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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Monday, September 26, 2005

Liberalisation of agricultural trade: challenges

Daily News: 20/09/2005" by Dr. Mangala de Zoysa, Department of Agricultural Economics, University of Ruhuna

During the last several decades many multilateral trading systems with the participation of developed and developing countries have been promoted in the General Agreement on Tariffs and Trade (GATT) and subsequently in the World Trade Organization (WTO).

The trends influenced the rules and commitments embodied in the Uruguay Round (UR) and encouraged governments to move further toward free trade. Progressive liberalization of agricultural trade has increased participation of developing countries in international trade in agricultural products.

Bio-security in food and agriculture has been demonstrated in the WTO agreement on the application of Sanitary and Phytosanitary (SPS) measures. The measures protect animal and plant health from pests and diseases, and protect human and animal health from risks in foodstuffs as well as protect humans from animal-carried diseases. However, the developing countries face both opportunities and challenges emerged from the SPS agreement.

The UR in September 1986 called for increased disciplines in market access and SPS measures in agricultural trade. The UR in December 1988, agreed the priority areas of SPS as: international harmonization on the basis of the standards developed by the international organizations; development of an effective notification process for national regulations; setting-up of a system for the bilateral resolution of disputes; improvement of the dispute settlement process; and provision of the necessary input of scientific expertise and judgment, relying on relevant international organizations.

The agreement on SPS measures of WTO allows countries to restrict trade in order to protect human, animal, or plant life without disguised restriction on trade. The agreement recognizes the rights of importing countries to implement these measures providing scientific justification or risk assessment to avoid the use of SPS measures for protection of domestic industries.

Disputes in standards
The international standards of SPS measures are developed and approved with very limited participation of developing countries. Therefore, the international standards are often inappropriate for use as a basis for domestic regulations in developing countries.

The standards formulation procedures vary among international standards setting organizations. It is therefore difficult for most developing countries to have their standards accepted as equivalent by developed countries. Failure to recognize equivalence of measures is a major problem confronting developing countries at the international agricultural trade. SPS measures are based on principles of international science and risk assessments in order to minimize trade distortions.

Therefore, lack of harmonization of standards for setting regulation to meet national needs developing country agricultural exporters are at a disadvantage. There is no agreement whether and under what circumstances, countries could implement domestic measures other than international standards. It is not clear whether economic considerations or consumer concerns other than health-related concerns should be taken into account in the risk assessment.

Developing countries face difficulties when requested to meet SPS measures in foreign markets based on international standards, as they are unable to effectively participate in the international standard-setting process. They have to demonstrate the scientific soundness of their own SPS measures through risk assessments even these measures differ from international standards. The Mutual Recognition Agreements (MRAs) are not feasible due to the lack of modern facilities for risk assessment in many developing countries.

Although the certification and accreditation of laboratory testing has serious implications for MRAs developing countries have a limited capacity to carry out those functions. The SPS agreement encourages accepting equivalent SPS measures achieve the importing member's appropriate level of SPS protection.

However, the importing countries are looking for sameness instead of equivalency of measures. The adoption of standards is more complex, time consuming and become non-scientific nature with the involvement of a large number of stakeholders and politicizing the process of international standards setting.

Trade restrictions
Expansion of agricultural trade has a direct relationship to poverty reduction and accelerated economic growth in developing countries. Further, reduction of existing trade barriers will provide increased opportunities for developing countries to take advantage of gains through international trade.

However, despite the UR having made progress in restraining tariff escalation, a number of serious trade barriers still remain particularly on imports of processed foods from developing countries.

Tariffs on foods particularly processed food exported from developing countries are subjected to high rates of protection. If the protection via tariffs and subsidies were lowered developing countries would successfully expand their exports of fruits, vegetables, and cut flowers.

However, many countries are expected to continue the resistance in the UR to opening their agricultural sectors to international competition. Lowering the level of protection provided by tariffs and non-tariff barriers increase the importance of SPS measures as border protection instruments for agriculture sector.

Imposing costly, time-consuming and unnecessary tests or duplicative conformity assessment procedures can act as powerful non-tariff barriers in agricultural trade. Therefore, it is very difficult to demarcate the boundary between legitimate measures and measures aimed at discouraging imports and protecting domestic producers by developed countries.

Strengthening domestic capacities
Strengthening domestic capacities implies building up knowledge, skills and capabilities in the SPS domain. Strong domestic capacities would help developing countries to identify agricultural products they could import or export and also its potential negative impact on people's health, animal health or the environment.

Developing countries should be able to respond to urgent needs emerging in their target markets and to the wishes and expectations of final consumers, by providing good quality and safe products. It is necessary for all developing countries to cooperate with one another to formulate effective mechanisms capable of devising, and enforcing appropriate SPS requirements.

Developing countries require modern facilities to test and certify agricultural commodities based on MRAs. They have to promote scientific research, testing, conformity assessment and equivalency to avoid the unfair SPS measures. Developing countries have to train competent personnel and provide them with resources to enable them to effectively participate in the international standard-setting process for SPS measures.

WTO members have suggested that mandatory provision of technical assistance should be included in Special and Differential (S and D) treatment for developing countries under the SPS agreement. Several international organizations and developed countries provide technical cooperation.

Therefore, better co-ordination among these institutions would ensure the full benefit from their efforts. It has been agreed to provide assistance in the form of credits, donations and grants bilaterally or through the appropriate international organizations.

The technical co-operation would up grade the technical skill of personnel working in laboratories, certification bodies and accreditation institutions in developing countries. They will be able to issue internationally acceptable certificates, effectively participate in the international standard-setting process and represent in the mutually recognized agreements on SPS measures.

Reviewing standards and regulations of SPS measures can promote agricultural trade and economic development of the developing countries. Establishment of regional collaborative laboratories, certification bodies and accreditation institutions could alleviate the problem of non-recognition of developing country certificates.

The WTO agreements to develop domestic policies by national authorities encourage the developing countries to promote the harmonization of SPS regulations on an international basis. Covering conformity assessment certificates, MARs can improve the market access for the agricultural products of developing countries by avoiding duplicative testing and the related costs, reducing possible discrimination, and eliminating delays.

Dispute Settlement provisions significantly advance the negotiating agenda with SPS agreement under WTO agreements in 1995. A certification program provides a means to settle the dispute. However, it is not certain that consensus on labeling, harmonized conformity assessment mechanisms or the need for regulation can be achieved within the context of WTO negotiations. The SPS Committee in 2001 agreed on guidelines on recognizing the equivalence of differing SPS measures.

The guidelines clarify the type of information importing and exporting countries should provide and factors that importing countries need to consider. Further it emphasizes methods to facilitate transparent regulatory measures. It is suggested that the burden of justification of an acceptable level of SPS risk are placed upon the importing country dispute settlement provisions.

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