Product Requirements and Market Access

(SPS and TBT)

C. Obura Bartel Robert Hamwey

Exports

e.g.

Ethiopia

Safely kept & consumed

Safely used,environmentallysound

ImportingCountry

Humans, animals, plants of importing country

SPS

TBT

Product Requirements

Standards applied to exports: Ethiopia

0 50 100 150 200

Coffee, Tea, Cocoa,Spices

Crude Animal & Veg.material

Oil, Seeds

Leather & Leather Goods

Vegetables & Fruit

Sugar, Honey

Textile Fibres

Cereals

Textile Yarn, Fabrics

Meat Products

$ million

EthiopiaTop 10 Exports

in 2003

SPS

SPS

SPS

SPS

TBT

TBT

TBT

Standards applied byEthiopia’s main trading partners

0 50 100 150 200 250

Djibouti

Germany

Japan

Italy

Saudi Arabia

USA

Somalia

United Kingdom

Israel

India

Sw itzerland

Belgium

Yemen

France

United Arab Emirates

Portugal

Pakistan

China

Turkey

Netherlands

$ million

EthiopiaTop 20 Export

partners 2001-2003

Moderate #

Moderate #

Moderate #

Moderate #

High #

High #

High #

High #

High #

High #

High #

Product requirements are becoming more frequent and/or more stringent in many sectors of export interest to LDCs

Non compliance may result in trade losses

LDCs must continue to strengthen their ability to respond to these requirements

LDCs should continue to communicate their objectives and concerns in international trade and standard-setting bodies

Main Points

WTO basics

• Agreements• Principles

The WTO Agreements

MemberA

MemberB

Goods

Services

GATTGATS

Issues SectorsWTO… WTO Agreements are betweenGovernments, not private firms

The WTO AgreementsAgreements for specific sectors or issues:AgricultureSanitary and phytosanitary measures (SPS) Textiles and clothingTechnical barriers to trade (TBT) Trade-related investment measuresAnti-dumping measuresCustoms valuation methodsTrade-related intellectual propertyPreshipment inspectionRules of originImport licensingSubsidies and counter-measuresSafeguards

These agreements were adopted during the Uruguay Round of

negotiations in 1994 and each is an integral part of the ‘WTO Agreements’

• During the Uruguay Round (UR) of

Multilateral Trade Negotiations,

provisions on product requirements were

included in several UR Agreements

SPS

(Sanitary and Phytosanitary measures)

TBT

(Technical Barriers to Trade)

The UR Agreements

The SPS and TBT Agreements do not contain standards, rather they

qualify what types of standards are permitted and specify how

they should be applied

The WTO Agreements

MemberA

MemberB

Goods

Services

WTOTBTSPS

Standards… SPS and TBT related standards

block imports of non-complying products

WTO basics

• Agreements

• Principles

• National Treatment (NT) ( GATT Art. III ) ensures non-discrimination between domestic and imported goods

• Most Favoured Nation (MFN) ( GATT Art. I ) ensures that imports from other Members are subject to the same treatment … exemptions exist

• National health, safety and environmental policies must not arbitrarily discriminate

between foreign and domestically produced like products

between like products imported from different trading partners

Principles: Non-discrimination

National Treatment

DomesticFirm

ForeignFirm

DomesticMarket

Most Favoured Nation

Exporting Member

AImporting Member

Exporting Member

B

Terms A

Terms BMost favourable terms extended to all members

Like products• WTO rules have generally been interpreted as not

allowing to differentiate products based on their Process and Production Methods (PPMs), unless the PPM has an impact on the final characteristics of a product

• Therefore, it is generally considered that WTO rules do not permit WTO Members to impose restrictions on imports of a product purely on the basis of how the product is produced (non-incorporated PPMs)

Principles: Like products

Like Products

ProductPPM A

ProductPPM B

ImportMarket

HIGH local pollution PPM

LOW local pollution PPM

However, as an exception, SPS and TBT related standardsallow Members to discriminate

between imports based on PPMs !

