Transcript Imperial College London

APS Annual Meeting
8, August 2012
Providence, RI
From Boom to Busted: Trade
Concerns under the WTO’s SPS
Agreement.
Lee M. Pearson
Centre for Environmental Policy
Imperial College London
Link to Presentation
Overview
•
•
•
•
•
Introduction
• International context
• The balancing act of interests
• The SPS Agreement: obligations and its use
Specific Trade Concerns in Plant Health
• Methods and Data
• Specific Trade Concern examples
Results and Discussion
• What is contentious as reflected by SPS Specific Trade Concerns?
• Are developing countries represented?
• Does the value of trade matter?
• Does the system address concerns?
Future Work
Conclusion
Clash of Interests at International Scale
“Traditional trade protection
measures such as tariffs and
quotas are falling away. But
to some extent they are being
replaced by domestic
technical regulations…”
Alien species cause
damage and losses in
excess of $120B/year in
the USA alone
(Pimental et al, 2005)
Economic and Health Tensions
“A mild type of [cattle-plague or pleuro-pneumonia], in certain
sections of our country, is the occasion of great loss to our farmers,
and of serious disturbance to our trade with Great Britain [...] The
value of neat-cattle exported from the United States [was] nearly
double the value for the same period [last year], an unexampled
increase of export trade. Your early attention is solicited to this
important matter.”
- US President Rutherford B. Hayes, 1880
More history see: The Food Safety Network, University of Guelph
Balance of Costs/Benefits Make SPS Controversial
Domestic
Consumers
Government
• Price of purchases
• Concerns for quality
• Perception of risk
Domestic
Producers
• Biosecurity costs
• Export quality perception
• Domestic competitiveness
Scientists
• Uncertainty in evidence
• Knowledge generation
Other Domestic
Industry
Foreign
Industry
• Costs of inputs
• Market access for exports
• Market access
• Compliance costs
• Certifications costs
The SPS Agreement
• Since Jan 1, 1995 WTO members must notify new or
changed SPS measures that are likely to have a trade
impact.
• SPS measure is any government measure applied to
protect animal or plant life or health
• from risks arising from pest/disease spread,
• from additives, contaminants, toxins or disease-causing
organisms in food, beverage or feedstuffs.
• Measures:
• must be based on risk assessment (for regular measures)
• must not be more trade restrictive than necessary
• should follow international standards (OIE, Codex, IPPC), but
member can set individual Appropriate Level of Protection.
Who uses the SPS agreement?
(data: SPS – IMS)
(Aisbett & Pearson, forthcoming)
What do they use it on?
(data: SPS – IMS)
(Aisbett & Pearson, forthcoming)
Literature on SPS
• Building Resilience into Agriculture Biosecurity
• Waage & Mumford, 2008
• Myriad pest, disease, viral studies
Science Literature
• WTO Trade Report 2012 focused exclusively on SPS and
TBT measures.
• SPS has heavy trade impacts
• Tran, Wilson, & Anders 2011; Henson & Loader 2001
• Political Economy of SPS
• Kono, 2006; Disdier et. al. 2008; Vogel 1995
Economic Literature
• Resolving trade conflicts over food safety
is the biggest challenges facing the WTO
• Roberts & Unnevehr, 2005
• EC and USA have cultural differences
which impact their approach to risk
• Echols, 1998
Legal & Political
Science
Specific Trade
Concerns
Trade Concerns Show Implementation Challenges
• SPS Committee is a forum for discussion between
WTO Members meeting quarterly
• STCs advantages for research:
• Low cost for country to raise
• Reflect issues in implementation
• Reflect member’s understanding of agreement’s
purpose
• Less political than disputes
• Warnings of future disputes
Data
• SPS – IMS
• Specific Trade Concerns
from 1995 to 2011
• 81 plant health STCs
• Multiple countries (83 obs)
• Multiple products (112 obs)
• UN COMTRADE
• 4-6 digit level Exports /
Imports by product,
country pair, year
Example of HS-digits
• HS-08: Edible Fruit
• HS-0805: Citrus fruit
• HS-080510: Oranges
• World Bank
• GDP (constant 2000 USD)
• Development status
Note: How to get
Interception/Rejection Data?
Research Questions for Plant Health Concerns
1. What are the most common
concerns raised in the WTO with
regards to plant health issues?
2. How do concerns vary across
product? Across regions?
3. Are we effectively resolving our
trade concerns about plant
health?
4. Are developing countries
represented in the process?
5. How does trade value interact
with concerns?
