Comparing EU free trade agreements by bdi90998

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									                                   InBrief No. 6B - July 2004



Comparing
EU free trade agreements
Sanitary and Phytosanitary Standards
                                Bettina Rudloff and Johannes Simons, Institute of Agricultural Policy, University of Bonn



 The aim of this InBrief series is to provide a synthesis of various chapters of the ten free trade agreements (FTAs) recently concluded
 by the European Union with developing countries, as well as other relevant trade agreements when appropriate. Each InBrief offers
 a detailed and schematic overview of a specific set of trade and trade-related provisions in these agreements.




Sanitary and phytosanitary standards (SPS)
are receiving increasing attention within                         Box 1 Main Provisions of the WTO SPS Agreement
the framework of international trade. SPS
measures are meant to ensure that imports         1) National choice of protection level (Art. 2)
do not undermine national health and              2) Harmonisation (Art. 3)
safety. However, restrictions designed to            • Domestic standards to be based on recommended international ones
uphold domestic safety standards can be              • Stricter standards to be justified by risk assessment
misused as disguised protectionism. This          3) Risk assessment (Art. 5)
risk has gained importance because tariffs           • Recommended criteria to be considered
as traditional measures of protection are            • Provisional measures if timely risk assessment is unfeasible (Art. 5.7)
covered by World Trade Organization (WTO)         4) Equivalence (Art. 4)
reduction commitments.1 Against this back-           • Aim of achieving bilateral and multilateral equivalence agreements
ground, international agreements on SPS           5) Regionalised concept (Art. 6)
aim to balance the targets of granting               • Regional identification of hazards
nations free choice of their national level of    6) Procedural provisions
safety protection and facilitating fair mar-         • Control, inspection and approval (Annex C)
ket access.                                          • Notification and enquiry points (Annex B)
                                                  7) Technical assistance (Art. 9)
SPS measures are qualitative in character.        8) Special and differentiated treatment (Art. 10)
Their aim is to provide a certain level of food      • Phased introduction of measures possible
safety or health based on strict scientific          • Encouragement and facilitation of the active participation in relevant organisations (see Box 2)
reasoning. Therefore, no preferences can be       See www.wto.org/english/tratop_e/sps_e/sps_e.htm
granted in the form of easier or softer
requirements for free trade agreement (FTA)       International quasi-binding SPS standards
partners. This absence of any possible con-       1) Food Safety: Codex Alimentarius Commission (CAC)
cessions is a feature which sets SPS provi-       2) Animal Health: World Organisation for Animal Health (OIE)
sions apart from the quantitative                 3) Plant Health: International Plant Protection Convention (IPPC)
agricultural provisions.