• WTO members must notify the WTO about measures that may have a significant impact on trade

• Notification obligations include health, safety and environmental measures (SPS and TBT)

• The WTO Secretariat compiles all information on these measures in its Central Registry of Notifications

• These are to be put in a single database that all WTO members can access

Principles: Transparency - notification

Health, safety and environment-related

product requirements

Product requirements take the form of

product standards (qualities of finished good)

and/or process standards (how the good is produced)

They may be

regulatory (in exporting or importing country)

or voluntary (response to market preferences)

Some definitions

• Regulatory standards

Safety, health and environment (SPS, TBT)

Labelling requirements (TBT)

Packaging requirements (TBT)

• Voluntary standards

Market-based buyer/consumer requirements

Health, safety and environment-related requirements that may have impacts on

exports from Ethiopia

Product requirements and market access

• Regulatory StandardsStringent health, safety and environment- related requirements

• Voluntary StandardsConsumer demand for healthy, safe, or “Environmentally friendly products” (e.g. natural foods, gourmet coffee)

• Potential trade barriers for Ethiopia

• Potential trading opportunities for Ethiopia ?

Foreign Regulatory Standard

Exporting Country

Importing Country

RegulatoryProduct Standard

VoluntaryProcess Standard

Home Regulatory Standard

Exporting Country

Importing Country

Potential for easier entry

butReduced

competitiveness

National Env.

Policy

RegulatoryProcess Standard

SPS – Food, plant and animal safety standards. Applies only to agricultural and some natural commodities trade (e.g., timber products).

TBT – Food, plant and animal safety standards, as well as environmental protection standards. Can apply to trade of any good (e.g., can include standards such as packaging and labelling for food), but most generally applies to non-agricultural trade.

Both SPS and TBT product standards can have environment related process implications (PPMs)

Regulatory Standards

SPS or TBT ?

To protect: From:

human or animal life

risks arising from additives, contaminants, toxins or disease-causing organisms in their food, beverages, feedstuffs

human life plant- or animal-carried diseases (zoonoses)

animal or plant life

pests, diseases, or disease-causing organisms

a country damage caused by the entry, establishment or spread of pests

Other measures must be TBT measures

SP

S m

easu

res

Illustrative SPS Measures :

• Additives, contaminants, toxins in food or drink • Residues of drugs or pesticides in food or drink • Processing methods with implications for food safety • Plant/animal quarantine procedures• Declaring areas free from pests or disease • Preventing disease or pests spreading to or in a country • Sanitary requirements for imports (e.g. refrigeration

used to transport animals)

Differences between SPS and TBT Measures

Illustrative TBT Measures :

• Labelling of composition or quality of food• Volume, shape and appearance of packaging • Packaging and labelling for dangerous chemicals• Regulations for electrical appliances • Regulations for communications equipment • Textiles and garments labelling • Testing vehicles and accessories • Regulations for ships and ship equipment • Safety regulations for toys

Differences between SPS and TBT Measures

Voluntary Standards

Exporting Country

Importing Country

Consumer Preference

NicheMarket

VoluntaryProduct

Standard

Process Standard

• Due to increased consumer demand for healthy and environmentally preferable products importers may impose certain health, safety or environmental requirements on their suppliers from developing countries

• Voluntary standards have no legal basis and are not covered by the SPS and TBT Agreements.

Voluntary Standards

WTO provisions

www.wto.org

UNCTAD Training Programme for Ethiopian Officials

TBTSPS

• The SPS Agreement governs measures used

by governments to ensure that human and

animal food is safe from contaminants,

toxins, disease-causing organisms and

additives, and measures to protect human

health from pests or diseases carried by

plants and animals

Agreement on Sanitary

and Phytosanitary Measures (SPS)

SPS

• SPS measures may only be applied to the extent that they are necessary for the protection of life of humans, animals or plant life

• They should not lead to discrimination between Member Countries where identical or similar conditions exist

• Member Countries are encouraged to establish measures on the basis of internationally recommended standards and directives, in order to internationally harmonise sanitary and phytosanitary measures

SPS Agreement

Harmonisation

• International standard-setting bodies mentioned in the SPS Agreement:

