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									                                       www.unido.org




 THE ARAB QUALITY AND FOOD SAFETY
           CONFERENCE
                 15-16 June 2006, Beirut




     “QUALITY AND GLOBAL TRADE”
              UNIDO Perspective


                   Gerardo Patacconi
IDO, UNIDO Focal Point for UNIDO/WTO MoU and ISO/DEVCO
             Trade Capacity Building Branch
                  G.Patacconi@unido.org
                              www.unido.org




    Emerging Quality and Safety issues
 Food scares and other security issues
 Global, regional, national TBT/SPS
  regulations
 Standards and Conformity Assessment
  infrastructure
 Supply-capacity (quality, quantity, price) and
  competitiveness
 global/regional value chains
 UNIDO Global Approach
                             www.unido.org




Food scares and other security issues




              I’ve got MAD……….
        and the World become CRAZY
about improving food quality and safety systems
                                              www.unido.org



                     EMERGING ISSUES
                                   Focus on supply-chain and border
                                     security:
                                   • Bioterrorism Act) to protect the US from the
                                     threat of bioterrorism using the food
SECURITY: Risk of deliberate         chain.(Registration, US Agent, Prior Notice and
                                     Establishment and Maintenance of Records)
contamination, frauds and misuse   • Custom Trade Partnership Against Terrorism
of shipment                          (C-TPAT)
                                   • The Container Security initiative (CSI)
                                   • The 24-Hour Rule
                      HIGH COST
SAFETY: Distribution of            Focus on supply-chain and food safety:
                                   •   EU Food Law – Regulation (EC) 178/2002
unsafe/adulterated Food products   •   Residual of pesticides
(to be withdrawn from the supply   •   Labeling,
chain and timely and accurate      •   Standards/Technical Regulations
                                   •   Conformity Assessment procedures
information given to consumers)    •   ………….
                                      www.unido.org




       Standards and Conformity Assessment
                   infrastructure
•   Poor physical facilities/infrastructure
•   Limited academic and research capabilities and
    technical/scientific know-how/skills
•   Inefficient institutional set up (Standards and conformity
    assessment functions, when exist, are scatters among too
    many institutions)
•   Early focus on mandatory standards and inspection
•   Revenues generated could not be retained due to the public
    law status
                                      www.unido.org




       Standards and Conformity Assessment
                   infrastructure

•   Labs established even with donor support not sustainable
•   Donation of equipment with poor planning, training, and
    lacking adequate local physical infrastructure/staff,
    absorbion capacity
•   Political instability and conflicts,
•   Lack of funding
•   Lack of demand
•   Low-level of manufacturing due to focus on commodities
•   Exposed to barriers to trade especially SPS measures
                                        www.unido.org




Standards and Conformity Assessment
             infrastructure
• Poor and uneven quality of local products

• National quality infrastructure lacks credibility and tests
  and certificates by local laboratories not recognized in
  export countries.

• Inability of DCs to utilize preferential treatment/ market
  access concessions.

High Risk of rejection of products in export markets due
         to lack of conformity (TBS and SPS).
                            www.unido.org




Supply-capacity (quality, quantity, price) and
     competitiveness and integration in
         regional/global value chains
                                                                                            www.unido.org


                            Global Trade Growth & Marginalisation
                                                         World exports, 1980-2004 (US$ billion)
                  10,000

                   9,000

                   8,000                                                                              World

                   7,000

                   6,000                                                                               Developed
    billion US$




                                                                                                       economies
                   5,000

                   4,000
                                                                                               Developing
                   3,000                                                                       economies

                   2,000

                   1,000
                                                                                                                 LDCs
                      0
                                1980              1985      1990    1995    2000     2001      2002       2003     2004
                           Source: UNCTAD, 2005


 Share of developing countries in global trade only 26%
 Every 1% growth in Trade, LEADS TO one-half % Income increase

 Over                     75% of global trade is in manufactures (Industry the key)
                                                             www.unido.org



         Immediate Opportunities: Agro Food Exports
World and Developing country exports of fish,processed fruits & vegetables now exceed the combined
    value of exports of tropical crops: Cotton, Coffee, Sugar, Tobacco. (source: UN COMTRADE)




                                               +19%
                  +11%




                  - 9%
                                               - 20%
                           www.unido.org




Immediate Opportunities: Agro Food Exports
                                                                                   www.unido.org


                            Global Trade Challenges
                   Tariffs reduced – Other Barriers remain

 “LDCs have neither the surplus of capacity of exportable products nor the
production capacity to take immediate advantage of new trade opportunities”
                                 Kofi Annan - UN SG, Financial Times, 5 Mar. 2001


