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

Standards and Trade: Background/results of the project Veena Jha. UNCTAD. 2nd July 2002. The project. Reasons for undertaking the project. Benefits of liberalized agricultural trade were not reduced by disguised restrictions or other non-tariff barriers to trade

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

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  1. Standards and Trade:Background/results of the projectVeena Jha UNCTAD 2nd July 2002

  2. The project

  3. 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”

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

  5. 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

  6. 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

  7. Economic/developmental effects of SPS measures and environmental standards • Compliance costs • Trade impacts • Impacts on industry

  8. Economic/developmental effects of SPS measures and environmental standards • Legislation • Training • Infrastructure • Engagement in international negotiations

  9. 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

  10. Developing countries

  11. 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)

  12. 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)

  13. 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

  14. 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

  15. 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)

  16. Mango pulp • Quality a major hurdle

  17. Tea • Quality a major hurdle

  18. Tea • Quality a major hurdle

  19. 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

  20. Multilateral level • Transparent and participatory preparation of standards • Trade rules

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