Codex Alimentarius

the International Office of Epizootics

the International Plant Protection Convention

• WTO Members may introduce or maintain stricter measures if these are based on a scientific justification or if they are the consequence of coherent decisions based on an appropriate evaluation of risks

SPS Agreement

Risk Assessment

International standards for

harmonisation are those of the

‘three sisters’

• Article 4 of the SPS Agreement, stipulates that measures, which are demonstrably equivalent, should be acceptable to the importing country

• Some members of the WTO have interpreted equivalence to mean any measures that can achieve the required level of SPS protection

• Allows countries to export from certain regions that are free from pests and diseases even when some regions of such countries are affected by diseases

SPS Agreement

Regionalisation

Equivalence

including through Mutual Recognition Agreements

• National measures must be based on “sound science” and on an assessment of risks (Article 5.1) - this is often very difficult/costly in developing countries

• Governments are allowed, under certain conditions, to take provisional measures where relevant scientific information is insufficient (Article 5.7, see next slide)

• Beef/hormone case

Precautionary Principle in the SPS Agreement

Article 5.7 of the SPS Agreement

• “In cases where relevant scientific evidence is insufficient, a Member may provisionally adopt sanitary or phytosanitary measures on the basis of available pertinent information, …

• In such circumstances, Members shall seek to obtain the necessary information for a more objective assessment of risk and review the SPS measures accordingly, within a reasonable period of time” - the latter is a controversial issue

 

Precautionary Principle in the SPS Agreement

• Article 10 of the SPS Agreement provides scope for the phased introduction of new SPS measures and longer periods for compliance for products of export interest to developing countries

• The SPS Committee may also grant developing countries exceptions from the obligations under the agreement based on their financial, trade and development needs

• Article 9 provides for technical assistance including technical expertise, training and equipment to assist Members adjust to and comply with SPS measures

Special and Differential Treatment

• Recognizes the right of WTO Members to protect human, animal and plant life and the environment and to set the level of protection as it deems appropriate

• Aims to ensure that technical regulations, standards and conformity assessment procedures do not create unnecessary obstacles to trade

• Encourages countries to use international standards where these are available

Agreement on

Technical Barriers to Trade (TBT)

TBTHarmonisation

including through common use of ISO Standards

• TBT measures include technical standards and conformity assessment procedures

• Permits technical standards for product characteristics or related PPMs

• Specifies conformity assessment procedures used to determine that product requirements are met

• It may also specify terminology, symbols, packaging, marking or labelling requirements as they apply to a product or a PPM

TBT Agreement

• The TBT Agreement calls upon WTO Members to “ensure, whenever possible, that results of conformity assessment procedures in other Members are accepted, even when those procedures differ from their own…”

• These include, for example: control, testing, verification and certification

TBT: Conformity Assessment procedures

Equivalence

including through Mutual Recognition Agreements

• Each WTO Member country must establish one enquiry point to respond to questions from other Member countries and provide documentation on SPS and TBT regulations adopted or proposed, control and inspection procedures, conformity assessment, production and quarantine treatment, pesticide tolerance, risk assessment procedures, etc.

SPS and TBT Enquiry points

Transparency

and

Notification

SPS and TBT

in practice

SPS and TBT Implementation

Member with standard

Other Members

Notification

Review

InfoXchge

Measure Applied

Risk, Conf. Assmt

Compliance

Exports

Non-compliance

ExportsCtte Mtg

DSU

Revise/Maintain Measure

• Implementation of the Agreement Information from Members Specific Trade Concerns of Members Consideration of new notifications received

• Monitoring the use of international standards • Equivalence, Harmonisation, Regionalisation (SPS)• Comformity Assessment, Triennial Review (TBT)• Transparency • S&DT, Technical Assistance• Statements from observer organizations

(FAO, WHO, OIE, IPPC, ISO, UNCTAD, etc.)• Requests for observer status • Other business

Typical Agenda for an

SPS and TBT Committee Meeting

• Argentina raised concerns on measures adopted by Panama to prohibit the imports of certain products because of FMD (SPS)

• Nicaragua, Brazil, Cuba, India, Guatemala, Mexico, Ecuador, Bolivia, El Salvador, Costa Rica and Peru raised concerns over Germany’s impositon of standards higher than Codex for MRLs of Ocratoxin A in coffee as discriminatory and scientifically unjustified (SPS)

