Subregional Workshop on the Trade and Subregional Workshop on the Trade and Environment Dimensions in the Food Environment Dimensions in the Food and Food Processing Industries in and Food Processing Industries in South-East and North-East AsiaSouth-East and North-East AsiaJakarta, Indonesia, 26-27 July 2006Jakarta, Indonesia, 26-27 July 2006

Lorenzo SANTUCCIUnited Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP)

Environmental and Health Environmental and Health Requirements and Market Access Requirements and Market Access

for Food Products from South-for Food Products from South-East and North-East AsiaEast and North-East Asia

Overview of presentation

• Nature, types and trends in environmental and health-related requirements

• Constraints faced by developing countries in meeting requirements

• Opportunities and benefits arising from adjusting to environment and health-related requirements

Types of Environmental and Health-related requirements

• Environmental and health-related requirements are of different types and nature and are set to fulfill different objectives

Type

Product-related

Process-relatedProduct-related PPMs

Non product-related PPMs

NatureMandatory (Legislative)

Voluntary (Non-legislative)

Set byGovernment

Private Sector NGOs

ObjectiveHuman, animal, plant health

Environmental protection

Types of Environmental and Health-related requirements (2)

Examples:• Maximum Residue Levels (MRLs) for pesticides,

aflatoxins, antibiotics, etc• Ban of substances, including pesticides• Hygene/quality control throughout the production chain

(HACCP, Quality and Environmental Management Systems)

• Supply chain management and traceability• Packaging regulations• Eco-labels (e.g sustainable fisheries / forestry products,

organic agriculture)

Types of Environmental and Health-related requirements (3)

Requirements Set by Purpose Example WTO relevance

Legislative market access requirements

Government Protect human, animal, plant health and the environment

MRLs and bans of hazardous substances, packaging regulations

Covered by WTO rules (Fall under SPS / TBT Agreements).

Non-legislative

market access

requirements

(market entry)

Private sector, Government, NGOs

Supply chain management / Environmental and social concerns

Eco-labels, quality / environmental management systems

Not covered by WTO rules (Do not fall under SPS / TBT Agreements)

Trends in Environmental and Health-related requirements

• In recent years there has been an increase in the number, complexity and stringency of environmental and health-related requirements, especially in the food sector

• Major food safety crises (e.g. BSE) have risen the attention of Governments, industries and the general public on consumer health and safety

• Although legislative requirements are mainly related to requirements on end products, there seems to be a trend towards a “farm-to-fork” approach (traceability)

• Industries are playing an increasingly proactive role, setting standards that are stricter than the ones imposed by Governments and that are aimed at protecting consumer health and safety and managing risk through supply chain management

Marketing strategy

Social standards

Trends in Environmental and Health-related requirements (2)

Consumer health & safety

Product

Quality

Environmental protection

Overview of presentation

• Nature, types and trends in environmental and health-related requirements

• Constraints faced by developing countries in meeting requirements

• Opportunities and benefits arising from adjusting to environment and health-related requirements

Constraints faced by developing country producers

• Compliance with environmental and health-related requirements requires several actions (e.g. upgrade of infrastructure and technology; product redesign; changes in procurement strategy; proof of compliance)

• Producers in developing countries face additional difficulties due to a number of constraints, namely:

1. Structural constraints

2. Cost constraints

3. Access to information

4. Standard setting

5. Firm size (SMEs)

Constraints: 1 – Structural constraints

• Lack of infrastructure (e.g. accredited laboratories and testing facilities)

• Certification

• Weak legislative and normative framework

• Limited skills and training capacities

• Limited access to financial resources and cleaner technologies

Constraints: 2 – Costs

1. Adjustment costs

in order to comply with export requirements, changes throughout the production chain and/or alternative inputs may be needed

2. Conformity assessment costs

These include costs for testing, monitoring and certification

3. Cost of non-compliance

These include costs arising from the inability to export caused by restrictions or bans, or by detention of an export batch that fails to comply with import regulations

Constraints: 3 – Access to information

• Accurate and timely information on emerging requirements is essential in order to respond promptly and avoid bans or restrictions to exports

• Insufficient information of both existing and emerging requirements and its dissemination to producers in developing countries is a major constraint

• WTO notifications may not be disseminated promptly• Lack of technical knowledge may prevent understanding

the implications of emerging regulations• Private sector requirements fall out of the scope of the

WTO. Information about emerging requirements may not reach small and medium sized enterprises

Constraints: 4 – Standard setting

• Standards set by developed countries and at international level generally do not take into account the differing environmental, developmental and production conditions in developing countries

• Developing country participation in international standard setting is limited

• Lack of harmonization and mutual recognition and equivalence are major constraints

• Environmental and health-related requirements are becoming more stringent and complex, as new scientific information on health or environmental risks becomes available or new technologies that permit more accurate testing are developed

Constraints: 5 – Firm size

• SMEs may encounter additional difficulties in responding to environmental requirements, as a result of their size

• Proof of compliance, including certification can be difficult to obtain and the cost can be too high for producers to bear

• SMEs cannot achieve economies of scale• SMEs have no or little bargaining power• SMEs often have to cope with lack of institutional

support

Overview of presentation

• Nature, types and trends in environmental and health-related requirements

• Constraints faced by developing countries in meeting requirements

• Opportunities and benefits arising from adjusting to environment and health-related requirements

Opportunities

• Although they can act as trade barriers, environmental and health standards can provide opportunities for improving export competitiveness and address domestic environmental, health and food safety issues. For example: New market opportunities and identification of competitive

advantages Opportunity for investment in supply chain modernization Better quality and safety control practices Increased resource efficiency Improved sustainability of production Improved health and safety of workers and domestic

consumers Opportunity to clarify necessary role of government in

food safety and export competitiveness Opportunity to upgrade legislation

Opportunities (2)

Opportunity Example Improved market access

Improved health and environment

New market / competitive adv

Organic agriculture

Investment in infrastructure modernization

HACCP for fishery products

Better quality and safety control practices

Quality / environmental management systems

Resource efficiency GAP (pesticides, fertilizers, water use)

Improved sustainability of production

GAP / Sustainable fisheries management

Improved health and safety of workers and consumers

Ban on pesticides

Conclusions

• In recent years there has been an increase in the number, complexity and stringency of environmental and health-related requirements, especially in the food sector. These requirements are becoming increasingly important NTBs

• Developing countries face a number of constraints in responding to these requirements

• Environmental characteristics of products and production processes are increasingly influencing product quality and international competitiveness

• Therefore, there is a potential to enhance both export competitiveness and environmental sustainability by addressing environmental requirements for traded products

• Coherent policies that address both these dimensions are needed in order to overcome the constraints and lead to win-win situations

Thank you for your kind Thank you for your kind attention!attention!

Contact:

Lorenzo SantucciAssociate Environmental Affairs Officer

Environment and Sustainable Development DivisionUnited Nations Economic and Social

Commission for Asia and the Pacific (UN-ESCAP)Rajadamnern Nok Avenue, Bangkok 10200 - Thailand

Tel: +66(0)2-288-1946 / Fax: +66(0)2-288-1059E-mail: santucci@un.org

Web: www.unescap.org/esd