Program for Biosafety Systems – http://pbs.ifpri.info/
“Low Level Presence, Trade, Biosafety and
Decision Making: Issues f...
Program for Biosafety Systems – http://pbs.ifpri.info/
IFPRI’s Mission and Expertise
• IFPRI mission as an international n...
Program for Biosafety Systems – http://pbs.ifpri.info/
Sources of LLP
• Asynchronous: at least one cultivating country has...
Program for Biosafety Systems – http://pbs.ifpri.info/
GM food trade and asynchronous approval
• Growing market shares and...
Program for Biosafety Systems – http://pbs.ifpri.info/
Policy options and decision making
variables affecting economic wel...
Program for Biosafety Systems – http://pbs.ifpri.info/
Some issues identified for consideration on the
evaluation of econo...
Program for Biosafety Systems – http://pbs.ifpri.info/
Qualitative implications for key decision parameters
identified in ...
Program for Biosafety Systems – http://pbs.ifpri.info/
Limitations to studies on the impact of
low level presence policies...
Program for Biosafety Systems – http://pbs.ifpri.info/
Example from Developing Countries-
soybean imports in Vietnam
 In ...
Program for Biosafety Systems – http://pbs.ifpri.info/
Option Probability
trade
disruption
Price Risk Cost Conclusions
0% ...
Program for Biosafety Systems – http://pbs.ifpri.info/
Broader regulatory cost of compliance: Issues
and Implications iden...
Program for Biosafety Systems – http://pbs.ifpri.info/
Implications increases of cost of compliance for
public goods in de...
Program for Biosafety Systems – http://pbs.ifpri.info/
Black Sigatoka Resistant Bananas in Uganda
 Considered irreversibl...
Program for Biosafety Systems – http://pbs.ifpri.info/
Summary
• LLPs are becoming an important trade issue
• Need to unde...
Program for Biosafety Systems – http://pbs.ifpri.info/
Potential issues for discussion
• How can we reduce asynchronicity?...
Program for Biosafety Systems – http://pbs.ifpri.info/
José Benjamin Falck-Zepeda,
Ph.D.
Senior Research Fellow / Leader P...
Program for Biosafety Systems – http://pbs.ifpri.info/
References
• Bayer, J. C., G. W. Norton, and J. B. Falck-Zepeda. 20...
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Falck Zepeda presentation at the FAO Technical Consultation on Low Level Presence and Trade in Rome March 2014

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Falck Zepeda presentation at the FAO Technical Consultation on Low Level Presence and Trade in Rome March 2014

  1. 1. Program for Biosafety Systems – http://pbs.ifpri.info/ “Low Level Presence, Trade, Biosafety and Decision Making: Issues for Developing Countries” José Falck Zepeda Senior Research Fellow International Food Policy Research Institute (IFPRI) Leader PolicyTeam for the Program for Biosafety Systems (IFPRI - PBS) ContributingTeam Guillaume P. Gruère* Patricia Zambrano Antoine Bouet Dedbdatta Sengupta Daniela Horna* *Departed IFPRI
  2. 2. Program for Biosafety Systems – http://pbs.ifpri.info/ IFPRI’s Mission and Expertise • IFPRI mission as an international non-governmental organization “To Provide Research-Based Policy Solutions That Sustainably Reduce Poverty and End Hunger and Malnutrition” • IFPRI conducts research in policy relevant topics: – Trade related impacts • Impacts of labelling and low level presence policies • Private contracts and standards • Compliance ability – Ex ante and Ex post socioeconomic impact assessments of adoption – Regulatory issues • Effects of cost of compliance with biosafety regulations and regulatory delays • Coexistence, segregation, identity preservation • Regional harmonization approaches • IFPRI provides operational and research based policy support to biosafety regulatory agencies and competent authorities in their decision making
  3. 3. Program for Biosafety Systems – http://pbs.ifpri.info/ Sources of LLP • Asynchronous: at least one cultivating country has already authorized a GM crop while other countries have not approved for importation • Asymmetric: a cultivating country has authorized a GM crop, but its developer does not seek approval in potential or unattractive importing countries • Accidental admixture: a country has authorized the cultivation of a GM crop in field trials only. Traces of the commodity end up in the commercial crop supply Source: Stein, A. and E. Rodriguez-Cerezo. 2010.