• The United States outlined potential difficulties in meeting proposed EC regulations on the traceability and labelling of biotech food and feed products (TBT)

• The representative of the EC raised concerns about a new regulation of Japan concerning the release of formaldehyde from construction material (TBT)

Illustrative Trade Concerns of Members

Systemic concerns of developing countries

with SPS and TBTimplementation

• As standard-takers, it is difficult to develop required capacities quickly enough to avoid export dislocations

• Limited participation in international standard-setting

• Difficult to assess compliance with national standards

• Developed country standards may not apply to domestic conditions; necessity of establishing two production channels – domestic and export

Concerns and constraints...

• Voluntary standards do not have provisions regarding notification

• Lack of information, infrastructure, technology and capital

• High costs of compliance with standards but limited potential to attract needed investments for new PPMs, testing, inspection and verification

• Difficult to acquire required inputs at competitive prices; often requiring import of inputs

Concerns and constraints...

National actions and

policy responses

Awareness raising Training Implementation of national enquiry points National and regional standard setting Technology, innovation and enterprise

development Support for small and medium sized

enterprises (SMEs) Institutional reform

At the national level

• General awareness of the effects of international standards on exports

• Campaigns to create awareness on food safety

• Encourage improved sanitation methods for food production workers

Awareness raising

• Development of national standards compatible with both standards in international markets and domestic conditions

• Policy dialogues to develop standards and regulations that can be effectively enforced

• Strengthening domestic infrastructure, e.g., in the areas of training, testing and certification

National standard setting

• The Hazard Analysis Critical Control Point (HACCP) system adopted as one of the international standards of the Codex Alimentarius has now been implemented in the national legislation of a number of countries

• The HACCP system aims to ensure the safety of food for consumption

• The HACCP system sets out principles and key hygiene controls at each stage of the food chain, from primary production to final consumption

Implementing SPS: HACCP

• HACCP enables producers to assess hazards and establish control systems that focus on prevention rather than relying on testing of the end-product

• HACCP is specifically designed for the food and food-related industry and focuses on hygiene

• It is a systematic approach of preventing and reducing risks

• Will increasingly become a market requirement imposed upon developing exporters by their buyers

Implementing SPS: HACCP

• Enterprise development to strengthen sanitation, safety and environmental quality of products and production processes

Promotion of Quality and Environmental and Management Systems, e.g., ISO 9000, 14001

• New processes for processing and packaging with greater emphasis on environment-friendly inputs

• Promotion of clean technologies (UNEP/UNIDO Centres for Clean Technology)

• Ethiopia is pursuing these approaches

Technology, innovation and

enterprise development

• Facilitate the registration of SMEs

• Improve the provision of timely and accurate information to SMEs

• Promote partnerships among SMEs

Support for SMEs

• Policy dialogues to enhance coordination between ministries and the private sector

• Sharing of information

• Build national and regional networks of laboratories

• Strengthen regional testing and certification bodies

• Establish national enquiry points

• Implement HACCP

Institutional measures

• Transparent preparation of international standards

• Participation in SPS, TBT and international standard setting meetings

• Participation in technical assistance programmes (UNCTAD, WTO, World Bank, UNEP, ITC, UNIDO)

At the multilateral level

Develop bilateral agreements for:

• Mutual recognition of conformity assessment and certification procedures

• Equivalence of national standards and labelling criteria

Implementation of trade rules

Issues for discussion

• What significant health, safety and/or environmental requirements in export markets do LDCs now face?

• What product requirements will soon be encountered in new export markets?

• How can LDCs respond to such requirements?

Experiences of LDCs

• Creating awareness of health and environmental requirements in international markets among government ministries, producers and others?

• Improving institutional capacity to develop and/or strengthen domestic standards and infrastructure?

• Exploring regional cooperation?

• Enhancing understanding of WTO rules, in particular the SPS and TBT Agreement?

• Participating effectively in international standard-setting and

other international debates?

• Improving information flow?

What priorities for LDCs?

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