CCP:
BA/TF 01/13  |
| CCP:
BA/TF 01/13 |
COMMITTEE ON COMMODITY PROBLEMS |
INTERGOVERNMENTAL GROUP ON BANANAS AND TROPICAL FRUITS |
Second Session |
San José, Costa Rica, 4 - 8 December 2001 |
TRADE POLICY DEVELOPMENTS FOR TROPICAL FRUITS |
Discussion paper submitted by the International Plant Protection Convention Secretariat |
1. As the World Trade Organization passes the 50th anniversary of the rules-based trading system that began with the GATT after World War II, it is clear that globalization and the liberalization of trade have become permanent fixtures in international trade policy formulation. Now, more than ever before, the prosperity of countries depends on maintaining an open international economy based on commonly agreed rules. The significance of tropical fruits in this international economy is quickly evident in the increasing volumes of fresh and processed fruit shipped across borders and seas to markets in the far corners of the globe where the availability of such products had been inconceivable only two decades before.
2. For every country in the world, the import and export of agricultural products is essential to the health of the economy as well as the population. Non-industrialized countries in particular rely upon agriculture as a cornerstone for commerce. Industrial countries rely upon trade in agricultural products to provide the quantity, quality and variety of goods demanded by modern consumers.
3. There continue to be important limitations to the free global movement of tropical fruit, despite the opportunities resulting from globalization, and many countries have experienced difficulty adjusting to a new trade environment characterized by reduced tariff barriers. Countries may thus turn to other measures (such as SPS) in order to protect domestic markets, secure market share or gain other unfair trading advantages, particularly in those instances in which existing tariff barriers may have been removed. The use of non-tariff or technical measures as a means for governments to limit imports has increased as a result.
4. However, it is important to recognize that SPS measures should be applied to the extent necessary to protect human, animal and plant life or health. Furthermore, consumer and environmental concerns have had significant effects on the changing face of trade policy as it affects tropical fruits and many other agricultural commodities. By understanding the current situation and forces at work to shape international trade policies affecting tropical fruits, countries are better able to adjust their national strategies and priorities to maximum benefit.
5. The beginning of a new era in trade policy for agricultural products began with the last round of multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT) -- the Uruguay Round, and the agreements therein related to agriculture. Emerging from these negotiations was the Agreement on the Application of Sanitary and Phytosanitary Measures (the SPS Agreement) which dealt specifically with the issue of measures to protect plant, animal and human health and life.
6. The SPS Agreement came into force for most WTO Members in 1995 and for all other Members in 2000. The Agreement is designed to provide discipline to the use of protective measures in order to prevent such measures from being used as unjustified trade barriers. It is structured around several key principles, starting with the sovereign right of a country to put protective measures in place, but balancing this with the obligation to ensure that such measures are justified and not more restrictive than necessary to achieve the appropriate level of protection.
7. The SPS also makes provision for countries to impose provisional measures in the absence of sufficient information and to take emergency measures as necessary for new or unexpected hazards. However, the SPS maintains a corresponding requirement to pursue such information as may be required to evaluate the appropriateness of measures. Measures should only be maintained on the basis of scientific principles and evidence considered in the framework of a systematic evaluation process known as risk assessment. Those requirements that are determined to be inappropriate should be modified. Transparency in the development and implementation of measures is critical throughout.
8. A number of other very important principles and definitions are found in the SPS Agreement. The sum of these represents a blueprint for establishing fair measures as well as for evaluating the measures of others.
9. SPS concepts corresponding to the most important issues for trade in tropical fruits are:
Equivalence - accepting measures that are not identical but that achieve the same effect. Phytosanitary requirements have historically been very prescriptive (e.g. treatment with methyl bromide at a certain dose). According to the principle of equivalence, another measure that achieves the same level of protection should be considered and accepted if demonstrated to be effective and feasible.
Pest free and low prevalence areas - recognizing that areas may be free of a pest that occurs elsewhere in the country, or that areas may have a low prevalence of the pest. The recognition of these concepts by countries has proven to be extremely important for trade in agricultural products, in particular tropical fruit. The establishment of credible surveillance and suppression programmes by exporting countries has provided many opportunities for the elimination or reduction of phytosanitary restrictions by their trading partners.
Non -discrimination - the application of phytosanitary measures without discrimination between countries of the same phytosanitary status, or between domestic and imported commodities with similar status. The proliferation of bilateral agreements prior to the SPS Agreement created substantial discrimination. As transparency allows countries to discover the diversity of requirements among trading partners, questions are raised about the justification for differences and measures are frequently adjusted where found to be inconsistent or unjustified.
Risk analysis - the process of evaluating evidence regarding the likelihood, magnitude, and uncertainty associated with a potential hazard, and determining the type and strength of measures required to reduce or to eliminate the risk. Where international standards are not in place for specific measures, countries must rely upon risk analysis as the basis for determining their measures. At the present time there are very few specific standards, so most existing phytosanitary requirements are evaluated and new ones are decided based on risk analysis. Opportunities exist to challenge the basis for requirements that are not based on risk analysis and to provide relevant information needed to improve decisions where uncertainty exists in risk analysis. The need for collaboration between trading partners, and the possibility to include the private sector, means the burden is shared and the potential for agreeing on effective, feasible measures is increased.
10. Phytosanitary measures (requirements designed to protect from the introduction of harmful exotic plant pests) represent one of the most significant non-tariff measures affecting the movement of agricultural commodities. Among the measures most often required for tropical fruits are treatments. The most common and widely used treatment is fumigation with methyl bromide.
11. Global concerns for methyl bromide as an ozone-depleting substance and multilateral initiatives under the Montreal Protocol for the complete phase-out of its production by 2005 have accelerated the shift to existing alternatives and increased research on other alternatives. Physical treatments such as cold, heat, and controlled atmosphere are increasingly adopted as replacements for methyl bromide or as the treatment of choice, including where methyl bromide cannot be used. The applications for less-used treatments such as irradiation, and combination treatments are increasing, and substantially more work is being done to identify alternative chemical treatments.
12. The trend to identify and use more treatment alternatives is a positive one that will be particularly important for trade in tropical fruits because the industry relies so heavily on single-treatment measures. However, a parallel trend that is driven by the SPS Agreement is becoming equally important over the long term. This second trend arises from the use of risk analysis and the obligation for measures to be based on international standards or risk analysis.
13. Phytosanitary treatment requirements have historically been based on a worst-case scenario with built-in safety margins to compensate for uncertainty and ensure high levels of security. As traditional treatments such as methyl bromide become unavailable or fall from favour, phytosanitary officials are increasingly placed in the position of re-evaluating their requirements and exploring alternatives. In many instances, they are able to draw upon their experience and better information to be much more precise about the actual pest risk and thereby avoid the need for worst-case assumptions.
14. This opens the possibility for lighter measures and significantly increases the range of available measures. To the extent that any country has the experience and data to show that the pest risk for a particular commodity does not justify a rigorous treatment, it can argue in the context of risk analysis that lighter measures are justified. This raises extremely important opportunities for fresh fruit producers who are largely limited by the lack of treatments or unacceptable side effects associated with highly rigorous treatments.
15. Another positive effect of this trend is the increasing shift away from single-measure, single-point risk management. Increasing emphasis is being placed on the variety of possibilities that exist for mitigating pest risk at various points between the producer and consumer and considering the combined effect of multiple measures in what are popularly known as "systems approaches". Although the concept has actually been practiced on a limited scale for decades, it has not been well described until recently when the popularity of this approach for the management of phytosanitary risks began expanding rapidly, in particular as regards tropical fruits.
16. In principle, systems approaches reflect many of the characteristics associated with Hazard Analysis Critical Control Point systems (HACCP) that are well known in food safety. However, phytosanitary systems normally involve more uncertainty and it is also more difficult to identify critical control points in phytosanitary systems according to the strict definitions of HACCP. Nonetheless, the conceptual approach is fundamentally identical and has proven extremely useful as a tool for developing new measures to facilitate trade in fresh tropical fruits.
17. Figure 1 is a summary flowchart describing the processes and decision points typically associated with market access (including market penetration, expansion, and retention). It is useful to note the key role played by risk analysis and the importance of interaction between trading partners as well as between phytosanitary officials and the private sector.
