Second International Workshop on Conformity Assessment Rio de Janeiro, 11-12 December 2006 Presented by: Ulrich HOFFMANN, UNCTAD secretariat
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
Concerns of Exporting Developing Countries
• • 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.
Escalating Food Safety and Quality Requirements
“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
Drivers of Private-sector Safety and Quality Requirements
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.
Putting Environmental, Health and Food-safety Requirements into Context
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 antitrust/competition law measures.
EHFSRs are increasingly becoming an integral part of product quality. DgCs need to exploit full national benefits of meeting EHFSRs in export markets, notably in terms of resource efficiency, pollution intensity, occupational safety and public health -- important are dynamic effects that also reduce adjustment costs.
Main Trends in EHFS Requirements 
More strict (e.g. MRLs)
More complex (e.g. traceability and auditing requirements)
More multi-dimensional (e.g. see next slide)
Multidimensionality of Requirements
Pillars of Environmental, Health and Food Safety Requirements
Food Safety Plant/Animal Health Product Quality Environment Social
MRLs Heavy metal limits Food additives Hygiene requirements Traceability HACCP
Surveillance Quarantine Pest risk assessment Sanitation
Product composition Product cleanliness Grading Labeling requirements Control of nutritional claims ISO 9002
Control of water and env contamination Protection of biodiversity Protection of endangered species Recycling Organic prod requirements
Labour standards Fair trade standards
Multidimensionality of Requirements cont’d
Holistic view of EUREPGAP Standard: Food Safety, Environment and Social CPs
250 200 150 100 50 0
d oo F f Sa y et E m on vir n t en S cia o l T l ta o
Recom. Minor Major
Main Trends in EHFS Requirements 
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.
Diverse Standards in National and International Markets
Source: Jaffee, S.
Local Customs and Consumer Preferences
Private Sector Competitive Strategies
Standards as applied
Laws and Regulations
There is an ongoing process to put in place harmonized requirements and codes, yet the application is occurring at different speed and depth.
Differential application of requirements/standards is the norm, rather than the exception. Weak compliance enforcement by governments, strong by retailers.
EHFSRs and the Limits of WTO Disciplines
TBT and SPS Agreements contain disciplines on the preparation, adoption and application of technical regulations, standards and conformity assessment procedures.
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
Hierarchy of Trade-related SPS Management Functions
Technically Demanding Risk Management Functions
Source: Jaffee, S. et.al.
Institutional Structures and Role Clarity
Suitable and Effectively Implemented Regulation Application of Basic “Good Practices” for Hygiene and Safety Awareness and Recognition
Pillars of EHFS Requirements
Issue Food safety Details MRLs Heavy metals Food additives Hygiene requirements Traceability Hazard analysis and critical control points (HACCP) Surveillance Plant quarantine Pest risk assessment Sanitation Grading Freshness Product composition Product cleanliness Labelling requirements Control of nutritional claims Control of water and environmental contamination Recycling requirements Organic production requirements Protection of biodiversity Protection of endangered species Labour standards Fair trade standards Corporate social responsibility
Source: Jaffee, S. et.al.
Main Problems Arising from Mandatory EHFSRs in 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.
Spectrum of Private-sector Requirements
Whole Chain Assurance
FARM GATE Growers Farmers
FARM GATE Food Packing and Processing Retail Stores
Currently some 400 private food schemes
EurepGAP HACCP SQF 1000 BRC Integrated ISO 9000 Farming of SQF 2000 FARRE UK Assured Produce
HACCP ISO 9000 SQF 3000
Pre-Farm and Post Farm
Implications 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.
Interrelationship between Mandatory and Voluntary EHFS Requirements
– 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.
Advantages 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.)
Problematic 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 highend domestic market in DgCs • Revision of EurepGAP standard every three years – moving target (DgCs have to seek active participation)
Key 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
Key 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.
Swinging the Pendulum
Fire-fighting, reactive approach
• 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)
Pro-active, strategic approach INVOLVES:
• 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).
Specific Elements of Pro-active Adjustment to 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.
Key Elements of a Proactive Role of DgC Governments
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.
Clusters of Policy Tools
Info gathering and dissemination – cost/benefit analysis
Publicprivate sector dialogue
Pay special attention to small producers
Setting up and Supporting Quality Assurance Systems
Special Role of UNCTAD’s Consultative Task Force on 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)
Recent Activities under UNCTAD’s Consultative Task Force on Environmental Requirements and Market Access
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)
Further Activities under UNCTAD’s Consultative Task Force on Environmental Requirements and Market Access
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.
Website of UNCTAD’s Consultative Task Force
Country-case studies under UNCTAD’s Consultative Task Force on challenges and opportunities of EurepGAP for Central and South American countries
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