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Stefano Ponte Senior Researcher Danish Institute for International Studies spo@diis.dk

Beyond Regulation: How voluntary and private standards on quality and ‘sustainability’ shape ‘real world’ trade. Stefano Ponte Senior Researcher Danish Institute for International Studies spo@diis.dk. Global Value Chain Analysis (GVC).

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Stefano Ponte Senior Researcher Danish Institute for International Studies spo@diis.dk

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  1. Beyond Regulation:How voluntary and private standards on quality and ‘sustainability’ shape ‘real world’ trade Stefano Ponte Senior Researcher Danish Institute for International Studies spo@diis.dk

  2. Global Value Chain Analysis (GVC) • Tool for understanding trade flows, power relations and division of functions along the producer-consumer axis in the ‘real world’ of business and industry relations • ‘Lead firms’ in GVCs set ‘private’ rules that shape trade flows and market access • DIIS studies on: coffee, cocoa, cotton, citrus, fresh vegetables, clothing • New research: role of standards in shaping trade flows, market access and governance of GVCs

  3. 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

  4. 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

  5. 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?

  6. Case studies • Fish • EU regulation • MSC (Maritime Stewardship Council) certific. • Coffee • Limited effect of mandatory standards • Except for forthcomibg ocratoxin legislation (EU) • ICO quality improvement programme • Impact of ’sustainability’ standards • Fair trade, organics, shade grown, etc.

  7. Fish (gen.) • Impact of: • EU regulation (Council Directive 91/493/EEC) • MSC certification (Maritime Stewardship Council) • Other voluntary and private standards • Exports of Nile Perch (from Uganda) and South African Hake (from South Africa) • Substitutes for cod and haddock • Mostly to the EU (duty and quota free from Uganda)

  8. Uganda-Fish • Artisanal fishery + industrial processing • EU bans on Ugandan exports • Responses to the crisis • Implementation of HACCP • Stronger regulation and organization of the industry; product testing (local facilities) • Upgrading (processes, not product) • Re-establishment of good reputation • New challenges: MSC certification

  9. MSC • Maritime Stewardship Council • Founded in 1997 by Unilever and WWF • Certifies ’sustainable fisheries’ • 3 principles: • Status of stock • Impact of fishery on the ecosystem • Performance of fishery management system • Main characteristics • 10 fisheries so far: one in ’developing countries’ (South Africa) • 4% of globally traded fish volume (est.) • Mostly industrial fisheries • Demanding institutional and regulative practices

  10. Coffee • Coffee crisis & the coffee paradox • Role of ’sustainability’ standards • Certifications: fair trade, organics, shade-grown, Utz kapeh • Codes of conduct and procurement guidelines: Starbucks, Nestle’ (SAI), CCCC • Small proportion of market as of now • (1% by value), but growing fast • Do they ’deliver’ to producers?

  11. Premium levels

  12. Other indicators • Other impacts on income (in and out of the coffee economy) • Social and environmental impacts • Smallholders vs. Estates • Regions

  13. Role of public policy and technical assistance • Promote participation of developing country actors in standards setting • Provide information and training to formulate negotiating positions • Promote coordination and harmonization • Capacity building to match new standards • Super partes functions • ’positive discrimination’ (SMEs, smallholders) • regulatory framework, monitoring claims

  14. The role of research • GVC analysis, trade and standards • 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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