The main data in a STC
• First date raised
• Dates subsequently raised
• Members maintaining the
measure
• Members raising the concern
• Products covered
• Subject keywords
• Status
• Date reported as resolved
• Description of content
• Relevant documents
• Members supporting the concern
• Document title
• Solution
Most Concerns about Vegetables and Fruit
06
07
08
10
11
12
44
HS codes
LIVE TREES &
OTHER PLANTS
EDIBLE
VEGETABLES
ED. FRUITS &
NUTS, PEEL OF
CITRUS/MELONS
CEREALS
MILLING INDUSTRY
PRODUCTS
OIL SEEDS/MISC.
GRAINS/MED.
PLANTS/STRAW
WOOD & ARTICLES
OF WOOD, WOOD
CHARCOAL
US and EU are Primary Discussants
Country Raising Concern
1. United States (16)
2. European Union (9)
3. Japan (9)
4. Australia (7)
5. Brazil (5)
20
15
10
5
ia
W
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As
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N
or
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ib
be
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C
ar
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Au
st
Am
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N
or
ic
a
th
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Af
ric
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ia
So
Su
ut
bh
Sa
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ia
ha
ra
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Af
ric
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pe
Am
La
tin
Eu
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Au
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ra
la
si
a
0
5
10
15
20
Number Specific Trade Concerns
25
25
1. United States (22)
2. European Union (13)
3. Argentina (8)
4. China (7)
5. Canada (4)
Country Maintaining Measure
US and EU are Primary Discussants
Country Raising Concern
Country Maintaining Measure
1. United States (16)
2. European Union (9)
3. Japan (9)
4. Australia (7)
5. Brazil (5)
20
15
10
5
SA
IR
O
N
AP
PO
In
de
pe
nd
en
t
EP
PO
C
PP
C
SA
VE
C
O
AP
PP
C
SA
IR
O
N
EP
PO
IA
PS
In
C
de
pe
nd
en
t
N
AP
PO
EP
PO
C
PP
C
SA
VE
C
O
C
AN
AP
PP
C
0
0
5
10
15
20
Number Specific Trade Concerns
25
25
1. United States (22)
2. European Union (13)
3. Argentina (8)
4. China (7)
5. Canada (4)
Developing Countries Participate in Process
RAISING
CONCERN
Developed
Developing
TOTAL
MAINTAINING MEASURE
Developed
Developing
27
19
(48%)
(53%)
23
(26%)
14
(36%)
=
50
(38%)
=
33
(45%)
=
=
=
• Developed nations more likely to resolve disputes
• Power dynamic at play? Or lack of scientific capacity?
TOTAL
46
(50%)
37
(30%)
=
83*
(41%)
Why Resolution Status Might Matter
? ?
Does the amount of trade matter?
•
•
Mean value of trade covered by
concern between countries is $52M
in year of dispute.
Export share varies greatly
Raising
Member
% export
share
• .000165% for EU’s trade of foliage to
New Zealand’s market
• 97.5% Nicaragua’s trade of oranges
to Costa Rica
•
World
Market share varies greatly
• 99.5% of Guatemala’s avocados
come from Mexico
• .0039% of USA’s wood
packaging/crates come from
Argentina
% market
share
Maintaining
Member
Does the amount of trade matter?
•
Mean value of trade:
Raising
Member
• Resolved: $17.0M
• Not Resolved: $73.2M
•
Mean Market Share:
• Resolved: 40.0%
• Not Resolved: 22.8%
•
% export
share
Mean export share from raising
country:
World
• Resolved: 6.8%
• Not Resolved: 18.6%
% market
share
Suggests focus on small value problems of
importance for Maintaining Members
Maintaining
Member
Resolution is Clearly Difficult and Time Consuming
•
•
•
Before
resolution,
concerns are
raised around 3
times (2.8) on
average
Concerns that
are resolved
take 4+ years
(4.4 years) on
average
Less than half
(43%) of cases
are ever
reported as
resolved
Obligations Relevant for Trade Concerns
•
•
•
•
•
•
•
Article 2.2 – Measure applied only to extent necessary and not maintained
without sufficient scientific evidence
Article 2.3 – Measures do not arbitrarily discriminate between Members
where identical conditions prevail
Article 4.1 – Equivalence. Members should accept measures different from
their own if it achieves the equivalent level of protection.
Article 5.1-5.6 – Measures must be based on risk assessment that considers
scientific evidence and avoids arbitrary distinctions in the levels of risk in
different situations. Such measures are not more trade-restrictive than
necessary, taking into account technical and economic feasibility.
Article 5.7 – If a lack of scientific evidence, members may adopt provisional
measures and gather evidence to review in a reasonable period of time.
Article 6.1-6.3 – Members shall consider level of prevalence of disease or
pest by region and recognize pest-free or low-pest areas as demonstrated by
exporter.
