Second International Workshop on Conformity

Assessment
Rio de Janeiro, 11-12 December 2006
Presented by: Ulrich HOFFMANN, UNCTAD secretariat
 Abstract
2

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
 3
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.
 4
Escalating Food Safety and Quality Requirements

Key Reasons

“Perception” on recent Risk and cost minimization

food scares and management by major
scandals retailers

Demographic
developments in OECD More sophisticated detection
countries and testing methods
 5
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.
 6
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 anti-
trust/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.
 7
Main Trends in EHFS Requirements [1]

3 Trends:

More strict (e.g. MRLs)

More complex (e.g. traceability and auditing requirements)

More multi-dimensional (e.g. see next slide)

 Multidimensionality of Requirements
8

Pillars of Environmental, Health and Food Safety Requirements

Food Safety Plant/Animal Product Environment Social

Health Quality

MRLs Surveillance Product Control of Labour

Heavy metal Quarantine composition water and env standards
limits Pest risk Product contamination Fair trade
Food assessment cleanliness Protection of standards
additives Sanitation Grading biodiversity
Hygiene Labeling Protection of
requirements requirements endangered
Traceability Control of species
HACCP nutritional Recycling
claims Organic prod
ISO 9002 requirements
Multidimensionality of Requirements cont’d
9

Holistic view of EUREPGAP Standard:

Food Safety, Environment and Social CPs

250
Control Points

Recom. 200
Minor 150
Major 100
50
0
y n t l al
f et e cia o t
S a
o nm So T
d vir
F oo En
 10
Main Trends in EHFS Requirements [2]

• 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.
 11
Diverse Standards in National and International Markets

Source: Local Customs

Jaffee, S. and Consumer
Preferences There is an ongoing
process to put in
place harmonized
Private Laws
Standards requirements and
Sector and
Competitive
as
Regulations
codes, yet the
applied application is
Strategies
occurring at
different speed and
depth.
Enforcement
Capacity

• Differential application of requirements/standards is the norm, rather

than the exception.
• Weak compliance enforcement by governments, strong by retailers.
 12
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
 13
Hierarchy of Trade-related SPS Management Functions

SPS
Diplomacy

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
14

Issue Details
Food safety MRLs
Heavy metals
Food additives
Hygiene requirements
Traceability
Hazard analysis and critical control points (HACCP)
Plant health Surveillance
Plant quarantine
Pest risk assessment
Sanitation
Product Grading
quality Freshness
Product composition
Product cleanliness
Labelling requirements
Control of nutritional claims
Environment Control of water and environmental contamination
Recycling requirements
Organic production requirements Source:
Protection of biodiversity
Protection of endangered species Jaffee, S. et.al.
Social Labour standards
Fair trade standards
Corporate social responsibility
 Main Problems Arising from Mandatory EHFSRs 15

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.
 16

Spectrum of Private-sector Requirements

Whole Chain Assurance

REQUIREMENTS
Currently
PRE- POST some 400
FARM FARM private
GATE GATE food
Growers Food Retail schemes
Packing and Consumers
Farmers Processing Stores
Key components
Collective EurepGAP HACCP HACCP
Pre-Farm and Post Farm
SQF 1000 BRC ISO 9000 o

Gate Standards
Integrated ISO 9000 SQF 3000
Farming of SQF 2000 o Traceability
FARRE o Documentation
UK Assured Produce o Residue Monitoring
Individual TESCO’s Nature’s
 Implications for DgC Producers/Exporters
17

• 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.
 18
Interrelationship between Mandatory and
Voluntary EHFS Requirements
Different thrust:
– 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
19

• 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
20

• 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 high-
end domestic market in DgCs
• Revision of EurepGAP standard every three years – moving target (DgCs
have to seek active participation)
 Key Challenges for Developing Countries
21

• 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
22

General Issues

• 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
23

Fire-fighting, Pro-active,
reactive strategic
approach approach
INVOLVES:
• 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)
• 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 24

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.
 25
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.
Info gathering and
Clusters of Policy Tools dissemination –
cost/benefit analysis

Public- Pay special

private Effective attention to
sector adjustment small
dialogue producers

Setting up and
Supporting Quality
Assurance Systems
 26

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)
 27

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)
 28

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.
 29

On-line Sources
Website of UNCTAD’s Consultative Task Force
www.unctad.org/trade_env/test1/projects/taskforce.htm
Country-case studies under UNCTAD’s Consultative Task
Force on challenges and opportunities of EurepGAP for
Central and South American countries
www.unctad.org/trade_env/test1/meetings/inmetro2.htm
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