  4. 4. Program for Biosafety Systems – http://pbs.ifpri.info/ GM food trade and asynchronous approval • Growing market shares and trade of GM commodities • Increasing pipeline of new GM crops and events • Lack of policies and definitions – Slow down import regulations – 0% tolerance for imports of unapproved GM products • Focus on implementation issues – Codex Annex: simplified procedure – Incentives to move forward 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Mexico Canada Chile Taiwan Australia Peru Japan USA Philippines Russia Korea Indonesia HongKong Malaysia Thailand Brunei NewZealand Vietnam Pop.Rep.China Singapore PapuaNewGuinea Percentage of imported maize with potential LLP issues 0% 20% 40% 60% 80% 100% Pop.Rep.China Taiwan Korea Canada Mexico Australia Philippines Malaysia Japan HongKong Indonesia USA Peru Chile Singapore Russia NewZealand Brunei Thailand PapuaNew… Percentage of imported soybeans with potential LLP issues Source: Gruere 2011
  5. 5. Program for Biosafety Systems – http://pbs.ifpri.info/ Policy options and decision making variables affecting economic welfare Policy Options 1. 0% tolerance level for unapproved GM products 2. A threshold (t %) low level presence policy 3. 100% tolerance Optimal Policy Option The cost of enforcing the regulation The potential risk of the product The price of the product Source: Gruere, G. 2011.
  6. 6. Program for Biosafety Systems – http://pbs.ifpri.info/ Some issues identified for consideration on the evaluation of economic welfare of LLPs Price Tolerance level Probability of rejection Timing of approval Premium differentials Cost of compliance Tolerance level Import volumes Cost structure enforcement Approval delays Enforcement capacity Risk Tolerance level Trust in exporter regulations Availability Type of product and use
  7. 7. Program for Biosafety Systems – http://pbs.ifpri.info/ Qualitative implications for key decision parameters identified in assessment studies of economic welfare 1. Tolerance level 2. Approval delays 3. Degree of confidence in domestic and exporter’s regulation Best outcomes with high confidence & low delays, but the optimal tolerance level depends on tradeoff cost versus relative risk perceptions. Increase in Price Risk Cost of implementation Total economic welfare Tolerance level ↓ ↑ or → ↓ ↓ or ↑ Approval delay ↑ → ↑ ↓ Confidence → ↓ → ↑ Source: Gruere, G. 2011.
  8. 8. Program for Biosafety Systems – http://pbs.ifpri.info/ Limitations to studies on the impact of low level presence policies • Complex issue that requires extensive data to estimate impacts • Data issues – Production, prices, trade volumes, shares of affected imports – Testing costs relative to volume… • Many available studies based on assumptions and relatively simple models • Obtain an idea of qualitative direction and a sense of the magnitude of impacts…with known limitations
  9. 9. Program for Biosafety Systems – http://pbs.ifpri.info/ Example from Developing Countries- soybean imports in Vietnam  In average across simulations and range of assumptions, implementation cost for different tolerance levels are: • 0% $18million, • 1 % $4.1million, • 5 % $580,000 per year  Some, but not limited to, relevant question for a regulator could be: Is maintaining a 0% tolerance level - costing an average of $14 million more- in order to address perceived safety concerns better than a 1 % presence of an unapproved event that has gone through safety authorization in the country of export? Is the 0% level worth roughly $17+ million more than a 5 % level? Source: Gruere, G. 2011. Economic welfare effects of a single unapproved GM soybean event in the United States and Canada only -20000 -18000 -16000 -14000 -12000 -10000 -8000 -6000 -4000 -2000 0 N(0.1,0.1) N(0.5,0.5) N(1,1) N(2.5,2.5) ThousandsUSD τ=0% τ=1% τ=5%
  10. 10. Program for Biosafety Systems – http://pbs.ifpri.info/ Option Probability trade disruption Price Risk Cost Conclusions 0% LLP 100% High until approval Some variability Very high Valid if high perceived risk and no trust in export t % LLP Moderate Moderate Some variability and possible low risk Moderate to high Best solution from an economic perspective 100% pass 0% 0 Larger variability and potential risk None Valid if prices matter more than anything else Low level presence policies (e.g. Codex Annex) are valid intermediates between 0% tolerance level and 100% pass. Summary selected issues and policies related to economic welfare impacts of LLPs Source: Gruere, G. 2011.
