Reflections on Sanitary & Reflections on Sanitary & PhytoPhyto--Sanitary Sanitary Measures & StandardsMeasures & Standards

Myriam VeliaMyriam Velia

SPS are “measures designed to protect humans, animals, and plants, from diseases, pests, and other contaminants”“only to the extent necessary” protection (in the form of standards) with regulations to be based on science; Difficulties: ◦ Scientific dimensions → practicalities?◦ Differences across countries SPS systems even when similar agro-ecological

conditions → determinant & motives of SPS? ⇒ Heterogeneity of measures inherent – Differences in:

Risk factors (hazard identification, prob of introducing hazard, risk tolerance);Degree of uncertainty about risk factors;In risk tolerance

→ the benchmarks? Diversity: barrier to trade VS. Complete harmonisation (in the sense of

sameness/identical) not possible & not desirableBUT associated with cost of compliance on rules & regimes & hampers EOS. + SPS contain incentives for raising standards (↑ costs of competing foreign firms

through domestic standard requirements can be used strategically);

Context: Diversity of SPS standards

To consider with SPS set of procedures:1. Risk assessment: does it achieve the risk objective?2. On trade-distortion dimension: does the specified set of procedures distort trade

the least among possible options?3. On economic efficiency: is the targeted level of risk reduction itself justified by the

economic welfare effects that are associated with it? Trade perspective: ◦ SPS regulations distinct from trade barriers but impact on trade;

Effects on supply and demand - but investments in SPS systems yield no government revenue; Free(r) trade (generally) benefits the consumers but particular benefits to consumers associated with SPS:

SPS address information asymmetry on quality attributes – also linked to the proliferation of private standards – but price premia; Diversification: from bulk → fresh products; commands more stringent SPS but linked to export growth; Important as associated with lower price-sensitivity

◦ But measures: To address market failures so different welfare implications when analysed than when barriers to trade are analysed → standards have an ambiguous impact on welfare (address the negative production externality but ↑ price of foreign goods).

On Evaluations

⇒ Implications for regional integration / from a regional arrangement perspective? ◦ Region will seek to address SPS not scientifically justified;◦ Region will seek to address TBT typically bundled with SPS + improve the design of SPS

measures when not in line with monitoring & testing capabilities;◦ Region is about bigger market;

Streamline SPS requirements - USAID Study in 2010 on trading corridor on cost of obtaining an SPS certificate for maize: 9% of the farm-gate price; encourage investments in SPS infrastructure / efforts to encourage sharing infrastructure;Cooperate in relevant area to enhance SPS capacity; Share information – regulations / transparency;To expand trade / to tap on EOS gains / to develop regional value chain – a number of key dimensions including HARMONIZATION

⇒ Where at?Gap approach around ability to meet other countries SPS

⇒ Where going to? systems

SPSM Arrangements: ◦ WTO SPS – note that room for the exercise of national political sovereignty + policy

autonomy both in choosing policy objectives & instruments in WTO procedurals and not benchmarks

◦ SADC: SPS Annex◦ … EU SPS System

Harmonization: encourages countries [voluntary] to harmonize or base their national measures on the international standards developed by Codex, the OIE for animal health, and IPPC for plant health → benchmarks but can be exceeded if scientific justification provided.

Equivalence: Countries are encouraged to recognize others’ procedures as offering equivalent protection levels – negotiated;

Assessment of Risk: SPS measures to be based on an assessment of risks and scientifically sound.

Transparency: Need to establish national enquiry points + national notification authority

Regionalization: Countries should ensure that their SPS measures are adapted to the SPS characteristics of the area from which the product originated and to which the product is destined. Countries should also accept the imports from pest- or disease-free areas and areas of low pest or disease prevalence.

CORE WTO SPS PRINCIPLES

Source: From Shafaeddin (2007)

Source: From Shafaeddin (2007)

National & regional level Challenges (in SADC and elsewhere in SSA):CBA - high costs associated with SPS …

⇒ Availability of financial resources with risk of diversion of budgets as SPS systems altered? … which might be passed onto the consumers for firms that provide the domestic & foreign markets (regional or international);And could be worsened by the effect of a jump to EU SPS requirements.

WBk study (Cadot & Gourdon): SPS measures in Africa increase price of food staples by 13% - 15%; At the product level, rice and other cereals, some types of meat (e.g. poultry), and edible oils tend to fetch high AVEs; SPS regulations would have added 30% - 40% on the prices (after adjustments for cost of living differences) of basic staple in some African countries. Effect is regressive – in Kenya would have raised the cost of living by 9% for poor households.

Lack of capacity acute on a number of fronts - more pronounced for smaller producers/smaller farmers (lack of capacity & related solutions will influence the harmonisation goal) – capacity building needs to reach the poorest rural area;

Limited capacity for complianceInadequate infrastructural facilities & Access to testing and to inspection services

Coordination challenges with the variety of actors involved – also noting that SPS particularly affect small and medium exporters and traders;

Refers to the WTO SPS Agreement - enhanced implementation thereof but additional obligations to SADC MS in terms of regional information sharing and cooperation. Envisages regional harmonisation of MS’ SPS measures - the establishment of a SADC SPS Coordinating Committee + National SPS Committees - National SPS committees are still being formed (Moz 2012)

◦ SPS Measures of MS to be based on international standards guidelines, and recommendations + consultation for specific SPS measures to be recognised

◦ international standards for standards-related measures to be used. ◦ Annexes adopted on SPS + TBT to implement a regional technical regulatory framework

⇒ Internal: push harmonisation efforts (which make equivalence less problematic) + focus on platform necessary to enhance exports;

⇒ External: International standards approach ↔ catching up; view that compliance a means to enhance market access and development. ◦ On EC: cooperation on standards & TA efforts

SPS Annex to the SADC Protocol

SPS separated from the set of rules to address TBT issues; WTO SPS Agreement principles & principles re-affirmed with some additional elements: ◦ On harmonisation:

references to objectives of sister organisations for harmonisation obligations & Co-operation in international organisations & facilitation on participation to the work of these;Regional : harmonisation to enhance regional trade & investment (within & between - bloc complementarity) & development of appropriate regulatory frameworks within + between SADC states.

◦ On equivalence:Nothing on addressing recognition of equivalence (though resource intensive) – but close co-operation efforts & exchange of information at the technical level by regulatory officials (“efforts towards establishing equivalence” in SPS Agreement);

◦ On zoning & compartmentalisation: There are firm obligations + jointly propose to identify zones

◦ On transparency & exchange of information: Extensive & include early warning systemInstitutional arrangement specified – Trade and Development Committee and Trade Committee;Priority areas indicated in SADC EPA with priority sectors and products identified by the Trade and Development Committee & pooling resources;

SADC iEPA

High level challenges : ◦ CBA of existing SPS:◦ Defining regional stance;◦ Catching up with multilateral & other commitments◦ Designed solutions that maintain SPS priorities while reducing transaction costs;◦ But … challenges also offer new opportunities – evaluating agricultural production

constraints… but internal (at SADC MS level) – even though addressing these will help get closer to EU SPS requirements.

SADC-iEPA: additional elements around given EU SPS? / Some missed opportunities?

Explicit references to capacity constraints (& S&D Treatment provisions)? More detailed/specific element on mutual recognition (which involve conformity assessment procedures)?; Flexibility vs. slow/inadequate implementation: E.g.: On harmonisation: awareness on participation constraints but no budget specified → end commitments and progress?; Does not address similar problem with equivalence; operational guidelines absent on zoning and compartmentalisation. What about TA and other form of assistance?Other?

Concluding Remarks