                                                    European Centre for Development Policy Management
                                                    Centre européen de gestion des politiques de développement
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                                                                                                        • fostering consistent application of WTO
                 Box 2 Technical support for developing countries
                                                                                                          SPS measures by pursuing a common
 Supplementing the WTO SPS Agreement, the comprehensive Standards and Trade Devel-                        understanding of the existing WTO provi-
 opment Facility (STDF) is provided through the World Bank’s Development Grant Facility and               sions; and
 the Doha Development Trust Fund. The main objective is to help developing countries to meet            • harmonisation, through consistency with
 SPS requirements by extending technical skills and supporting participation in relevant                  WTO standards and mutual recognition
 organisations. The Food-Specific Codex Trust Fund was jointly launched by the World Health               provisions.
 Organization and the Food and Agriculture Organization of the United Nations (FAO) and
 oordinated by the STDF. It aims to support developing countries to participate in the process of       The FTAs differ in four main respects (Table 1):
 establishing standards, e.g. by joining the relevant meetings and conferences.
                                                                                                        • the extent to which they reaffirm WTO
                                                                                                          rules;
                                                                                                        • the emphasis on cooperation on SPS
SPS in the WTO                                     circumstances such as diseases of special              measures;
                                                   regional relevance or the existence of con-          • the adoption of a general exception clause
The WTO SPS Agreement adopted in the               trol programmes for certain regions.                   similar to GATT Art. XX; and
1994 Uruguay Round lays down a common                                                                   • the specification of technical assistance in
basis with respect to SPS measures for all         Finally, procedural provisions address issues          SPS issues.
countries that are members of the WTO,             of transparency such as the requirement to
independent of whether they are additio-           establish enquiry and notification points for        Only very rarely do the agreements contain
nally a member of an FTA. This agreement           information exchange. Developing countries           individual provisions that go beyond WTO
defines SPS measures as ‘all types of trade        often face capacity constraints in these             SPS commitments (Table 1). These concern a
rules aiming at the protection of human,           areas. Special and differential treatment            limited number of product-specific supple-
animal and plant life or health’. To prevent       provides for the encouragement and facili-           ments, procedural provisions on fixed time
an arbitrary interpretation of the protection      tation of developing countries’ participation        schedules or decision procedures, equiva-
level, quasi-binding international standards       in relevant organisations, as well as for            lence provisions, and some specifically
have been introduced. Any deviation                longer implementation periods (Box 2).               emphasised objectives.
towards stricter national standards must be
justified by a risk assessment.
                                                                                                        The explicit confirmation of the WTO com-
A number of principle provisions make up           SPS in EU free trade agreements                      mitments regarding SPS measures is not
the core of the WTO SPS Agreement. First,                                                               only a formal element. It also increases the
member states are free to choose the level         As the definition of norms and standards is          flexibility of the parties in case of disagree-
of protection they deem necessary and to           predetermined by the superior WTO rules,             ments. The parties have the opportunity to
establish measures to implement the tar-           bilateral arrangements mainly focus on pro-          settle disputes either according to the dis-
geted protection level. Harmonisation              cedural issues. In this respect, a common            pute procedures of the specific FTA3 or
requires national standards to be based on         characteristic of all EU FTAs reviewed here is       according to the WTO dispute settlement
standards developed by accepted and rec-           their emphasis on facilitating the applica-          procedures.
ommended international organisations.2             tion of the WTO SPS provisions. This is done
Any stricter protection must be justified by       in two main ways:
a scientific risk assessment. Further, equiva-
lence is recommended in the acceptance of
different measures that achieve similar pro-
tection levels. The exporting country must
                                                              Box 3 Where to find articles on SPS in EU trade agreements
demonstrate equivalency of measures to              MED agreements:
the importing country. Bilateral and multi-         Tunisia (1995) – Article 40; Israel (1995) – Article 46 and Protocol 3; Morocco (1996) – Article 40;
lateral agreements (socalled ‘equivalence           Jordan (1997) – Article 71; the Palestinian Authority (1997) – Article 44; Algeria (2001) – Article
agreements’ or in case of mutual accept-            58; Lebanon (2002) – Article 51.
ance ‘mutual recognition agreements’) pro-          http://europa.eu.int/comm/external_relations/euromed/med_ass_agreemnts.htm
vide the institutional framework for
implementation of equivalence. Such agree-          TDCA (South Africa): Article 61.
ments establish a basis for the exchange of         http://europa.eu.int/eur-lex/en/archive/1999/1_31119991204en.html
information on standards, recognition of
                                                    Global Agreement (Mexico): Article 5 of the main agreement and Article 20 of Jount Council
certification, provisions for retests and
                                                    Decision 2/2000.
appeal, and the return of rejected consign-
                                                    http://www.europa.eu.int/comm/trade/issues/bilateral/countries/mexico/docs/en2_annex_16.pdf
ments. Provisional protection measures may
be implemented if scientific evidence is            Association Agreement (Chile): Annex IV.
insufficient to provide a reliable risk assess-     http://europa.eu.int/comm/trade/issues/bilateral/countries/chile/docs/euchlagr_xxiii.pdf
ment (Art. 5.7).
                                                    For other agreements, see the Trade Agreements Database and Archive maintained by
Other main provisions relate to the regio-          Dartmouth Tuck Business School: http://mba.tuck.dartmouth.edu/ib/research/trade_
nalised concept wherein the definition of           agreements.html
risk–free areas should consider regional




