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Standards and Trade:Standards and Trade:An OverviewAn Overview
Key IssuesKey Issues
Definitions and Classification of Definitions and Classification of standardsstandards
Trade Effects of StandardsTrade Effects of Standards Costs of ComplianceCosts of Compliance Role of the WTORole of the WTO SPS AgreementSPS Agreement
Question 1Question 1
What capacity do developing What capacity do developing countries need to establish in order countries need to establish in order
to meet the challenges posed by to meet the challenges posed by standards in export markets?standards in export markets?
Question 2Question 2
How might the SPS and TBT How might the SPS and TBT Agreements be amended to meet Agreements be amended to meet
better the needs of developing better the needs of developing countries?countries?
Question 3Question 3
How might the implementation of How might the implementation of higher standards in export markets higher standards in export markets
be a source of competitive be a source of competitive advantage?advantage?
Question 4Question 4
To what extent should developing To what extent should developing countries develop their own countries develop their own
standards rather than standards rather than implementing international implementing international
standards?standards?
Question 5Question 5
What is the role of the public and What is the role of the public and the private sector in developing the private sector in developing standards capacity in developing standards capacity in developing
countries?countries?
OutlineOutline
BackgroundBackground What are standards?What are standards? ConclusionsConclusions
BackgroundBackground
Fundamental role in economic activityFundamental role in economic activity Trade effects recognizedTrade effects recognized Greater incidence of standardsGreater incidence of standards Greater range of standardsGreater range of standards Addressed by WTO through SPS and Addressed by WTO through SPS and
TBT AgreementsTBT Agreements Impact on trade complexImpact on trade complex
Notifications of Technical Notifications of Technical Measures to GATT/WTO, 1981-Measures to GATT/WTO, 1981-
20022002
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
What are standards?What are standards?
““Specification (or a set of specifications) Specification (or a set of specifications) that relates to a product's attributes”that relates to a product's attributes”
““Providing for common and repeated Providing for common and repeated uses, rules guidelines, or uses, rules guidelines, or
characteristics for activities or their characteristics for activities or their results, aimed at the achievement of results, aimed at the achievement of
the optimum degree of order in a the optimum degree of order in a given context”given context”
Standards ClassificationStandards Classification
TerminologyTerminology Basic standardsBasic standards Dimensional standardsDimensional standards Performance standardsPerformance standards Variety reductionVariety reduction Testing & quality controlTesting & quality control
Content of StandardsContent of Standards
Product Standards
Process & Production Methods
Legal Basis of StandardsLegal Basis of Standards
Mandatory standardsMandatory standards De factoDe facto mandatory standards mandatory standards Voluntary consensus standardsVoluntary consensus standards
Classifying StandardsClassifying Standards
Public Private
Mandatory
Voluntary
Number of firms Certified to ISO Number of firms Certified to ISO 9000 and ISO 14000 in Selected 9000 and ISO 14000 in Selected
Developing Countries, 2002Developing Countries, 2002
0
2000
4000
6000
8000
10000
India South Africa Brazil Thailand
ISO 9000 ISO 14000
Sanitary and Phytosanitary Sanitary and Phytosanitary MeasuresMeasures
Bans:Bans: TotalTotal PartialPartial
Technical specifications:Technical specifications: Process standardsProcess standards Product standardsProduct standards Packaging standardsPackaging standards
Information requirements:Information requirements: Labelling requirementsLabelling requirements Controls on voluntary claimsControls on voluntary claims
Trade Effects of StandardsTrade Effects of Standards
Impacts:Impacts: Trade reductionTrade reduction Trade diversionTrade diversion
Trade effects related to costs of Trade effects related to costs of compliancecompliance
Impact on exporter competitivenessImpact on exporter competitiveness Empirical evidence remains limitedEmpirical evidence remains limited
Trade Effects of StandardsTrade Effects of Standards
Detention dataDetention data WTO counter-notificationsWTO counter-notifications Case studiesCase studies Quantitative estimatesQuantitative estimates
US Border Detentions of US Border Detentions of Egyptian Agri-Food Exports, Egyptian Agri-Food Exports,
20032003
0
10
20
30
40
Fruit &vegetables
Herbs & spices Confectionery Dairy products Other
Reasons for US Border Reasons for US Border Detention of Egyptian Agri-Food Detention of Egyptian Agri-Food
Exports, 2003Exports, 2003
0
10
20
30
40
50
60
Salm
onella
Filth
y
Insan
itary
Low
-acidca
nned
food
Pro
cessnot
appro
ved
Lab
elling
Pesticid
es
Unsafe
additive
%
Counter-Notifications Relating to Counter-Notifications Relating to New Measures in SPS Committee, New Measures in SPS Committee,
1995-20021995-2002Country ApplingMeasure
