).
• Significance of adjustment costs and little opportunity for price premiums.
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Interrelationship between Mandatory and Interrelationship between Mandatory and Voluntary EHFS RequirementsVoluntary EHFS Requirements
Different thrust:– mandatory requirements: equivalence of risk-outcomes (i.e. characteristics of finished
product)– Private-sector standards: equivalence of production system
Results in a “tacit alliance” that benefits either side:• Reduced need for enforcement of governmental regulation. Rather than spending large
amounts of money on extensive and costly testing of imports, governments can rely on the certification and assurance processes laid down by private sector bodies.
• Private standards free governments from any need to interfere with overseas production processes.
• Governmental regulation (reflecting private-sector requirements) is occasionally required to - harmonize requirements;- level the competitive playing field; or - reduce consumer confusion.
• Private sector benefits from public funds that assist producers in meeting supply-chain requirements.
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Advantages of the EurepGAP StandardAdvantages of the EurepGAP Standard
• Harmonization of procurement standard among key global retailers– However, retailers can still procure non-EurepGAP certified produce
• Allows local adaptation through “interpretation guidelines”• Facilitates equivalence of standards through
“benchmarking procedure”• Allows “group certification” • Can provide access to lucrative export markets, cutting out
middlemen• Better transparency in development and revision of
standard, compared to requirements of individual retailers• Appropriate EurepGAP implementation can lead to
benefits and catalytic effects (in terms of reduced input use, better occupational safety, better soil fertility etc.)
2020202020
Problematic Aspects of the EurepGAP StandardProblematic Aspects of the EurepGAP Standard
• Risk of marginalization of small producers (different experience in Senegal and Kenya)
• Supply-chain governance implications– Control mechanisms without ownership– Favours FDI type of investment– Producers have to shoulder significant part of risk management costs
(capital and recurrent costs: 20-200% of annual profit of producers of 0.5-6 hectares)
• No price premium for compliance or advantages through use of a EurepGAP label
• Risk of becoming dependent on servicing packages of globally active agro-chemical companies
• EurepGAP is gradually becoming important also for access to the high-end domestic market in DgCs
• Revision of EurepGAP standard every three years – moving target (DgCs have to seek active participation)
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Key Challenges for Developing CountriesKey Challenges for Developing Countries
• Lack of local regulation/enforcement in DgCs• Lack of institutional support (notably significant deficiencies in
SMTQ system - standards, metrology, testing, and quality assurance)
• Weak regulatory system relating to the import, production and sale of crop protection products
• Lack of knowledge on responsible pesticide use• Lack of extension services• Constraints of physical infrastructure• Constraints regarding farmer skills
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Key Problems of Current Adjustment ApproachKey Problems of Current Adjustment Approach
• Reactive/fire-fighting approach prevails (delaying compliance until after a crisis has occurred).
• Piecemeal and fire-fighting approach on technical assistance• Insufficient participation in pre-standard-setting consultations by
DgC producers/exporters• Costs of adjustment are often more apparent than benefits/ catalytic effects.
General IssuesGeneral Issues
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Swinging the PendulumSwinging the Pendulum
• In DgCs:– looking beyond costs at opportunities and catalytic role of new EHFS
requirements for national economy (e.g. resource savings, enhanced occupational safety, environmental benefits, new business and export opportunities)
– assuring coherent and inclusive policy approach towards supply-chain requirements (conceptual clarity on approaches and supportive policies)
• Active participation of DgCs’ exporters in standard-setting consultations and revision process of supply-chain requirements (including insistence on ex-ante assessment of impact on DgCs).
Fire-fighting, reactive approach
Pro-active, strategic approach
INVOLVES:
2424242424242424Specific Elements of Pro-active Adjustment to Specific Elements of Pro-active Adjustment to Supply-chain Requirements Supply-chain Requirements
• Enhanced transparency in setting of supply-chain requirements (including consideration of international trade implications and impact on DgCs. Active outreach to DgCs on participation in consultative processes).
• Develop coherent national strategies in DgCs to respond to new requirements (conceptual clarity, stakeholder dialogue/involvement).
• Strengthen synergies between meeting external requirements and assuring domestic food safety.
• Promoting strategic alliances among key stakeholders in DgCs.• Building regulatory/institutional capacity (on food control systems, information
management, without being focused on a specific standard). • Pay special attention to needs, but also best ways of adjustment of small
producers (strategies should be multi-pronged, i.e. enabling them to supply global retailers, national and international conventional wholesale markets, and national and international organic markets).
• For further detail: See handout that distils findings of recent country-cases studies prepared by UNCTAD’s Consultative Task Force.
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Key Elements of a Proactive Role of DgC GovernmentsKey Elements of a Proactive Role of DgC Governments 25
Key Function of Government: 1. Taking into account broad commercial and developmental objectives.2. Optimizing long-term costs and catalytic benefits of compliance.3. Focus on wider distributional and societal impacts of the available responses.
Public- private sector
dialogue
Info gathering and dissemination –
cost/benefit analysis
Pay special attention to
smallproducers
Setting up and Supporting Quality Assurance Systems
Clusters of Policy Tools
Effectiveadjustment
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Special Role of UNCTAD’s Consultative Task ForceSpecial Role of UNCTAD’s Consultative Task Forceon Environmental Requirements and Market Accesson Environmental Requirements and Market Access
• Country- and sector-focused exchange of national adjustment experiences among DgCs
• Includes in the analysis and discussion voluntary ERs of the private sector and NGOs and thus
provides a formal exchange mechanism between these stakeholders and governments
• Facilitating access to information on new ERs
• Allows a regular exchange of information among agencies and initiatives that provide TC/CB in fields relevant to CTF discussions
• Provides input into WTO debate (CTE, TBT, SPS)
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1. Three series of country-case studies on challenges and opportunities of EurepGAP for horticultural exports. Asia: Malaysia, Philippines, Thailand, Viet Nam Latin America: Argentina, Brazil, Costa Rica Africa: Ghana, Kenya, Uganda
2. Sub-regional, multi-stakeholder workshops on exchanging national experiences on national GAPs for horticultural products Asia: Manila, November 2005; Latin America: Rio de Janeiro, December 2005; Africa: planned for February 2007 in Nairobi
3. Publication of monographs on the three regions (see info note)
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Recent Activities under UNCTAD’s Consultative Task Recent Activities under UNCTAD’s Consultative Task Force on Environmental Requirements and Market AccessForce on Environmental Requirements and Market Access
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1. At the global/regional level: organize dialogues between governments, private-sector standard bodies and producers/exporters in DgCs on conceptual issues of adjustment strategies.
2. At country/sub-regional level: promoting stakeholder dialogue on strategy development (including on adjustment options for smallholders), based on sound information for decision making. Aim: conceptualizing strategies with clear local ownership that can be sustained in the long run.
3. Assisting interested stakeholders in exploring different options for EurepGAP certification and technical equivalence.
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Further Activities under UNCTAD’s Consultative Task Further Activities under UNCTAD’s Consultative Task Force on Environmental Requirements and Market AccessForce on Environmental Requirements and Market Access
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Website of UNCTAD’s Consultative Task Force
www.unctad.org/trade_env/test1/projects/taskforce.htm
UNCTAD Trade and Environment Review 2006: Environmental Requirements and Market Access for Developing Countries:
Developing Pro-active Approaches and Strategies
www.unctad.org/trade_env/test1/publications.htm
On-line Sources
Country-case studies under UNCTAD’s Consultative Task Force on challenges and opportunities of
EurepGAP for Central and South American countries
www.unctad.org/trade_env/test1/meetings/inmetro2.htm
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