Liberalisation of agricultural trade: challenges
by Dr. Mangala de Zoysa, Department of Agricultural
Economics, University of Ruhuna
During the last several decades many multilateral trading systems
with the participation of developed and developing countries have been
promoted in the General Agreement on Tariffs and Trade (GATT) and
subsequently in the World Trade Organization (WTO).
Agriculture: Principal pillor of economy |
The trends influenced the rules and commitments embodied in the
Uruguay Round (UR) and encouraged governments to move further toward
free trade. Progressive liberalization of agricultural trade has
increased participation of developing countries in international trade
in agricultural products.
Bio-security in food and agriculture has been demonstrated in the WTO
agreement on the application of Sanitary and Phytosanitary (SPS)
measures. The measures protect animal and plant health from pests and
diseases, and protect human and animal health from risks in foodstuffs
as well as protect humans from animal-carried diseases. However, the
developing countries face both opportunities and challenges emerged from
the SPS agreement.
The UR in September 1986 called for increased disciplines in market
access and SPS measures in agricultural trade. The UR in December 1988,
agreed the priority areas of SPS as: international harmonization on the
basis of the standards developed by the international organizations;
development of an effective notification process for national
regulations; setting-up of a system for the bilateral resolution of
disputes; improvement of the dispute settlement process; and provision
of the necessary input of scientific expertise and judgment, relying on
relevant international organizations.
The agreement on SPS measures of WTO allows countries to restrict
trade in order to protect human, animal, or plant life without disguised
restriction on trade. The agreement recognizes the rights of importing
countries to implement these measures providing scientific justification
or risk assessment to avoid the use of SPS measures for protection of
domestic industries.
Disputes in standards
The international standards of SPS measures are developed and
approved with very limited participation of developing countries.
Therefore, the international standards are often inappropriate for use
as a basis for domestic regulations in developing countries.
The standards formulation procedures vary among international
standards setting organizations. It is therefore difficult for most
developing countries to have their standards accepted as equivalent by
developed countries. Failure to recognize equivalence of measures is a
major problem confronting developing countries at the international
agricultural trade. SPS measures are based on principles of
international science and risk assessments in order to minimize trade
distortions.
Therefore, lack of harmonization of standards for setting regulation
to meet national needs developing country agricultural exporters are at
a disadvantage. There is no agreement whether and under what
circumstances, countries could implement domestic measures other than
international standards. It is not clear whether economic considerations
or consumer concerns other than health-related concerns should be taken
into account in the risk assessment.
Developing countries face difficulties when requested to meet SPS
measures in foreign markets based on international standards, as they
are unable to effectively participate in the international
standard-setting process. They have to demonstrate the scientific
soundness of their own SPS measures through risk assessments even these
measures differ from international standards. The Mutual Recognition
Agreements (MRAs) are not feasible due to the lack of modern facilities
for risk assessment in many developing countries.
Although the certification and accreditation of laboratory testing
has serious implications for MRAs developing countries have a limited
capacity to carry out those functions. The SPS agreement encourages
accepting equivalent SPS measures achieve the importing member's
appropriate level of SPS protection.
However, the importing countries are looking for sameness instead of
equivalency of measures. The adoption of standards is more complex, time
consuming and become non-scientific nature with the involvement of a
large number of stakeholders and politicizing the process of
international standards setting.
Trade restrictions
Expansion of agricultural trade has a direct relationship to poverty
reduction and accelerated economic growth in developing countries.
Further, reduction of existing trade barriers will provide increased
opportunities for developing countries to take advantage of gains
through international trade.
However, despite the UR having made progress in restraining tariff
escalation, a number of serious trade barriers still remain particularly
on imports of processed foods from developing countries.
Tariffs on foods particularly processed food exported from developing
countries are subjected to high rates of protection. If the protection
via tariffs and subsidies were lowered developing countries would
successfully expand their exports of fruits, vegetables, and cut
flowers.
However, many countries are expected to continue the resistance in
the UR to opening their agricultural sectors to international
competition. Lowering the level of protection provided by tariffs and
non-tariff barriers increase the importance of SPS measures as border
protection instruments for agriculture sector.
Imposing costly, time-consuming and unnecessary tests or duplicative
conformity assessment procedures can act as powerful non-tariff barriers
in agricultural trade. Therefore, it is very difficult to demarcate the
boundary between legitimate measures and measures aimed at discouraging
imports and protecting domestic producers by developed countries.
Strengthening domestic capacities
Strengthening domestic capacities implies building up knowledge,
skills and capabilities in the SPS domain. Strong domestic capacities
would help developing countries to identify agricultural products they
could import or export and also its potential negative impact on
people's health, animal health or the environment.
Developing countries should be able to respond to urgent needs
emerging in their target markets and to the wishes and expectations of
final consumers, by providing good quality and safe products. It is
necessary for all developing countries to cooperate with one another to
formulate effective mechanisms capable of devising, and enforcing
appropriate SPS requirements.
Developing countries require modern facilities to test and certify
agricultural commodities based on MRAs. They have to promote scientific
research, testing, conformity assessment and equivalency to avoid the
unfair SPS measures. Developing countries have to train competent
personnel and provide them with resources to enable them to effectively
participate in the international standard-setting process for SPS
measures.
WTO members have suggested that mandatory provision of technical
assistance should be included in Special and Differential (S and D)
treatment for developing countries under the SPS agreement. Several
international organizations and developed countries provide technical
cooperation.
Therefore, better co-ordination among these institutions would ensure
the full benefit from their efforts. It has been agreed to provide
assistance in the form of credits, donations and grants bilaterally or
through the appropriate international organizations.
The technical co-operation would up grade the technical skill of
personnel working in laboratories, certification bodies and
accreditation institutions in developing countries. They will be able to
issue internationally acceptable certificates, effectively participate
in the international standard-setting process and represent in the
mutually recognized agreements on SPS measures.
Reviewing standards and regulations of SPS measures can promote
agricultural trade and economic development of the developing countries.
Establishment of regional collaborative laboratories, certification
bodies and accreditation institutions could alleviate the problem of
non-recognition of developing country certificates.
The WTO agreements to develop domestic policies by national
authorities encourage the developing countries to promote the
harmonization of SPS regulations on an international basis. Covering
conformity assessment certificates, MARs can improve the market access
for the agricultural products of developing countries by avoiding
duplicative testing and the related costs, reducing possible
discrimination, and eliminating delays.
Dispute Settlement provisions significantly advance the negotiating
agenda with SPS agreement under WTO agreements in 1995. A certification
program provides a means to settle the dispute. However, it is not
certain that consensus on labeling, harmonized conformity assessment
mechanisms or the need for regulation can be achieved within the context
of WTO negotiations. The SPS Committee in 2001 agreed on guidelines on
recognizing the equivalence of differing SPS measures.
The guidelines clarify the type of information importing and
exporting countries should provide and factors that importing countries
need to consider. Further it emphasizes methods to facilitate
transparent regulatory measures. It is suggested that the burden of
justification of an acceptable level of SPS risk are placed upon the
importing country dispute settlement provisions. |