Regulatory Goal of Contested Measure
Plant Health
Animal Health
Human Health
Other Total
Number of Complaints by Developed Countries
Developed Countries 16 7 44 3 70
Developing Countries 17 11 41 4 73
Multiple Countries - 2 - - 2
Sub-total 33 20 85 7 145
Number of Complaints by Developing Countries
Developed Countries 12 12 34 2 60
Developing Countries 8 17 7 2 34
Multiple Countries - 2 - - 2
Sub-total 20 31 41 4 96
Total 53 51 126 11 241
Phytosanitary Restrictions on Phytosanitary Restrictions on Mexican Avocado Exports to Mexican Avocado Exports to
the USthe US Longstanding dispute dating back to Longstanding dispute dating back to
19141914 Relates to avocado seed weevilRelates to avocado seed weevil Entry granted to fruit from Michoacan in Entry granted to fruit from Michoacan in
1994 under agreed control system1994 under agreed control system Regions of US to which can export Regions of US to which can export
gradually extendedgradually extended Exports increased significantly over timeExports increased significantly over time
Imports of Avocados to the Imports of Avocados to the United States, 1991-2002United States, 1991-2002
0
50000
100000
150000
1991 1993 1995 1997 1999 2001
Short
tonnes
Mexico Other
EU Hygiene Requirements and EU Hygiene Requirements and Fish Exports from KenyaFish Exports from Kenya
Nile perch fishery of Lake Victoria developed Nile perch fishery of Lake Victoria developed as export-oriented sectoras export-oriented sector
On-going problems:On-going problems: General hygiene standardsGeneral hygiene standards Border detection of Border detection of SalmonellaSalmonella Pesticide residuesPesticide residues
Periods of restrictions on exports to EU over Periods of restrictions on exports to EU over period 1997-2001period 1997-2001
Efforts by government and exporters to Efforts by government and exporters to complycomply
Full harmonization in December 2003Full harmonization in December 2003
Guatemalan Exports of Guatemalan Exports of Raspberries to the USRaspberries to the US
Off-season exports of raspberries Off-season exports of raspberries developed through late 1980sdeveloped through late 1980s
Cases of human Cases of human CyclosporaCyclospora linked to linked to raspberries in 1996raspberries in 1996
Guatemalan raspberries identified as Guatemalan raspberries identified as source of contaminationsource of contamination
System of food safety controls System of food safety controls implementedimplemented
Exports never recoveredExports never recovered
Impact of EU and Codex Standards for Impact of EU and Codex Standards for Aflatoxins on Imports of Cereals to the EUAflatoxins on Imports of Cereals to the EU
EU Member State EU Standard Codex Standard Difference Between
Scenarios (%)
Austria +5 +5 0
Belgium/Luxembourg -10 +13 80
Denmark 0 +5 50
Finland -1 +3 61
France -92 +123 80
Germany 0 +10 50
Ireland -3 +4 80
Italy -22 +29 80
Netherlands -8 +11 80
Portugal -35 -22 87
Spain -10 +13 80
Sweden -1 +3 61
UK 0 +3 50
EU -177 +202 76
Costs of ComplianceCosts of Compliance
Costs of compliance:Costs of compliance: Non-recurringNon-recurring RecurringRecurring
Significant impact on small exportersSignificant impact on small exporters Related to underlying technical capacityRelated to underlying technical capacity Can be source of competitive advantageCan be source of competitive advantage Great cost-great benefit?Great cost-great benefit? Scope for strategic choicesScope for strategic choices
Costs of Compliance with Export Costs of Compliance with Export Food Safety Requirements in Food Safety Requirements in
Bangladeshi and Nicaraguan Shrimp Bangladeshi and Nicaraguan Shrimp Processing SectorsProcessing Sectors
Costs(US$ million)
Bangladesh(1996-98)
Nicaragua(1997-2002)
Industry Facility UpgradingGovernment
Training ProgramsTotal
17.550.380.07
18.01
0.330.140.090.56
Annual Maintenance of HACCP Program
2.43 0.29
Shrimp Exports During Focal Periods 775.00 92.60
Average Annual Shrimp Exports 225.00 23.20
Upgrade/Focal Year ExportMaintenance/Annual Exports
2.3%1.1%
0.61%1.26%
Role of the WTORole of the WTO
GATT Article XXGATT Article XX Standards CodeStandards Code WTO Agreements:WTO Agreements:
SPS AgreementSPS Agreement TBT AgreementTBT Agreement
Role of the WTORole of the WTO
Right to implement standards in pursuit Right to implement standards in pursuit of legitimate objectivesof legitimate objectives
Non-discriminationNon-discrimination Least trade-distortingLeast trade-distorting Special & differential treatmentSpecial & differential treatment
SPS AgreementSPS Agreement
HarmonizationHarmonization EquivalenceEquivalence ‘‘Appropriate level of protection’Appropriate level of protection’ RegionalizationRegionalization TransparencyTransparency Consultation & dispute settlementConsultation & dispute settlement
ConclusionsConclusions
Standards a significant trade issueStandards a significant trade issue Evidence have major impact on tradeEvidence have major impact on trade WTO established coherent rules in WTO established coherent rules in
international contextinternational context Ways in which SPS and TBT Ways in which SPS and TBT
Agreements applied is changing over Agreements applied is changing over timetime
Major issue for developing countriesMajor issue for developing countries
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