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The Euro-Mediterranean                                              Table 1 SPS provisions in EU free trade agreements
Association Agreements and
the TDCA                                                                                         MED          TDCA          Mexico          Chile
                                                     Confirmation of WTO provisions
The Trade, Development and Cooperation
                                                     Reaffirmation of WTO SPS
Agreement (TDCA) concluded with South
                                                     Agreement                                      -
Africa in 1999 and the Association (or MED)
Agreements concluded with Israel (1995),
Tunisia (1995), Morocco (1996), Jordan (1997),       Cooperation on SPS measures
the Palestinian Authority (1997), Algeria
(2001) and Lebanon (2002) contain mostly             Harmonisation of standards as an
similar and relatively shallow provisions on         explicit target                                    *
SPS.
                                                     Protection of health and life as a
All MED agreements emphasise the neces-              general exception similar to GATT
sity of cooperation on SPS issues. Some              Art. XX
agreements explicitly mention the aim of
harmonising SPS standards (e.g. Art. 46 for          Explicit provision of technical
Israel, Art. 51f for Lebanon, Art. 58 for            assistance on SPS matters                      -            -              -
Algeria, Art. 44 for the Palestinian
Authority). Technical assistance is provided
                                                     Individual supplements beyond WTO provisions
for in general provisions on agriculture-
related assistance (e.g. Art. 46 for Israel, Art.
71 for Jordan, Art. 58 for Algeria). Protocol 3      Product-specific provisions or            - for Israel
of the agreement with Israel is dedicated to         amendments                               (cut flowers)      -              -             -
phytosanitary issues integrating some prod-
uct-specific exceptions. Thereby, certifica-         Procedural specifics**:
tion is required only for certain defined cut
flowers and fruit species. With respect to              establishment of a joint
other plants, permission for import can be              management committee                        -            -
granted even if in general the import into
one of the partners is prohibited. The grant-           detailed process of equivalence
ing of such a permission must be based on a             determination                               -            -              -
pest risk analysis. Hereby, the parties
assume conformity with plant protection
                                                        guidelines for conducting
measures for all other products than the
                                                        verifications, import checks and
defined cut flowers and fruit species. When
                                                        certification                               -            -              -
new SPS measures are being planned, spe-
cific consultations with the partner are
required (Protocol 3c).                                 time schedules and provisions on
                                                        internal reporting and consultation         -            -              -
The TDCA does not differ substantially from
the MED agreements. Within the overall                  operationalising administrative
objective of promoting ‘integrated, harmo-              provisions for imports                      -            -              -
nious and sustainable rural development in
South Africa’ (Art. 61), the TDCA mentions              requirements for information
cooperation in animal health, plant health              exchange                                    -            -              -
and agricultural production techniques. It
further states that cooperation will be              Provisional approval of certain
geared to examining measures to har-                 establishments without prior
monise standards and rules in the SPS field,         inspection                                     -            -              -
in conformity with WTO rules.
                                                     Specific objectives                            -            -              -
Except for the agreement with Israel, the
                                                                                                                                        animal welfare
MED agreements and the TDCA include very
general and shallow provisions on SPS, with
an overall emphasis on cooperation.                  * Only in the agreements with Israel, Algeria, the Palestinian Authority and Lebanon.
                                                     ** For the MED agreements and the TDCA, these specifics are either currently being
                                                        negotiated as part of supplemental technical annexes or such provisions have just been
                                                        adopted. Nevertheless, they are not an explicit part of the FTA itself. This is true only for
                                                        Mexico and Chile.




