The Impact of Regulations on Agro-Food Trade: The Technical Barriers to Trade Ans Sanitary and Phytosanitary Measures Sps Agreements

153 Pages·2004·0.94 MB·English

by  Organisation for Economic Co-Operation and Development

«
The Impact of Regulations
on Agro-food Trade
THE TECHNICAL BARRIERS TO TRADE (TBT)
The Impact
AND SANITARY AND PHYTOSANITARY MEASURES (SPS)
AGREEMENTS
of Regulations
Agricultural trade disputes over issues such as beef hormones and genetically modified
organisms have received wide public attention and illustrated the trade-off between on Agro-food
domestic and international policy objectives. Although often viewed predominantly from
adomestic perspective, food safety and other technical regulations can have significant
Trade
trans-boundary implications. Regulations can facilitate and enhance trade, if they reduce
the risk that consumers might purchase unsafe food and thereby increase confidence in
imported products. On the other hand, such regulations can become barriers to trade, in
particular if they place demands on importers that are more costly to meet than the THE TECHNICAL BARRIERS
requirements applied to domestic producers. TO TRADE (TBT) AND SANITARY
AND PHYTOSANITARY MEASURES (SPS)
As tariff barriers are being reduced in successive rounds of international trade negotiations,
AGREEMENTS
concerns have been expressed that the diminished tariff protection is being replaced by
tighter regulation of agriculture and food imports. The economic stakes are considerable
and trade concerns over food safety and other technical measures are bound to remain
important items on the agenda of trade policy makers. This report examines pertinent
issues at the interface between domestic policy objectives, technical regulations and T
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Cover_a.fm Page 1 Thursday, December 4, 2003 4:00 PM
The Impact
of Regulations
on Agro-food Trade
The Technical Barriers to Trade (TBT)
and Sanitary and Phytosanitary Measures (SPS)
Agreements
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
Cover_a.fm Page 2 Thursday, December 4, 2003 4:00 PM
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960,
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basis in accordance with international obligations.
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Publié en français sous le titre :
L’impact des réglementations sur le commerce de produits agroalimentaires
Les accords sur les obstacles techniques au commerce (OTC)
et l’application des mesures sanitaires et phytosanitaires (SPS)
© OECD 2003
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FOREWORD
This report describes pertinent agricultural trade issues related to food
safety and other technical measures and examines possible measurement
approaches concerning the economic and trade impacts of standards and
regulations. It discusses implementation aspects of the WTO Agreements on
Technical Barriers to Trade (TBT) and on the Application of Sanitary and
Phytosanitary Measures (SPS) and reviews impact quantification methods and
techniques both in terms of a general overview and as concrete case studies. The
analysis thereby aims to provide analysts and policy makers with background
information to help them design technical measures such that these are least
trade-restrictive.
The report brings together work carried out in the OECD’s Joint Working
Party on Agriculture and Trade (JWP) during 2001-2003 in the context of the
Horizontal Programme on Food Safety and the work programmes of the
Committee for Agriculture and the Trade Committee. It complements and
extends the earlier OECD study on “Food Safety and Quality: Trade
Considerations”, which focused on areas of existing or potential trade conflict
concerning food safety and quality and the contribution that economic analysis
could make in resolving contentious issues. Moreover, several reports on other
economic aspects of food safety can be found on the OECD internet site
(www.oecd.org/agr).
This report was prepared and edited by Wayne Jones and
Peter Walkenhorst, who work in the Directorate for Food, Agriculture and
Fisheries and the Trade Directorate respectively. It combines material prepared
by the Secretariat and external consultants. John Beghin (Iowa State University)
and Jean-Christophe Bureau (Institut National de la Recherche Agronomique)
prepared the chapter 3 overview of approaches to quantifying economic impacts
of technical measures. Norbert Wilson (Auburn University) contributed the
assessment of model-based analysis in chapter 4. The final chapter on empirical
trade flow analysis was authored by Timothy E. Josling (Stanford University)
and is available as a stand alone OECD consultant’s report, Measuring the
Trade Effects of the SPS Agreement. The combined, multi-chapter report is
published under the responsibility of the Secretary-General of the OECD.
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ACKNOWLEDGEMENTS
The 2001-2002 OECD horizontal programme of work on food safety was
directed by Wayne Jones of the Food, Agriculture and Fisheries Directorate
under the auspices of the Committee for Agriculture. Special thanks are due to
Fatima Yazza who was the Programme Administrator, to Marc Kircher who
provided research assistance, and to Anita Lari, Stefanie Milowski,
Joanna Biesmans and Michèle Patterson who contributed to the preparation of
the final publication.

