1. THE ARAB QUALITY AND FOOD SAFETY CONFERENCE 15-16 June 2006, Beirut “QUALITY AND GLOBAL TRADE” UNIDO Perspective Gerardo Patacconi IDO, UNIDO Focal Point for UNIDO/WTO MoU and ISO/DEVCO Trade Capacity Building Branch G.Patacconi@unido.org www.unido.org

2. Food scares and other security issues Global, regional, national TBT/SPS regulations Standards and Conformity Assessment infrastructure Supply-capacity (quality, quantity, price) and competitiveness global/regional value chains UNIDO Global Approach Emerging Quality and Safety issues

3. www.unido.org I’ve got MAD………. and the World become CRAZY about improving food quality and safety systems Food scares and other security issues

4. SECURITY SECURITY: Risk of deliberate contamination, frauds and misuse of shipment SAFETY SAFETY: Distribution of unsafe/adulterated Food products (to be withdrawn from the supply chain and timely and accurate information given to consumers) EMERGING ISSUES Focus on supply-chain and border security: Bioterrorism Act) to protect the US from the threat of bioterrorism using the food chain.(Registration, US Agent, Prior Notice and Establishment and Maintenance of Records) Custom Trade Partnership Against Terrorism (C-TPAT) The Container Security initiative (CSI) The 24-Hour Rule Focus on supply-chain and food safety Focus on supply-chain and food safety: EU Food Law – Regulation (EC) 178/2002EU Food Law – Regulation (EC) 178/2002 Residual of pesticides Labeling, Standards/Technical Regulations Conformity Assessment procedures …………. COST HIGH COST www.unido.org

5. Global, regional, national TBT/SPS regulations

6. www.unido.org Recognises importance of standards and conformity assessment for Trade Encourages the development of standards & conformity assessment systems However does not want standards/technical regulations create obstacles to trade Recognises country rights to ensure:  Quality of imports/exports, Product Safety  Protection of human, animal, plant life, health, environment Aims to prevent standards/technical regulations creating obstacles to trade Only legitimate objectives- national security, prevent deceptive practices  protection of human, animal health, plant life, safety, environment Recognises special problems of developing countries in this area Members shall, if requested...grant assistance to developing country members TBT – Agreement on Technical Barriers to Trade SPS – Agreement on Application of Sanitary & Phytosanitary Measures TBT /SPS Agreement (Jan 1995)

7. Standards and Conformity Assessment infrastructure Poor physical facilities/infrastructure Limited academic and research capabilities and technical/scientific know-how/skills Inefficient institutional set up (Standards and conformity assessment functions, when exist, are scatters among too many institutions) Early focus on mandatory standards and inspection Revenues generated could not be retained due to the public law status www.unido.org

8. Standards and Conformity Assessment infrastructure Labs established even with donor support not sustainable Donation of equipment with poor planning, training, and lacking adequate local physical infrastructure/staff, absorbion capacity Political instability and conflicts, Lack of funding Lack of demand Low-level of manufacturing due to focus on commodities Exposed to barriers to trade especially SPS measures www.unido.org

9. Poor and uneven quality of local productsPoor and uneven quality of local products National quality infrastructure lacks credibility and tests and certificates by local laboratories not recognized in export countries. Inability of DCs to utilize preferential treatment/ market access concessions. Standards and Conformity Assessment infrastructure www.unido.org High Risk of rejection of products in export markets due to lack of conformity (TBS and SPS).

10. www.unido.org Supply-capacity (quality, quantity, price) and competitiveness and integration in regional/global value chains

11. World exports, 1980-2004 (US$ billion) Global Trade Growth & Marginalisation www.unido.org  Share of developing countries in global trade only 26%  Every 1% growth in Trade, LEADS TO one-half % Income increase  Over 75% of global trade is in manufactures (Industry the key)

12. www.unido.org NO Trade gains without Industrial Capacity Industrialisation a Challenge for Developing Countries Developing country share of manufacturing value added?

13. www.unido.org Immediate Opportunities: Agro Food Exports World and Developing country exports of fish,processed fruits & vegetables now exceed the combined value of exports of tropical crops: Cotton, Coffee, Sugar, Tobacco. (source: UN COMTRADE) - 20% +19% +11% - 9%

14. www.unido.org Immediate Opportunities: Agro Food Exports

15. Global Trade Challenges Tariffs reduced – Other Barriers remain US$ 1.75 bn. exports from developing countries have been disrupted in 2004, due to SPS (food safety) non-compliance. While only US$ 53 mn. spent by donors on SPS support. World Bank 2004, Steven Jaffee & Spencer Henson, Standards and Agro-Food Exports from Developing Countries – Rebalancing the Debate COST OF COMPLIANCE TO FOOD SAFETY RULES - UNIDO Estimates Shrimp exports to the EU - Testing and Compliance cost adds 2.8% Enterprise Quality/safety set up cost – adds 5% to product cost National Quality & Testing infrastructure – US$ 5.0 mn. to US$ 25.0 mn. www.unido.org “LDCs have neither the surplus of capacity of exportable products nor the production capacity to take immediate advantage of new trade opportunities” Kofi Annan - UN SG, Financial Times, 5 Mar. 2001

