Subregional Workshop on the Trade and Environment Dimensions in the Food and Food Processing Industries in South-East and North-East Asia Jakarta, Indonesia, July 2006 Lorenzo SANTUCCI United Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP) Environmental and Health Requirements and Market Access for Food Products from South- East 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-related Product-related PPMs Non product-related PPMs Nature Mandatory (Legislative) Voluntary (Non-legislative) Set by Government Private SectorNGOs Objective Human, 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) RequirementsSet byPurposeExampleWTO relevance Legislative market access requirements GovernmentProtect 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) OpportunityExampleImproved 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 efficiencyGAP (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 attention! Contact: Lorenzo Santucci Associate Environmental Affairs Officer Environment and Sustainable Development Division United Nations Economic and Social Commission for Asia and the Pacific (UN-ESCAP) Rajadamnern Nok Avenue, Bangkok Thailand Tel: +66(0) / Fax: +66(0) Web: