Transcript Document

Voluntary Trade Standards:
The role of Cleaner Production
[SPEAKERS NAMES]
[DATE]
Introduction & Motivation
So far. . .
 We have learned
about CP as a
management
approach to
increase the
efficiency of the
production process,
and thus the
competitiveness of
enterprises
However, for enterprises
that export goods (or
which hope to do so),
production efficiency is
necessary, but not
sufficient.
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Introduction & Motivation
Exporting enterprises must. . .
!
!
meet the mandatory trade standards
of the markets they sell to.
Increasingly, they must also
consider meeting voluntary trade
standards that concern
environmental and social aspects of
the production process.
We will define
trade standards
later in this
presentation
Why? Meeting these standards may
allow them to sell to certain customers,
or to price their goods at a premium.
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Introduction & Motivation
As we will see,
!
meeting environmentally related trade
standards is increasingly imperative in making
African SMEs competitive in export markets.
!
Meeting any such standard poses real
challenges to African SMEs that BDS providers
must address.

Cleaner Production is an essential
management tool to help meet these
challenges.
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Overview of this module
This module will:
1. Provide a basic briefing on trade
standards
2. Discuss trade standards and trends that
affect export-oriented African SMEs
3. Demonstrate how CP helps to achieve
environmentally related trade standards
4. Discuss the most important/significant
aspects of these standards in more detail
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Definitions:
What are “International Trade Standards”?
A “STANDARD” is. . .
A standard is defined as "a
document, established by
consensus and approved
by a recognized body, that
provides, for common and
repeated use, rules,
guidelines or
characteristics for
activities or their results.”*
*BSI (British Standards Institution)
“International Trade
Standards” are. . .
STANDARDS that are applied to
goods and services which originate
in one country, but which are sold or
consumed in another.
International trade standards can
apply to the characteristics of the
product itself, or to the production
process.
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Definitions:
Voluntary vs. Mandatory standards
Mandatory international
trade standards. . .
are embodied in trade
treaties and agreements,
and in national law.
specify product
characteristics (e.g.,
pesticide residue levels) or
labeling.
are legal requirements.
Failure to comply prohibits a
product or service from
being sold in a given
geographic market.
Products vs.
production processes:
In the international trading
system, mandatory standards
generally apply to the
characteristics of the
product, not the process that
produced it.
However, food safety
requirements (“phytosanitary
standards) are a “grey area.”
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Definitions:
Voluntary vs. Mandatory standards
Voluntary international
trade standards. . .
can apply to the
characteristics of the
product, its production
process, or both.
Are not legally required to
export to a particular
geographic market
allow producers to sell into
higher value-added markets,
or to meet the requirements
of key customers.
Are “voluntary standards”
always voluntary?
A voluntary standard can
become mandatory for all
intents and purposes if
required by enough
customers in a particular
market.
This is increasingly
common for certain
standards.
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Some examples of voluntary standards
Note: Use of these examples does not imply USAID endorsement.
Fair Trade
Standards/certification regime to assure
that developing-country producers receive
fair prices for agricultural products
!
All require
independent
verification
Forest Stewardship Council
Standards/certification regime to assure that forest products are
produced from sustainably managed forests
Farm-level standards and certification to assure food safety, worker
health and safety, animal welfare, and environmental management.
ISO 14000 Environmental Management Standards
Standard/certification regime to assure basic good environmental
management practices in organizations*
*functions as a trade standard when it
affects access to export markets
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Why voluntary standards?
Voluntary and mandatory trade standards traditionally
serve different objectives:
Mandatory standards
Foster trade and economic
growth
Encourage competition
Protect consumers against
unsafe or substandard
products
Voluntary standards
Develop markets for
socially or environmentally
responsible products
Promote other
environmental social and
environmental objectives
Compensate for the lack of
local or national regulatory
capacity
But as we shall see, objectives
are beginning to overlap. . .
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Sources of standards
Many standards,
many sources:
Standards are set and
administered by. . .
 national, regional and
international organizations
Which may be. . .
 Governmental
 Multilateral
 Non-profit
This module is not a comprehensive
guide to standards, but it will help
familiarize you with the range of
standards in existence
Etc.
Etc.
Etc.
My
head
hurts.
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WAIT!
Why should
African SMEs and
BDS providers
care about
voluntary
standards?
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Why should African SMEs and BDS providers
care about voluntary standards?
Consider. . .
 The number and market
power of voluntary
standards concerning the
environmental and social
aspects of production is
growing dramatically
“Market power” means
that in rich-country
markets, goods and
producers conforming
to these voluntary
standards enjoy an
advantage.
 Some voluntary standards
are effectively becoming
required in certain markets.
The best example of
this trend is EurepGAP.
Why?
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Why should African SMEs and BDS
providers care about voluntary standards?
Changes in CONSUMER VALUES.
1
2
Consumer demand in rich
countries (and increasingly in
developing countries) is starting to
reflect non-economic values &
preferences
In addition, these consumers are
increasingly concerned about food
and product safety
such as concern for
child labor practices,
fair payment to
farmers, and the
environmental
impacts caused by
the production of
goods.
As a result. . .
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Why should African SMEs and BDS providers
care about voluntary standards?
1
2
An increasing number of
consumers are willing to
pay more for “green
goods”
Increasingly, consumers
put pressure on the
private sector to provide
“safe goods” above and
beyond regulations.
In response,
the private sector has. . .
Imposed environmental, social,
and product-safety requirements
on their suppliers.
Developed “green product lines”
and selected suppliers who can
conform to their requirements
(These requirements are
sometimes existing voluntary
standards; sometimes a new
voluntary standard is developed.)
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Why should African SMEs and BDS providers
care about voluntary standards?
!
consumer demand for
“green products”
particularly affects FOOD,
FIBER, ANIMAL &
FOREST PRODUCTS.
Demand for “Safe
products” particularly
affects FOOD.
These are key African
exports.
And they are also targeted
for commercialization and
growth in many SMEcentered developed
schemes.
As a result. . .
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Why should African SMEs and BDS
providers care about voluntary standards?
As a result. . .
primary producers in the developing world
increasingly find that compliance with voluntary
standards is essential in order to:
Increase the value-added
of their products/become
less of a commodity
supplier.
Enhance their ability to
act as suppliers to
developed-country
companies.
Maintain access to/share
in old markets and with
old customers.
Gain access to new
markets.
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What is the relationship to CP?
FIRST, some disclaimers. . .
Adopting any standard
requires detailed technical
knowledge of the standard,
Getting business benefits
from a standard often
requires marketing that
exploits the standard


