Agro-food exports, standards Agro-food exports, standards and trade agreementsand trade agreements

Stefano PonteStefano PonteInstitute for International StudiesInstitute for International Studies

CopenhagenCopenhagenspo@cdr.dkspo@cdr.dk

IntroductionIntroduction

Trade is an important revenue base Trade is an important revenue base for developing countriesfor developing countries

Especially as aid flows slow downEspecially as aid flows slow down Still, low income countries account Still, low income countries account

for only 3% of income generated by for only 3% of income generated by exportsexports

Lowering ’traditional’ trade barriers: Lowering ’traditional’ trade barriers: Will this be enough?Will this be enough?

Global Value Chain (GVC) Global Value Chain (GVC) analysis and tradeanalysis and trade

Trade not only between ‘countries’ Trade not only between ‘countries’ but also among (and within) firmsbut also among (and within) firms

Trade rules do not arise only from Trade rules do not arise only from domestic regulation and international domestic regulation and international agreementsagreements

‘‘Lead firms’ in GVCs set ‘private’ Lead firms’ in GVCs set ‘private’ rules that shape trade flows and rules that shape trade flows and market accessmarket access

GVC analysis and standardsGVC analysis and standards

Standards are one of the mechanisms Standards are one of the mechanisms shaping trade rules and flowsshaping trade rules and flows

GVC analysis contributes new knowledge on GVC analysis contributes new knowledge on ’private’ and ’voluntary’ standards set and ’private’ and ’voluntary’ standards set and enforced by ’lead firms’ or industry enforced by ’lead firms’ or industry associations, NGOs etc.associations, NGOs etc.

These may be even more demanding than These may be even more demanding than ’mandatory’ standards’mandatory’ standards

Standards affect upgrading opportunities for Standards affect upgrading opportunities for developing countriesdeveloping countries

Standards as a ’trade passport’?Standards as a ’trade passport’?

Standards define whether a good is Standards define whether a good is ’fit for trade’’fit for trade’

Key issues for developing countries:Key issues for developing countries:• Who defines standards?Who defines standards?• Who decides the content?Who decides the content?• Who sets the measurement methods?Who sets the measurement methods?• Who pays for the costs of compliance, Who pays for the costs of compliance,

monitoring and verification?monitoring and verification?• Who captures the benefits?Who captures the benefits?

Trends in agro-food standards (1)Trends in agro-food standards (1)

Increased food safety Increased food safety awarenessawareness

Focus on health and dietFocus on health and diet Social and environmental Social and environmental

concernsconcerns Authenticity of originAuthenticity of origin

Trends in agro-food standards (2)Trends in agro-food standards (2)

Product differentiation Product differentiation Quality controlQuality control Traceability (field-to-fork)Traceability (field-to-fork) Third-party certifications or auditingThird-party certifications or auditing Larger number of standardsLarger number of standards More complex standardsMore complex standards More stringent food safety standardsMore stringent food safety standards

Agro-food standards: Agro-food standards: A simplified typologyA simplified typology

MandatoryMandatory• Import regulation (i.e. food safety, geographic Import regulation (i.e. food safety, geographic

indications, labelling)indications, labelling) VoluntaryVoluntary

• International standards (ISO, Codex, SA8000)International standards (ISO, Codex, SA8000)• Labels (organic, fair trade, eco-labels)Labels (organic, fair trade, eco-labels)• Model codes of conduct (EUREP-GAP, ETI) Model codes of conduct (EUREP-GAP, ETI)

PrivatePrivate• Defined and owned by a company Defined and owned by a company

(supermarket chain quality standards) (supermarket chain quality standards) Considerable overlapsConsiderable overlaps

Lessons from case studies (1): Lessons from case studies (1): CoffeeCoffee

Why is coffee interesting for analysing Why is coffee interesting for analysing value chains, trade and standards?value chains, trade and standards?

No protectionist element in standardsNo protectionist element in standards• Produced mainly in the SouthProduced mainly in the South• Low tariff barriersLow tariff barriers• Yet, tariff escalation (roasted, instant)Yet, tariff escalation (roasted, instant)

Proliferation of ’private standards’: Proliferation of ’private standards’: ’specialty’ and ’sustainable’ coffees’specialty’ and ’sustainable’ coffees

’’Specialty’ and ’sustainable’ Specialty’ and ’sustainable’ coffee standardscoffee standards

Issues of participation in the setting Issues of participation in the setting of standardsof standards• Who benefits? Who pays?Who benefits? Who pays?

Different storiesDifferent stories• SpecialtySpecialty• Fair tradeFair trade• OrganicOrganic• Shade-grownShade-grown• Mainstream initiatives on sustainabilityMainstream initiatives on sustainability

Lessons from case studies (2): Lessons from case studies (2): Supermarket standards for FFVsSupermarket standards for FFVs

Extremely demandingExtremely demanding Higher than import regulation on food Higher than import regulation on food

safetysafety Quality, maximum pesticide residues, Quality, maximum pesticide residues,

’ethical standards’’ethical standards’ More functions demanded from exportersMore functions demanded from exporters Some cases of upgradingSome cases of upgrading From smallholders to commercial farms; From smallholders to commercial farms;

increasing concentration at production and increasing concentration at production and export levelsexport levels

Challenges (1): Challenges (1): Mandatory standardsMandatory standards

Better use of the dispute settlement Better use of the dispute settlement system in the SPS Agreementsystem in the SPS Agreement

Lenghty and demanding processLenghty and demanding process Penalties based on punitive tariffsPenalties based on punitive tariffs

• Not a practical way for developing cosNot a practical way for developing cos SPS Committee as a forum of SPS Committee as a forum of

discussiondiscussion

Challenges (2): Challenges (2): International standard settingInternational standard setting

SPS Agreement: harmonisationSPS Agreement: harmonisation• Through: Codex, IPPC, OIEThrough: Codex, IPPC, OIE• Poor participation in international Poor participation in international

standard setting and revisionstandard setting and revision Technical and financial assistance Technical and financial assistance

(not binding in SPS Agreement)(not binding in SPS Agreement) Modest size of the Advisory Centre Modest size of the Advisory Centre

on WTO lawon WTO law

Challeges (3):Challeges (3):Voluntary and private standardsVoluntary and private standards

Voluntary (sectoral) and private Voluntary (sectoral) and private standards are often more stringent standards are often more stringent than public regulationthan public regulation

Issues of participation, transparencyIssues of participation, transparency Public pro-active strategies to help Public pro-active strategies to help

industry organisations industry organisations Technical and facilitation support for Technical and facilitation support for

firms and industriesfirms and industries

Key questionsKey questions

Are standards eroding the Are standards eroding the comparative advantage of comparative advantage of developing countries?developing countries?

Are they marginalising smallholders Are they marginalising smallholders and small and medium enterprises?and small and medium enterprises?

Can standards be a tool for Can standards be a tool for stimulating learning and a launch-stimulating learning and a launch-pad for upgrading in developing pad for upgrading in developing countries?countries?

The role of researchThe role of research

GVC analysis, trade and standardsGVC analysis, trade and standards• Access and participationAccess and participation• Specificities of value chainsSpecificities of value chains• Catalyst for industry-level debateCatalyst for industry-level debate• Entry barrier AND opportunity for Entry barrier AND opportunity for

upgradingupgrading Costs and benefits of complianceCosts and benefits of compliance Distributive impactDistributive impact