  11. 11. Program for Biosafety Systems – http://pbs.ifpri.info/ Broader regulatory cost of compliance: Issues and Implications identified in existing studies • Regulatory delays have a negative impact on returns to investments • Projected trigger point is year 6 of regulatory delays for suspending a typical investment of$136 million in new R&D projects • Average regulatory approvals of 48 months implies reaching suspension point likely • Regulatory delays increase investment risk • Uncertainty increases likelihood that an investment will not be made Source: Smyth, McDonald and Falck-Zepeda, 2013
  12. 12. Program for Biosafety Systems – http://pbs.ifpri.info/ Implications increases of cost of compliance for public goods in developing countries • Cost are not as important, exceptions – National research organizations – International research systems developing “public goods” – Small private firms • Impact on the number/type of technologies • More “higher return” products and less public good products? Source: Beyer, Norton and Falck-Zepeda 2010
  13. 13. Program for Biosafety Systems – http://pbs.ifpri.info/ Black Sigatoka Resistant Bananas in Uganda  Considered irreversible and reversible costs and benefits for estimation  With one year delay, forego potential annual (social) benefits of +/- US$200 million Photos credits: Kikulwe 2009 and Edmeades 2008 Source: Kikulwe, Birol, Wesseler and Falck-Zepeda 2011.
  14. 14. Program for Biosafety Systems – http://pbs.ifpri.info/ Summary • LLPs are becoming an important trade issue • Need to understand better asynchrony sources and the various (pragmatic) approaches to manage LLPs – Critical need for reliable information and data to make the best possible judgment on the way forward • Different thresholds have different impacts – More cost/benefit studies are needed – Existing studies indicate that lower thresholds tend to have higher costs • Cost of compliance with regulations can impact potential stream of technologies available to developing countries especially those of a public good nature
  15. 15. Program for Biosafety Systems – http://pbs.ifpri.info/ Potential issues for discussion • How can we reduce asynchronicity? – What are regulators and/or decision makers roles and responsibilities? How about developers/industry? Other stakeholders? – Building trust in the system including regulations • How can information sharing improve our ability to make decisions? – Food/feed and environmental safety information sharing mechanisms and approaches • Use of Codex Alimentarius guidelines? • Use of FAO GM Foods Platform to share information for LLP situations? Other knowledge platforms i.e. Biosafety Clearinghouse? – Finance additional data/information collection needed to examine relevant policy issue in more detail? • Exploring the adoption of implementable LLP management approaches
  16. 16. Program for Biosafety Systems – http://pbs.ifpri.info/ José Benjamin Falck-Zepeda, Ph.D. Senior Research Fellow / Leader Policy Team Program for Biosafety Systems IFPRI 2033 K Street NW Washington, DC 20006-1002 USA j.falck-zepeda@cgiar.org Brief bio/pubs: http://www.ifpri.org/staffprofile/jose-falck- zepeda Blog: http://socioeconomicbiosafety.wordpress.com/ Follow me on Twitter: @josefalck
  17. 17. Program for Biosafety Systems – http://pbs.ifpri.info/ References • Bayer, J. C., G. W. Norton, and J. B. Falck-Zepeda. 2010. Cost of compliance with biotechnology regulation in the Philippines: Implications for developing countries. AgBioForum 13(1): 53-62. http://www.agbioforum.org/v13n1/v13n1a04-norton.htm • Gruere, G. 2011. Asynchronous Approvals of GM Products and the Codex Annex: What Low Level Presence Policy for Vietnam?. International Food and Agricultural Trade Council Discussion Paper. • Kikulwe, E.M., E. Birol, J. Wesseler, J. Falck-Zepeda. 2011. A latent class approach to investigating demand for genetically modified banana in Uganda. Agricultural Economics. • Smyth, S. and J. Falck-Zepeda. 2013. Socio-economic Considerations and International Trade Agreements. Estey Centre Journal of International Law and Trade Policy by 14(1): 18-38. http://www.esteyjournal.com/j_pdfs/smythfalck14-1.pdf • Stein, A. and E. Rodriguez-Cerezo. 2010. Low-Level Presence of New GM Crops: An Issue on the Rise for Countries Where They Lack Approval. AgBioForum. 13(2): 173-182.

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