The CP process does NOT
provide technical knowledge
of trade standards
The CP process
does not build
marketing skills

Nor does the CP process help identify standards
relevant to a business/product
HOWEVER. . .
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CP facilitates adoption of trade standards
? Why?
.
Because adopting
any standard
requires changing
business &
production
processes. . .
 . .. And CP prepares
a business for
change in important
ways. . .
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CP prepares a business for change
1
CP helps evaluate the business case for standards
changes to business & production
processes necessarily have cost
implications.
therefore an enterprise must
carefully evaluate the business case
for adopting any standard.
The business case examines:
 “costs of adoption”
(internal costs of change and
operating costs under the
standard)
Linkage to CP
 revenue potential after the
standard is adopted.
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CP prepares a business for change
1
The business
case: evaluating
costs of adoption
CP gives the enterprise a
detailed understanding of the
true costs of production, and
of its inputs and outputs.

This gives the enterprise the
basic information needed to
assess the internal costs of
change and the cost of
operations under the standard.
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CP prepares a business for change
2
CP gets production processes under control
Making and managing change is far
easier, cheaper, and more certain
when production processes are
well-understood and well-controlled
That is, it is absolutely essential to
have one's "house in order" to
implement any of these standards.
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CP minimizes costs of change
CP is prevention-based and focuses
decision-making on total costs
CP does exactly this!
helps identify the
 CP
way to make
changes with
minimum cost
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CP supports adoption of trade standards
Summing up:
 the company that
internalizes CP is better
able to evaluate whether a
standard makes business
sense, and can minimize
the costs of adoption.
“So as BDS
providers, we
should see
environmental trade
standards and
cleaner production
as closely related
issues.”
This is particularly true of
environment-related
standards.
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Now. . . Some voluntary
standards in more detail
Fair trade
Note: Use of these
examples does not imply
USAID endorsement.
Fair Trade
Standards/certification regime to assure
that developing-country producers receive
fair prices for agricultural products
(also emphasizes environmentally
responsible production techniques)
 60 developing countries, 464 producer
organizations, 515 registered traders
 Africa is the fastest growing region within
the Fair Trade network (124 producers)
 Worldwide Fair Trade product sales 2004
is estimated to be in excess of €800m;
growth ~50%/year
!
Not perfect: sometimes fair trade
product volume exceeds demand
(e.g., coffee.)
Fair Trade
Products
from Africa
Tea, Coffee, Wine,
Honey, Nuts and fruits,
Palm and virgin coconut
oil, Shea butter,
African black soap,
Cocoa products such as
cocoa butter,
Musical instruments,
Basket, Beads, Books,
Arts and crafts,
Home decorations,
Textiles,
Musical recordings.
(2004/05 figures)
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Sustainable Wood Products
Forest Stewardship Council
Standards/certification regime to assure
that forest products are produced from
sustainably managed forests
Some of the largest wood and paper
products companies in the world are
FSC-certified.
Major U.S and European “market making”
retailers have FSC-certified wood
procurement preferences, e.g.:
Home improvement: The Home Depot;
Lowe’s Home Improvement Centers, B&Q
PLC (home improvement);
Furniture & home goods: IKEA
!
Not perfect: the FSC has its critics
Note: Use of these
examples does not imply
USAID endorsement.
As of Oct 2004 more than
116 million acres of
forest in 61 countries
have received FSC
certification.
(58% Europe,
21% N. America,
13% Latin America,
4% each Africa &
Asia/Pacific.)
~3400 chain-of-custody
certificates granted in 68
countries (shows wood
comes from a certified
forest by tracing all
intermediate transport &
processing steps)
(2004/05 figures)
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ISO 14001
Note: Use of these
examples does not imply
USAID endorsement.
ISO 14001 Environmental
Management Standard
A standard specifying /certification regime
to assure basic good environmental
management practices in organizations*
(not an environmental compliance audit,
