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Agro-food exports, standards and trade agreements

Agro-food exports, standards and trade agreements. Stefano Ponte Institute for International Studies Copenhagen spo@cdr.dk. Introduction. Trade is an important revenue base for developing countries Especially as aid flows slow down

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Agro-food exports, standards and trade agreements

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  1. Agro-food exports, standards and trade agreements Stefano Ponte Institute for International Studies Copenhagen spo@cdr.dk

  2. Introduction • Trade is an important revenue base for developing countries • Especially as aid flows slow down • Still, low income countries account for only 3% of income generated by exports • Lowering ’traditional’ trade barriers: Will this be enough?

  3. Global Value Chain (GVC) analysis and trade • Trade not only between ‘countries’ but also among (and within) firms • Trade rules do not arise only from domestic regulation and international agreements • ‘Lead firms’ in GVCs set ‘private’ rules that shape trade flows and market access

  4. GVC analysis and standards • Standards are one of the mechanisms shaping trade rules and flows • GVC analysis contributes new knowledge on ’private’ and ’voluntary’ standards set and enforced by ’lead firms’ or industry associations, NGOs etc. • These may be even more demanding than ’mandatory’ standards • Standards affect upgrading opportunities for developing countries

  5. Standards as a ’trade passport’? • Standards define whether a good is ’fit for trade’ • Key issues for developing countries: • Who defines standards? • Who decides the content? • Who sets the measurement methods? • Who pays for the costs of compliance, monitoring and verification? • Who captures the benefits?

  6. Trends in agro-food standards (1) • Increased food safety awareness • Focus on health and diet • Social and environmental concerns • Authenticity of origin

  7. Trends in agro-food standards (2) • Product differentiation • Quality control • Traceability (field-to-fork) • Third-party certifications or auditing • Larger number of standards • More complex standards • More stringent food safety standards

  8. Agro-food standards: A simplified typology • Mandatory • Import regulation (i.e. food safety, geographic indications, labelling) • Voluntary • International standards (ISO, Codex, SA8000) • Labels (organic, fair trade, eco-labels) • Model codes of conduct (EUREP-GAP, ETI) • Private • Defined and owned by a company (supermarket chain quality standards) • Considerable overlaps

  9. Lessons from case studies (1): Coffee • Why is coffee interesting for analysing value chains, trade and standards? • No protectionist element in standards • Produced mainly in the South • Low tariff barriers • Yet, tariff escalation (roasted, instant) • Proliferation of ’private standards’: ’specialty’ and ’sustainable’ coffees

  10. ’Specialty’ and ’sustainable’ coffee standards • Issues of participation in the setting of standards • Who benefits? Who pays? • Different stories • Specialty • Fair trade • Organic • Shade-grown • Mainstream initiatives on sustainability

  11. Lessons from case studies (2): Supermarket standards for FFVs • Extremely demanding • Higher than import regulation on food safety • Quality, maximum pesticide residues, ’ethical standards’ • More functions demanded from exporters • Some cases of upgrading • From smallholders to commercial farms; increasing concentration at production and export levels

  12. Challenges (1): Mandatory standards • Better use of the dispute settlement system in the SPS Agreement • Lenghty and demanding process • Penalties based on punitive tariffs • Not a practical way for developing cos • SPS Committee as a forum of discussion

  13. Challenges (2): International standard setting • SPS Agreement: harmonisation • Through: Codex, IPPC, OIE • Poor participation in international standard setting and revision • Technical and financial assistance (not binding in SPS Agreement) • Modest size of the Advisory Centre on WTO law

  14. Challeges (3):Voluntary and private standards • Voluntary (sectoral) and private standards are often more stringent than public regulation • Issues of participation, transparency • Public pro-active strategies to help industry organisations • Technical and facilitation support for firms and industries

  15. Key questions • Are standards eroding the comparative advantage of developing countries? • Are they marginalising smallholders and small and medium enterprises? • Can standards be a tool for stimulating learning and a launch-pad for upgrading in developing countries?

  16. The role of research • GVC analysis, trade and standards • Access and participation • Specificities of value chains • Catalyst for industry-level debate • Entry barrier AND opportunity for upgrading • Costs and benefits of compliance • Distributive impact

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