16. Quality systems in the Agri-Food-Industry AFITA/WCCA 2004 Quality and safety and Beyond Feed industry farmer processing retail GMPEurepGAP BQM Agri Confiance - QM-Milch IKM KKM DQG Q+S Certus IKB Label Rouge IFS EFSIS BRC Stages of the food industry - Quality systems www.unido.org direct the retail ISO 22000 supplier to

17. Integration Needs Enterprise/Chain Management System ISO 22000 HACCP ISO9000 GHP GMP 1...X Different Product Lines ISO14001 BRC Q+S etc. ABM IFS SQF EurepGAP Traceability

18. AFITA/WCCA 2004 www.unido.org Quality Price safety The “big”dilemma

19. www.unido.org UNIDO GLOBAL APPROACH

20. UNIDO GLOBAL APPROACH: The UNIDO 3 Cs “Countries must have marketable products for export”  COMPETITIVITY of productive capacities “Products must conform to requirements of clients and markets”  CONFORMITY with standards “Rules for trade applied and simplified cross border transactions”  CONNECTIVITY to markets CompeteConformConnect www.unido.or g

21. Forming Strategic Partnerships for Trade Capacity Building

22. www.unido.org Lake Victoria – EU fish ban Developed improved factory processing Developed UNBS- first accredited micro-biology lab UEMOA Upgrading enterprises quality and safety Fish sector, cotton sector Regional Accreditation, Standards and conformity Sri Lanka Garments, rubber, spices, food sector Laboratory accreditation, ISO 14001, SA8000, HACCP Egypt Food traceability for market access Improve quality and productivity UNIDO is implementing Aid for Trade type projects: SUPPLY-SIDE DEVELOPMENT & CONFORMITY

23. Thank You

24. UNIDO TCB projects 2005: US$ 64.6 Mn. Additional US$ 90.4 Mn. under negotiations Source: UNIDO elaboration www.unido.org Total UNIDO TRTA Portfolio: OECD/WTO TCB Data Base

25. Situation Before Exporters not aware of impact of new Directive EC 178/2002 that could become a TBT as of 1 st January 2005: Insufficient to assess the problem, its impact and implement cost-effective solutionsInsufficient national capability to assess the problem, its impact and implement cost-effective solutions Lack of funding (institutions/enterprises) Risk of by local suppliers and complementary industriesRisk of loosing foreign markets by local suppliers and complementary industries Key priority to be effected with high negative impactKey priority exported products to be effected with high negative impact not known Case of Egypt Traceability of agro-industrial products for the European Market

26. TRTA/CB Project elaborated jointly by UNIDO and the Ministry of Foreign Trade (MOFT) with support of Italian authorities TRTA/CB funded utilising a debt swap agreed between Italy and Egypt and linked to an Italian Initiative for trade facilitation called the “green corridor” Egyptian producers assisted and traceability scheme implemented and linkages with Italian/European Importers established Situation Today Funded in the framework of the “Debt-for-Development Swap” agreement (19.02.2001) by the Government of the Italian Republic and the Government of the Arab Republic of Egypt Case of Egypt Traceability of agro-industrial products for the European Market

27. Assistance to Pack Houses (~100) and through them to over 5000 producers Available software assessed and 5 best options selected UNIDO Traceability manual developed and adopted Over 600 Egyptian trained in traceability and related issues Physical traceability assessed (farm to fork) Value chain analysis of selected products Mapping of pack Houses and production pattern Situation Today Case of Egypt Traceability of agro-industrial products for the European Market

28. Financial scheme designed Applicants to traceability fund assessed (ICT infrastructure, traceability system SWAT, assistance in selection of technology, support in implementation) Physical traceability assessed (farm to fork) Assess sector technology upgrading needs Assistance planned for Plant Quarantine system Preparatory work for assistance to food manufacturers (also internal traceability) Situation Today Case of Egypt Traceability of agro-industrial products for the European Market

29. www.unido.org While WTO membership increases, regional trading blocks are also increasing in number and consolidation South-South regional blocks limited trade linkage Tremendous trade development opportunity –e.g. SAARC - Internal SAARC trade only 10% Promote Inter-Regional trade and Intra-Regional trade Harmonised Standards and Conformity pre-condition UNIDO projects: SAARC, UEMOA, ECOWAS, EAC GROWING IMPORTANCE OF REGIONAL TRADE