but a certification of environmental
management systems and procedures)
As of April 2005, over 88,000 ISO 14001certified companies world wide.
Most common sectors
for ISO-14001-certified
companies:
Pulp and paper, Textile
and Dyes Iron and Steel,
Chemicals and
Petrochemicals,
Pharmaceuticals, Power
Cement, Paints and
Coatings Automotive,
other forms of
manufacturing, mining
Some larger multinationals are now requiring
their suppliers to be ISO-14001 certified
!
ISO 14001 certifies a management system, but cannot certify
whether the company uses this system to actually improve
its environmental performance
(2004/05 figures)
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EurepGAP
Farm-level standards and certification to
assure food safety, worker health and
safety, animal welfare, and environmental
management.
All producers for supermarkets associated
with EurepGAP were required to be certified
by EurepGAP by January 2005. (A number of
African countries requested an extension to
provide further time to comply.)
As of January 2004, over 1000 EurepGAPcertified African farmers
(with the large majority from South Africa).
!
Note: Use of these
examples does not imply
USAID endorsement.
EurepGAP started in 1997
as an initiative of retailers
(super markets in Holland
and England) belonging to
the Euro-Retailer Produce
Working Group (EUREP).
EUREP’s motivation was
to assure its customers
of food safety.
Standards now include
fruits, vegetables,
flowers, ornamentals,
livestock, and
aquaculture
EurepGAP is effectively becoming a required standard for
exporters to the European market & is shaping national
legislation in a number of cases.
(2004/05 figures)
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Reputability:
a key consideration for adopting any standard
Remember, the business case for
adopting a standard examines:
“costs of adoption”
(internal costs of change and
operating costs under the
standard)
revenue potential after the
standard is adopted.
!
Revenue potential depends
on how important a “green”
product is to the target
consumer, AND on
how well-known and
reputable the standard is.
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Reputability: a key consideration
We cannot endorse any
standard in this course.
However, we can identify the
characteristics of standards
which have:
 Tended to be most
successful in the
marketplace
 Been most-endorsed and
promoted by social and
environmental NGOs
developed by a
diverse group of
stakeholders and
not only by
“industry
insiders”
Requires
certification by
an accredited,
independent 3rd
party
A clear,
memorable label
on the product at
retail
“Chain of
custody”
requirements
track the product
from source to
retail outlet*
Standard
requires real
changes from
“business as
usual”
* For product
standards
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Closely related trends:
DOMESTIC & REGIONAL ECO-LABELS
National/Regional eco-label schemes
establish criteria for
“environmentally superior products”
in national or regional markets.
Some national & regional eco-label symbols:
Nordic swan
(Scandinavia).
Blue Angel
(Germany).
Green Label
(Thailand)
Green Seal
(USA)
Criteria are usually
based on the life-cycle
impacts of the products.
Products must usually
be independently
certified to carry the
eco-label.
Home and office
appliances,
soaps and cleaning
chemicals, paints, and
clothing are the most
common eco-labeled
products
EU “Flower”
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Closely related trends:
DOMESTIC & REGIONAL ECO-LABELS
In one sense, these eco-labels are
not “trade standards:”
i.e., they were not designed
especially for internationally
traded goods
Put another way,
Fair Trade, FSC &
similar standards
are really just fully
international
eco-label schemes.
However, when they affect the ability
of traded goods to compete in a
particular market, they function as
trade standards.
Increasingly, rich-country eco-labels
cover categories of goods that
Africa exports.
e.g. Fish, Fruits,
Cotton, Clothing. . .
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Summing up. . .
the “greening of demand” in
rich markets
Growth in voluntary standards that
increasingly link export success (and
even market access) to environmental
performance, particularly for Africa’s
key goods.
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Summing up.
These standards create
challenges for African
producers
They also create opportunities.
The important message from this
course:
Making CP business as usual
makes evaluating and adopting
standards far easier.
(Photos to be
added here)
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