Standards and Trade: Background/results of the project Veena Jha

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Standards and TradeBackground/results of the
projectVeena Jha
UNCTAD

• 2nd July 2002

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The project
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Reasons for undertaking the project

• Benefits of liberalized agricultural trade were
  not reduced by disguised restrictions or other
  non-tariff barriers to trade
• Developing countries feel that standards and SPS
  measures are as important as traditional WTO
  issues such as tariffs and quantitative
  restrictions.
• Therefore, both the AoA and the SPS were
  negotiated as part of an agricultural package

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Lessons learned

• Importance of the standards examined in the
  market place?
• Compliance costs and trade effects
• Protection versus protectionism
• Regional strategies

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Potential problems

• Lack of transparency
• Complexity of SPS standards
• Threshold limits
• Standard takers instead of Standard Setters
• Relevance of the standard to the production
  conditions of the exporting countries
• Domestic Regulatory Problems

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Potential problems

• Standard takers instead of Standard Setters
• Relevance of the standard to the production
  conditions of the exporting countries
• Domestic Regulatory Problems
• Other Capacity Problems

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Economic/developmental effects of SPS measures
and environmental standards

• Compliance costs
• Trade impacts
• Impacts on industry

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Economic/developmental effects of SPS measures
and environmental standards

• Legislation
• Training
• Infrastructure
• Engagement in international negotiations

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Can SPS measures and environmental standards be
protectionist?

• Motivation
• Protecting national producers against import
  competition?
• Creating a market for conformity assessment?
• Lowering prices?
• Perceptions
• Insufficient scientific evidence
• Lack of coherence in standards

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Developing countries
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Fish and fisheries products

• Automatic detention (United States)
• Value of detained products from India etsimated
  at US 14 million or 15 of total exports in
  1996-1997
• HACCP and other requirements
• Import bans (EU)

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Perceptions

• Certain standards are not strictly relevant for
  product quality
• Certain standards are too stringent given Indian
  fishing conditions
• The legitimate objectives of standards could be
  met through less cumbersome and less costly
  procedures
• Indian plants face more stringent standards than
  European plants (e.g. Indian plants have to
  undertake 62 tests to check water quality)

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Implications

• Fixed costs for adjustments between US 250,000
  and US 500,000 approved plants generally are
  large plants
• Out of a total of over 400 establishments in
  India, only 84 processing units have been
  approved for exports to the EU
• Many small companies were unable to continue
  exporting to the EU

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Peanuts

• Different testing procedures and conformity
  assessments required in different markets
• New sampling plan (3 test Dutch code methodology)
  would result in higher rejection rate
• Experts believe that 75 of the rejected lots
  would actually fall within the established
  tolerance limits

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Peanuts

• Europe 47 of the world imports of groundnuts
  and groundnut products
• Multi-test plan will increase the cost of testing
  alone by US 4 million
• UK Government estimates that compliance costs
  would average 8 of turnover
• Increased costs of doing business in the EU
  market could be more than US 200 million
  according to JEFCA (Joint European Commission
  Food Association)

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Mango pulp

• Quality a major hurdle

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Tea

• Quality a major hurdle

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Tea

• Quality a major hurdle

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National level

• Awareness raising
• National and regional standard setting
• Technology, innovation and enterprise development
• Small and medium sized enterprises
• Branding and umbrella certification
• Institutional changes

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Multilateral level

• Transparent and participatory preparation of
  standards
• Trade rules