Figure 1. Processes and decision points associated with enhancing market access
18. The discussions above and the flowchart touch on several points where cooperation between trading partners is essential. It is noted that private sector cooperation can also be extremely useful for facilitating processes that open trade opportunities. The concept is more than abstract idealism as there are numerous contemporary examples where private sector cooperation has been the contributing factor for market access. Indeed, it is nearly always an essential element.
19. The history of fresh fruit exports from Chile provides an excellent case study. In the space of about two decades, Chile was transformed from a minor exporter to one of the world's major exporters of fresh fruits and vegetables. It is a good example of cooperative efforts where the export industry has been instrumental in gaining, expanding, and retaining market access.
20. The strategy is simple, but it requires substantial, long-term and consistent commitment by both regulators and industry to cooperate in defining and achieving reasonable goals. To begin with, it is necessary to collaboratively identify a reasonable number of commodities and markets where minimal input is required to gain access and establish credibility -- not only phytosanitary credibility, but also credibility with buyers and consumers. Industry cooperation is required to ensure that only consistently high quality products are exported and phytosanitary rejections are minimized. Problems should be dealt with in an open and timely way based on cooperative understandings between growers, packers, shippers, phytosanitary officials and agents as necessary to ensure the smooth flow of accurate information.
21. Next steps involve incremental proposals to add commodities and expand markets while also using experience and information to argue for lighter measures where possible for existing authorizations. The key is overall cooperation and building credibility for the systems and information. Increasingly more complex and risky proposals may be added over time as confidence builds and financial returns grow.
22. Beyond simply cooperating in the implementation of systems for export, the private sector can also usefully contribute to risk analyses by providing needed information or funding necessary to obtain information or conduct a risk analysis. The private sector is also well-positioned to make and to evaluate risk management proposals for their feasibility. Finally, there are possibilities for the private sector to conduct research or to provide the resources for relevant research to be conducted to fill specific information gaps that may be the basis for restrictive measures.
23. In summary, it is clear that not only the success of realizing market access, but also the magnitude of the success is highly dependent on private sector cooperation. This involves horizontal cooperation among private sector entities, as well as vertical cooperation with regulatory authorities, the research community, and other non-commercial entities involved with market access issues.
24. In all cases, it should be recognized that regardless of the phytosanitary situation, it is the consumer who ultimately decides if there is a market. To this end it is useful to do the "homework" required to ensure that a worthy market indeed exists before investing in the initiatives needed to overcome trade barriers.
25. A number of specific points and trends characterize the current situation and may be helpful for developing strategies and predicting future needs as regards trade policy for tropical fruits:
26. It has been said that developing countries have not benefited from the Uruguay Round Agreements to the extent anticipated. In the case of the SPS Agreement, and in particular with regard to phytosanitary measures, national governments have operated under long-standing policies, regulations and mechanisms that must undergo a period of transition to adjust to the new trading regime. The signs of this occurring are clear, but it may be far too early to judge the merits or faults of the Agreement based on current evidence.
27. Developing countries in particular face challenges in updating their own phytosanitary systems to meet the requirements of trading partners and in protecting their own territories from the movement of pests through international trade. In order to do so, capacity building efforts include the need for training in SPS issues, in particular in the use and application of risk analysis as part of the regulatory decision making process. Likewise, countries require adequate access to both scientific and technical information in order to ensure that their own measures are technically sound, as well as in meeting requirements of trading partners. Enhanced capacities for internal surveillance and monitoring systems to be able to prove pest freedom (or areas of low pest prevalence) and in preventing the entry and spread of pests are also important. In the broad sense, building capacities in countries will lead to a wider understanding and application of the principles contained in the SPS Agreement, including transparency, equivalence and non-discrimination, that is essential to a rules-based trading system.
28. It is certain that many more opportunities exist than previously and the situation is much more predictable. Trade in tropical fruit has historically suffered from conservative measures. By understanding the forces affecting trade policy and carefully exploring new options within the contemporary trade environment, the industry will find many new possibilities for market access. Opportunities and sustainability will be enhanced and less resources and time wasted where there is good cooperation between trading partners and between the industry and government officials. In particular, the focus should be on technical competency, credibility, and transparency.