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The EU-Mexico Global                             cooperation, its trade provisions stand out       mented by appendices with procedural
Agreement                                        as the most advanced in EU bilateral agree-       details on the consultation process, the
                                                 ments to date.                                    priority sectors concerned, and conditions
The Economic Partnership, Political                                                                for provisional approval of establishments
Coordination and Cooperation Agreement,          The Association Agreement contains com-           (e.g. slaughter houses or processing estab-
also called the ‘Global Agreement', between      prehensive annexes, of which Annex IV             lishments) without prior inspection by the
the EU and Mexico was signed in December         covers SPS measures applicable to trade in        importing party (appendices V and VI).
1997 and came into force in October 2000.        animals and animal products, plants, plant
The most important provisions regarding          products and other goods, along with              Other appendices of procedural relevance
SPS can be found in Article 20 of the supple-    animal welfare. Annex V covers trade in           provide guidelines for conducting verifica-
mental EC/Mexico Joint Council Decision          wine. Both annexes reaffirm an overall            tions, for import checks and inspection fees
2/2000 of March 2000.                            commitment to WTO rules (Annex IV,                and for certification (appendices VII–IX).
                                                 Art. 42k and Annex V, Art. 26).                   Also, the competent authorities are defined
Reaffirming the overall commitment to                                                              with regard to the implementation of the
WTO provisions, the agreement covers SPS         The substantive provisions on norms and           agreement (Appendix II).
legislation and the mutual recognition of        standards follow those of the WTO.
conformity assessment (Art. 5j of the main       However, several procedural rules make this       Besides these institutional provisions, the
agreement). The general exceptions of the        agreement different and more detailed than        scope of SPS objectives is extended by a
Global Agreement are similar to those            the other FTAs (see also Table 1). Technical      special focus on animal welfare standards,
within GATT Art. XX (Art 5k of the main          assistance is specified for SPS-related mat-      concerning the stunning and slaughter of
agreement and Art. 22 of Decision 2/2000).       ters and is included within the provisions on     animals (Art. 2 and 3 and Appendix 1c). This
Decision 2/2000 of the Joint Council             support for the agricultural and rural sec-       follows the current policy of the World
emphasises and defines specific procedural       tors (Art. 24.2g).                                Organisation for Animal Health (OIE) which
rules, of which the Special Committee is of                                                        has recently integrated animal welfare into
outstanding importance. This committee is        Another aspect that makes the agreement           its strategic priorities. Though no significant
made up of two representatives of both           unique compared with the others is the            standards have yet been established at the
trading partners and has a three-fold man-       comprehensive provisions on equivalence           international level, development of an
date:                                            integrated into Annex IV.4 These provisions       international animal welfare standard is
                                                 require strong cooperation between the            nonetheless an aim set out in the
• to provide a forum to identify and address     responsible institutions of both partners.        Association Agreement with Chile (pre-
  problems that may arise from the applica-                                                        amble of Annex IV).
  tion of specific measures, with a view to      As in the Global Agreement, a joint commit-
  reaching mutually acceptable solutions;        tee, called the Joint Management                  A comprehensive and detailed institutional
• to consider the development of specific        Committee, is responsible for monitoring          design characterises the SPS-related provi-
  provisions for the application of regionali-   and control of the implementation of the          sions in the Chile Association Agreement. The
  sation, or for assessments of equivalence;     agreement (Art. 16). Flexibility is provided by   agreement targets strong cooperation
  and                                            additional ad hoc groups that deliberate on       between the respective authorities. SPS provi-
• to consider the development of specific        SPS-related issues. These groups are made         sions are more directly operational than
  arrangements for information exchange          up of expert representatives of the parties       those in the other agreements. Being an
  (Art. 20 of Decision 2/2000).                  or external experts.                              integral part of the FTA, they provide more
                                                                                                   legal security for exporters.5
Additionally, the committee may establish        As for information exchange, the agreement
contact points for the information               details specific information requirements
exchange.                                        for verification procedures, import checks
                                                 and relevant scientific opinions (Art. 12).       Overall conclusions
The Mexico agreement differs from those          Further, detailed provisions ensure trans-
previously discussed in the procedural aspect    parency by defining strict time schedules         SPS measures are becoming increasingly
of establishing a Special Committee on SPS       (Art. 8) and deadlines for the submission of      important in international trade arrange-
measures. By creating a committee man-           required information. The agreement also          ments. SPS measures aim to balance targets
dated to consider regional criteria and trans-   foresees concrete steps for consultation          of national health and safety with fair mar-
parency (by facilitating information             when a party fails to comply with notifica-       ket access. To avoid arbitrary trade barriers,
exchange), the Global Agreement strength-        tion requirements (Art. 8.3).                     food safety and animal health policies
ens bilateral cooperation on SPS issues.                                                           should be based on objective and neutral
                                                 A safeguard clause reiterates WTO rules on        grounds. To that end, the WTO SPS
                                                 implementing transitional SPS measures            Agreement and the associated provisions of
                                                 when scientifc evidence is insufficient (Art.     various international organisations provide
The EU-Chile Association                         14).                                              a common and reliable basis.
Agreement
                                                 A comprehensive article in Annex IV covers        The FTAs recently concluded by the EU do
The latest FTA concluded by the EU is the        the determination and suspension of equi-         not grant SPS concessions analogous to
one signed with Chile in November 2002.          valence and considers time schedules for          quantitative tariff reductions. All SPS stan-
Though this Association Agreement goes           the consultation process between the              dard-related provisions in the agreements
beyond trade to cover political dialogue and     parties (Art. 7). The provisions are supple-      are bound to the WTO framework. Their