  US$ 1.75 bn. exports from developing countries have been disrupted in
2004, due to SPS (food safety) non-compliance. While only US$ 53 mn. spent
                        by donors on SPS support.
 World Bank 2004, Steven Jaffee & Spencer Henson, Standards and Agro-Food Exports from Developing Countries – Rebalancing the Debate




COST OF COMPLIANCE TO FOOD SAFETY RULES - UNIDO Estimates
    Shrimp exports to the EU - Testing and Compliance cost adds 2.8%
      Enterprise Quality/safety set up cost – adds 5% to product cost
  National Quality & Testing infrastructure – US$ 5.0 mn. to US$ 25.0 mn.
                                                                 www.unido.org           AFITA/WCCA 2004




 Stages of the -
 food industry
                   Quality systems in the Agri-Food-Industry
  retail



processing
                                                                       direct         ISO
                                                                       supplier to   22000
                                                                       the retail
farmer


Feed industry



                   GMP   EurepGAP    QM-Milch
                                       -         DQG        Q+S            IFS
                         BQM         IKM                    Certus        EFSIS      Quality systems
                         Agri        KKM                     IKB          BRC
                         Confiance                       Label Rouge

                         Quality and safety and Beyond
         Integration Needs

                BRC       Different
                          Product Lines
  HACCP
                                 ABM
          Enterprise/Chain
ISO9000      Management
                System           Q+S
  GHP          ISO 22000     Traceability
                            ISO14001
   EurepGAP
                        IFS
       GMP 1...X SQF            etc.
                     www.unido.org   AFITA/WCCA 2004



         Quality




                                Price




safety
         The “big”dilemma
                                        www.unido.or
                                             g



UNIDO GLOBAL APPROACH: The UNIDO 3 Cs
“Countries must have marketable products for export”
   COMPETITIVITY       of productive capacities

“Products must conform to requirements of clients and   markets”

   CONFORMITY       with standards

“Rules for trade applied and simplified cross border transactions”
   CONNECTIVITY       to markets

   Compete               Conform               Connect
Forming Strategic Partnerships for Trade Capacity Building
                                                                    www.unido.org




Total UNIDO TRTA Portfolio: OECD/WTO TCB Data Base

                                                                             39.8
                  40


                  30                                      29.9                26.9
                                                                              25.4
    US$ million




                                                          23.2
                                     21.3
                  20                                15.9 16.4                 19.4
                                     11.7           15.3
                           11.6
                  10                  8.8                                      9.4
                               9.5                        11
                                     7.6
                                                                              0.6
                  0
                                2002                    2003               2004
                       UNIDO                FAO   ITC            UNCTAD     UNDP     WTO

                        UNIDO TCB projects 2005: US$ 64.6 Mn.
                       Additional US$ 90.4 Mn. under negotiations
Source: UNIDO elaboration
                                 Case of Egypt
          Traceability of agro-industrial products for the European Market




                  Situation Before
• Exporters not aware of impact of new Directive EC 178/2002 that
  could become a TBT as of 1st January 2005:
• Insufficient national capability to assess the problem, its impact and
  implement cost-effective solutions
• Lack of funding (institutions/enterprises)
• Risk of loosing foreign markets by local suppliers and
  complementary industries
• Key priority exported products to be effected with high negative
  impact not known
                                   Case of Egypt
           Traceability of agro-industrial products for the European Market




                     Situation Today
• TRTA/CB Project elaborated jointly by UNIDO and the Ministry of
  Foreign Trade (MOFT) with support of Italian authorities
• TRTA/CB funded utilising a debt swap agreed between Italy and
  Egypt and linked to an Italian Initiative for trade facilitation
  called the “green corridor”
• Egyptian producers assisted and traceability scheme
  implemented and linkages with Italian/European Importers
  established
  Funded in the framework of the “Debt-for-Development Swap” agreement
(19.02.2001) by the Government of the Italian Republic and the Government of
                         the Arab Republic of Egypt
                                Case of Egypt
         Traceability of agro-industrial products for the European Market




                  Situation Today
• Assistance to Pack Houses (~100) and through them to over
  5000 producers
• Available software assessed and 5 best options selected
• UNIDO Traceability manual developed and adopted
• Over 600 Egyptian trained in traceability and related issues
• Physical traceability assessed (farm to fork)
• Value chain analysis of selected products
• Mapping of pack Houses and production pattern
                                Case of Egypt
         Traceability of agro-industrial products for the European Market




                  Situation Today
• Financial scheme designed
• Applicants to traceability fund assessed (ICT infrastructure,
  traceability system SWAT, assistance in selection of
  technology, support in implementation)
• Physical traceability assessed (farm to fork)
• Assess sector technology upgrading needs
• Assistance planned for Plant Quarantine system
• Preparatory work for assistance to food manufacturers (also
  internal traceability)

								
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