Article 13 – Members shall formulate and implement measures in
observance of the agreement by other than central government bodies.
General Categories of Concerns
1. Pest-free Area Recognition
a) “In October 2006, the United States expressed concerns regarding
Indonesia's Decree 37 implemented in March 2006, which established
new phytosanitary requirements on fruit imports that failed to recognize
fruit fly free areas in the United States.” – STC243
2. Regulatory Time Delay
a) “The undue delays and changes in the procedures undertaken by
Australia were a concern to Chile.” – STC194
3. Disproportionately Trade Restrictive
a) “Canada urged India to use the least trade-restrictive measures as
stipulated in the SPS Agreement.” – STC186
4. Disputed PRA or Scientific Evidence
a) “asked Japan to explain the scientific rationale behind its measure, and
the risk assessment it was based on” – STC56
5. More Information Requested
a) “Australia was a major grain exporter and was especially interested in
the documents which should accompany shipments.” – STC174
Multiple Concern Types often Raised
“In March 2011, Rica stated that Costa Rica was free from
Chrysanthemum White Rust and had requested the United
States to reduce post-entry quarantine to two months.
However, the United States continued to request a post-entry
quarantine of six months. On 27 April 2010, APHIS had
provided a post-entry permit restricting chrysanthemums from
Costa Rica to 2000 cuttings, this was a disproportionate
measure...” – STC316
No Trend in Type of Concern by Product Type
06
07
08
10
11
12
44
HS codes
LIVE TREES &
OTHER PLANTS
EDIBLE
VEGETABLES
ED. FRUITS &
NUTS, PEEL OF
CITRUS/MELONS
CEREALS
MILLING INDUSTRY
PRODUCTS
OIL SEEDS/MISC.
GRAINS/MED.
PLANTS/STRAW
WOOD & ARTICLES
OF WOOD, WOOD
CHARCOAL
By Member The Concern Type Matters – US example
Raised by USA
•
•
Raised against USA
US predominately petitioning other countries on scientific evidence
Concerns raised against US predominately about regulatory delays
and trade restrictiveness.
Regionally Complaint Type Varies
•
•
•
Many
regions not
actively
participating
Africa of
particular
concern
North
America
raises most
concerns
about
scientific
evidence
Regionally Complaint Type Varies
•
•
East Asia
questioned
about
scientific
evidence
North
America
seen as too
trade
restrictive
and
introducing
unnecessary
delays.
Conclusions
• Most concerns (~60%) are not resolved
• Resolving has a large trade impact (>50% increase in under decade),
but concerns raised multiple times (2.8) and a decision takes years (4.4)
• Still need for capacity building of developing countries and further
analysis of their measures even though some promising signs of
participation in process.
• Few attempts at recognizing or challenging on equivalence
•
Possibly due to challenge this poses to domestic regulations
• Concerns are raised mostly between geographically disparate members
•
93% of concerns are raised between different regions and 84% different
NPPOs (with APPC and CPPC accounting for the difference)
• Regional variation in perceptions of risk and goals of SPS agreement
•
•
North America challenging a lack of scientific evidence for policies
North America challenged to make regulation decision quicker and consider
the alternative measures with less trade impact
Questions to Keep in Mind to Ease Concerns
• Does my planned biosecurity regulation treat domestic
production and international imports equivalently?
• Have I looked at costs of alternative methods to reduce
the risk?
• Can I apply regulations at a finer scale?
• What ports would be affected?
• What season is a risk for contamination?
• What season is a risk for introduction?
• Can I get buy-in to the scientific process from countries
that constitute our major import sources?
Further Work
Immediate
Open-ended Questions
• Relationship between loss of
tariff protection and concerns
raised over trade restrictiveness
• Logit model on likelihood of
concern resolution given trade
and economic factors
• How do we come to a common
approach to risk management
and dealing with uncertainty
across commodities? Across
countries?
• What moves a concern to a
dispute?
• What are the barriers to
developing countries
successfully resolving
concerns?
• How do we deal with public
perception of risk?
Links to more information
Websites
•
WTO SPS IMS website
• http://spsims.wto.org/
•
SPS Training Module
• http://www.wto.org/english/tratop
_e/sps_e/sps_agreement_cbt_e/
signin_e.htm
•
Standards and Trade
Development Facility
• http://www.standardsfacility.org/e
n/index.htm
•
Official WTO Disputes citing the
SPS Agreement
• http://www.wto.org/english/tratop
_e/dispu_e/dispu_agreements_in
dex_e.htm?id=A19#selected_agr
eement
Works Cited
•
Qiqqa Library to all References:
• http://bit.ly/MglOTb
Questions?
[email protected]
Academic Page
Linked-In
Acknowledgement:
US EPA Marshall Scholarship