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InBrief 6B July 2004                         Comparing EU free trade agreements                                                                            Page 5




main aim is to mitigate the costs of comply-             Notes
ing with SPS regulations and provide more                                                                                      Acronyms
security for exporters. In some agreements,              1 See the ECDPM-CTA FTA InBrief on agricul-
exceptional rules go beyond WTO provi-                     ture.                                                   EU          European Union
sions, such as the limited product-specific              2 Such as the World Organisation for Animal               FAO         Food and Agriculture
provisions in the agreement with Israel and                Health (OIE), the International Plant                               Organization of the United
the inclusion of animal welfare as an objec-               Protection Convention (IPPC) and the Codex                          Nations
tive in the agreement with Chile. Of all the               Alimentarius Commission (CAC) for food                  FTA         Free trade agreement
FTAs, only those with Mexico and Chile con-                safety. The latter, for instance, provides com-         GATT        General Agreement on Tariffs
tain individual procedural or institutional                prehensive and detailed guidelines on food                          and Trade
specifics that have the potential to                       hygiene, risk assessment procedures, maxi-              MED         Euro-Mediterranean
strengthen mutual cooperation. However, in                 mum residue levels of several substances                            Association
current and future renegotiations of the                   and additives and standards for labelling               OIE         Office International des
other FTAs, the relevance of institutional                 and packaging.                                                      Epizooties
provisions in the other agreements could be              3 See the ECDPM FTA InBrief on dispute settle-            SPS         Sanitary and Phytosanitary
enhanced as well.                                          ment.                                                               Standards
                                                         4 Therefore, Annex IV is often referred to as the         STDF        Standard and Trade
                                                            ‘equivalence agreement’.                                           Development Facility
                                                         5 For some of the other FTAs, the approach of             TDCA        Trade Development and
                                                           the EU-Chile Association Agreement to                               Cooperation Agreement
                                                           define procedural issues as integral part has           WTO         World Trade Organization
                                                           recently been initiated to achieve a similar
                                                           level of procedural security. The administra-
                                                           tive details are part of technical arrange-
                                                           ments supplementing the respective FTAs.
                                                           See for instance Decision 1/2003 of the EU-
                                                           Morocco Association Council, 24 February
                                                           2003, setting up subcommittees of the
                                                           Association Com-mittee (2003/208/EC).


                    Selected publications and information sources on sanitary and
                                       phytosanitary standards
                                Publications                                                                    Information sources

Cerrex (2003), Study of the consequences of the application of sanitary and phy-    www.acp-eu-trade.org
  tosanitary (SPS) measures on ACP countries, CTA Study, May,
  http://agritrade.cta.int/CTA_SPS%20Study_EN.pdf.                                  Agritrade: http://agritrade.cta.int