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TABLE OF CONTENTS

Chapter 1. Background................................................................................7
Chapter 2. Implementation of the TBT and SPS Agreements...............11
2.1 Agreement on Technical Barriers to Trade (TBT)..........................11
2.2 Agreement on the application of Sanitary and
Phytosanitary Measures (SPS)........................................................25
Chapter 3. Quantifying the Economic Impact of
Technical Measures.....................................................................................41
3.1 Definitions of a non-tariff barrier...................................................42
3.2 An analytical framework for measurement.....................................43
3.3 The price wedge method.................................................................45
3.4 Inventories-based approaches.........................................................48
3.5 Survey-based approaches................................................................50
3.6 Gravity based approaches...............................................................52
3.7 Risk assessment-based cost-benefit measures................................54
3.8 Stylised microeconomic approaches...............................................56
3.9 Quantification using sectoral or multi-market models....................58
Chapter 4. Model-Based Findings on the Impact of SPS Measures......63
4.1 Import bans.....................................................................................63
4.2 Technical specifications..................................................................70
4.3 Overall assessment of model-based analysis..................................74
Chapter 5. Measuring the Trade Effects of the SPS Agreement
through Trade Flow Data Analysis............................................................79
5.1 Defining potential trade effects of the SPS Agreement..................80
5.2 Data and analysis needed to calculate the trade impact..................87
5.3 Some partial evidence of trade impacts of the SPS Agreement......93
5.4 Summary observations..................................................................107
Annex 1. Summary of WTO Committee Interventions and Disputes
in the Area of Health and Safety.................................................................113
Annex 2. Overview of the TBT and SPS Agreements................................119
Bibliography … …… ……………………………..…..……………...142
5

CHAPTER 1

BACKGROUND
Technical regulations and standards are used by governments to achieve
domestic agricultural policy objectives, such as containment of health and
environment-related risks or fraud, and to facilitate trade by ensuring the
interoperability of technical systems and improving market transparency. Also,
demanding technical requirements can sometimes contribute to reinforce
consumer confidence and boost sales of products of both domestic and foreign
origin. On the other hand, excessive or cumbersome measures have the potential
to undermine market contestability, discourage imports, and thus, reduce
economic efficiency.
Although often viewed predominantly from a domestic perspective, food
safety, biosecurity and other technical measures can have significant trans-
boundary implications. Technical regulations, rules, and procedures can
facilitate and enhance trade, if they reduce the risk for consumers that they
might purchase unsafe food and thereby increase confidence in imported
products. On the other hand, such regulations can become barriers to trade, in
particular if they place demands on importers that are more costly to meet than
the requirements applied to domestic producers. For example, many developing
country exporters encounter difficulties entering the food markets of OECD
countries not necessarily because of insufficiently safe products, but often due
to lack of monitoring, testing, and certification infrastructure that would make it
possible for them to demonstrate compliance with existing import requirements.
One important policy challenge in this context is to design measures in a
way, so that they meet domestic policy objectives while minimising adverse
impacts on trade and the risk that measures may be misused for predominantly
protectionist purposes. Regulations to safeguard human health, protect the
environment and facilitate trade can take a variety of forms and use a range of
different policy instruments. The latter include labelling requirements, rules on
testing, inspection, and quarantine, specifications of product characteristics, and
total prohibitions of imports. The trade effects of these measures vary
7
considerably, and it is often difficult to determine whether the underlying policy
objectives are met with least cost for consumers, producers, and taxpayers.
The WTO Agreement on Technical Barriers to Trade (TBT Agreement)
tries to ensure that regulations, standards, testing and certification procedures
facilitate trade and do not give rise to unwarranted protection for domestic
producers. The 1994-Agreement was part of the outcome of the Uruguay Round
and extends and clarifies the 1979-Agreement that was reached in the Tokyo
Round of multilateral trade negotiations. It requires that technical regulations
and standards, as well as testing and certification procedures, be transparent,
justified by legitimate objectives, such as national security, prevention of
deceptive practices, human health and safety, animal and plant life and health,
or environmental protection, and do not create unnecessary obstacles to trade.
Countries have the right to pursue domestic policy objectives through technical
regulations and conformity assessment procedures; however, when designing
these measures, they are required to use relevant international standards, if these
exist and would be effective and appropriate.
The TBT Agreement covers all technical measures (regulations, standards,
testing and certification procedures) relating to any product or process and
production method, except sanitary and phytosanitary measures, which fall
under the auspices of the Agreement on Sanitary and Phytosanitary Measures
(SPS Agreement), and technical specifications related to government
procurement, which are covered by the plurilateral Agreement on Government
Procurement. Examples of measures that might fall under the TBT but not the
SPS Agreement include technical regulations and procedures concerning
composition and packaging, marking and labelling, process and production
methods, and final product characteristics. Measures based on product
requirements are supposed to be specified in terms of performance rather than
design or descriptive characteristics.
The SPS Agreement allows governments to implement border measures in
pursuit of objectives relating to human, animal, and plant life or health.
Governments are encouraged to use international standards when designing
their policies and to recognise other countries’ compliance procedures as
equivalent to their own, if the same level of sanitary and phytosanitary
protection is achieved. In cases in which countries wish to adopt measures that
provide a higher level of sanitary and phytosanitary protection than international
standards, they must ensure that their measures are based on an assessment of
the risks to human, animal, and plant health, taking into account the risk
assessment techniques developed by relevant international organisations; the
Codex Alimentarius for food safety, the International Office of Epizootics for
animal health, and the International Plant Protection Convention for plant
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