FAO/WHO (2003), Codex Alimentarius - Food Import and Export Inspection and          CAC – Codex Alimentarius Commission:
  Certification System - Combined Texts, Joint FAO/WHO Food Standards                 www.codexalimentarius.net/standard_list.asp
  Programme,
  www.fao.org/DOCREP/005/X4489E/x4489e00.htm#Contents                               IPPC – International Plant Protection Convention:
                                                                                       www.ippc.int/IPP/En/default.htm
O’Connor and Company (2003), The EC traceability and equivalence rules in light
   of the SPS Agreement: a review of the main legal issues, CTA Study, December,    OIE – World Organisation for Animal Health: http://www.oie.int/
   http://agritrade.cta.int/Agritrade_Report_O%27Connor.pdf
                                                                                    EU Expanding Exports Helpdesk: advice for developing countries exporting to the
Otsuki, Tsunehiro, John S. Wilson and Mirvat Sewadeh (2001), A Race to the Top? A     EU: http://export-help.cec.eu.int/
  Case Study of Food Safety Standards and African Exports, World Bank Research
  Paper No. 2563, http://econ.worldbank.org/files/1424_wps2563.pdf.                 EU food and veterinary inspections reports:
                                                                                      http://europa.eu.int/comm/food/fs/inspections/index_en.html
Oyejide, T. Ademola, E. Olawale Ogunkola and S. Abiodun Bankole (2000),
  Quantifying the Trade Impact of Sanitary and Phytosanitary Standards: What is     EU guidelines for importing from third countries:
  Known and Issues of Importance for Sub-Saharan Africa, Paper prepared for the       http://europa.eu.int/comm/food/fs/inspections/special_topics/guide_third-
  World Bank workshop on "Quantifying the Trade Effect of Standards and               countries_en.pdf
  Regulatory Barriers: Is It Possible?, April 27, 2000,
  www.worldbank.org/research/trade/conference/oyejide1.pdf                          FAO International Portal on Food Safety, Animal & Plant Health:
                                                                                      www.ipfsaph.org/

                                                                                    Standards and Trade Development Facility (Technical Assistance):
                                                                                       www.standardsfacility.org/




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                                                            InBrief series on trade for 2004-2005
       The InBrief series Comparing EU free trade agreements is aimed at                        The InBriefs are available online at www.acp-eu-trade.org
       trade negotiators, policy makers, officials and experts in gathering a                   www.ecdpm.org and http://agritrade.cta.int/
       better technical insight into the evolution of EU trade agreements and
       the approaches adopted by the EU in negotiating these agreements.                        This InBrief on sanitary and phytosanitary standards (SPS) is an
       This might be of particular interest to actors involved with or                          initiative by the European Centre for Development Policy Management
       interested in the current and forthcoming negotiations on trading                        (ECDPM) and the Technical Centre for Agricultural and Rural
       agreements with the EU, such as the African, Caribbean and Pacific                       Cooperation (CTA), under the editorial supervision of Sanoussi Bilal
       (ACP) countries with Economic Partnership Agreements (EPAs). A                           (sb@ecdpm.org), Stefan Szepesi (ECDPM) and Vincent Fautrel
       complementary and parallel series on EPAs, called Economic Partnership                   (fautrel@cta.int).
       Agreement InBriefs, provides insights into the main issues faced by the
       ACP, and discuss options for the negotiations with the EU.

       Topics included in the ECDPM InBrief series on trade for 2004-2005 are:
       • Agriculture
       • Anti-dumping and Safeguards
       • Competition Policy and State Aid
       • Dispute Settlement
       • Fisheries
       • Government Procurement                                                                 CTA Postal address            CTA visiting address
       • Investment                                                                             Postbus 380                   Agro Business Park 2
       • Rules of Origin                                                                        NL-6700 Wageningen            Wageningen
       • Sanitary and Phytosanitary Standards (SPS)                                             The Netherlands               The Netherlands
       • Services
       • Special and Differential Treatment                                                     Tel +31 (0)317 46 71 00       Fax +31 (0)317 46 00 67
       • Technical Barriers to Trade (TBT)                                                      E-mail cta@cta.int
       • Trade Facilitation
       • WTO Compatibility                                                                      Website www.cta.int




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