Case study

1. 1
The effects of environmental
regulations on developing
countries: what are the concerns
and what can be done
Veena Jha
Public Symposium: Challenges ahead
on the Road to Cancun
16-18th June 2003
WTO, Geneva
UNCTAD

2. 2
UNCTAD activities
• UNCTAD/IDRC Project Standards and Trade
– Final meeting: Geneva, 16 and 17 May 2002
• UNCTAD Expert Meeting on Environmental
Requirements and International Trade
– Geneva, 2-4 October 2002
Papers
http://www.unctad.org/trade_env/index.htm

3. 3
reports
• An overview paper
• Regional scoping paper on South Asia
(Bangladesh, India, Nepal and Sri Lanka)
• Regional scoping paper on Central America
(in particular Costa Rica)
• Regional scoping paper on Eastern Africa
(Kenya, Mozambique, the United Republic
of Tanzania and Uganda)
• Scoping paper on organic agriculture (Costa
Rica, India and Uganda)
UNCTAD

4. 4
Case studies: South Asia
Fishery
products
India (other countries) HACCP standards
Bangladesh (Aug97)
India (May97 & Aug97)
EU bans on exports of fishery
products
Peanuts India Aflatoxin standards: setting
national standards and promoting
indigenous development of
technology
Rice India Standards for pesticide residues
Spices India, Sri Lanka Aflatoxin standards and other SPS
measures
Tea India Meeting standards on pesticide
residues
Organic
food
products
India Standard-setting, certification,
exports and institutional support

5. 5
Case studies: Central America
Poultry Costa Rica (and other
Central American
Effects of (a) the application of US
SPS regulations concerning specific
avian diseases (New castle disease)
and (b) HACCP requirements on
exports to the US and intra-Central
American trade. Policy responses.
Shrimp Costa Rica US measures concerning imports of
shrimp (turtle excluder devices).
Organic
food
products
Costa Rica Standard-setting, certification,
exports and institutional support

6. 6
Case studies: Africa
Fishery
products
Kenya, Mozambique,
Tanzania and Uganda:
Regulation 91/493/EEC
Kenya, Tanzania and
Uganda (1997):
EU Import ban: presence of
salmonellae in nile perch from Lake
Victoria
Kenya, Mozambique,
Tanzania and Uganda
(1997)
EU Import ban: outbreak of cholera
Kenya, Tanzania and
Uganda (1999)
EU Import ban: fish poisoning in
Lake Victoria
Peanuts Kenya Kenya : EU regulation on pesticide
application (Maximum Residue
Levels, MRLs)
Organic
food
products
Uganda Standard-setting, certification,
exports and institutional support

7. 7
Expert Meeting on
Environmental Requirements and
International Trade
2-4 October 2002
• Environmental and health requirements
(SPS measures)
• Chairman’s summary
(TD/B/COM.1/EM.19/3)
• Commission on Trade (3-7 February 2003)
http://www.unctad.org/trade_env/test1/meetings/envreq.htm

8. 8
Environmental requirements
• Standards (voluntary) and technical
regulations (mandatory)
• Labelling requirements (either mandatory
or voluntary, such as eco-labelling),
• Packaging
• Product taxes and charges
• Take-back obligations
• Informal (non-government) requirements
• Quotas and Non Automatic Licensing (to
implement MEAs)

9. 9
Environmental requirements
• Voluntary measures and private sector
standards appear to be much more frequent
than Government environmental product
regulations. These include:
– Standards, codes and benchmarks
– Supply chain management
• There are only few international standards for
environmental regulations

10. 10
More stringent and complex…
• Environmental requirements are
becoming more frequent
– growing evidence of harmful
environmental effects of certain
substances
– changes in consumer preferences

11. 11
More stringent and complex: examples…
• Draft Strategy for a Future Chemicals
Policy in the EU point to the imminent
introduction of legislation that
implements a precautionary approach
Stakeholders' Conference on the Commission's White
Paper on the Strategy for a Future Chemicals Policy,
Brussels, 2 April 2002

12. 12
More stringent and complex: examples…
• EU Directive 2000/53/EC on End-of-Life
Vehicles
– Aimed at sound management of scrapped
vehicles
– Implications for material selection, use of
hazardous materials, the use of recyclable
and/or bio-degradable material as well as design
for recycling.
• Japanese market, significant initiatives:
– The recycling-oriented economy framework
– Launch of the Green Purchasing Act

13. 13
Implications for market access
Concerns of developing countries:
• Many standards perceived as overly
stringent or complex
• Frequent changes (never catch up)
• Scientific justification insufficient
• Standardes often fail to take into account
the conditions of developing countries
• Way a measure is implemented may
discriminate (GATT/WTO dispute
settlement mechanism)

14. 14
Structural weaknesses
• Lack of awareness
• Management of information
• Poor infrastructure
• SMEs
• Lack of finance
• Lack of institutional capacity
• Insufficient access to technology
• “Standard-takers” rather than “standard-
setters”

15. 15
Sectors
Most studies done by UNCTAD refer
to:
• Agricultural and fisheries products
• Leather and textiles
• Forestry products
• Electronics

16. 16
Agricultural products
Drivers:
– Advancements in food safety sciences and
growing public awareness of health safety
issues
– Following food scares, consumers expect
retailers, through their purchasing practices,
to supplement Government regulations for
ensuring food safety.
– Consumers and retailers are demanding more
transparency, traceability and quality
assurance in the food chain

17. 17
Agricultural and fisheries products: concerns
• HACCP (which has environmental aspects): may
be expensive for small producers
• Aflatoxin: compliance and testing may be very
expensive (issues such as science and
proportionality)
• MRL levels in food products: too stringent for
tropical conditions?
• Developments in cut flowers
• Fishery products: large funds required to
establish infrastructure and build institutions

18. 18
Agricultural and fisheries products: concerns
• Cuba, honey and coffee: lack of in-country
technical capacity to verify compliance with the
very low MRL limits required under EU
regulation 2377/EC.
• Peru: traditional foods are now subject to
complex import regulations (EU regulation
258/97 on Novel Food and Novel Food
Ingredients) due simply to their exogeniety
• Caribbean countries: similar problems in
exporting certain traditional food products to
the US market, because MRL levels have not
been defined

19. 19
Leather and textiles, concerns
India
• Bans on products containing traces of azo dyes,
pentachlorophenol (PCP), other harmful amines
and other substances
• Eco-labels, based on life cycle analysis, buyer’s
requirements and ISO standards
• Animal rights issues (leather)
Pakistan
• With phasing out quantitative restrictions,
quality standards and environment-related
requirements of buyers in developed countries
become more stringent

20. 20
Leather and textiles, implications
South Asian
• Problems of SMEs
India:
• Substitutes 2.5 times more expensive than azo
dyes
• Azo-free dyeing 15 to 20 per cent more expensive
• High Costs of testing
Nepal:
• Weak regulatory and institutional framework to
address problems faced by the export industry

21. 21
Leather and textiles, national responses
India
• The Government of India (GoI) has banned 112
harmful azo dyes.
• pro-active role of Pollution Control Boards:
norms for effluent treatment.
• Dissemination of information and development
of eco-standards.
• The GoI has established a Technology
Upgradation Fund, strengthened testing
laboratories and been assisting textile units in
securing certification

22. 22
Leather and textiles, national responses
Pakistan
• Pakistan National Environmental Quality
Standards and Environmental Improvement
Plans
• Environment Technology Programme for
Industry of the Federation of Pakistan Chamber
of Commerce and Industries (FPCCI)
Nepal
• Joint initiative with the Governments of Finland
to improve environmental performance and
promote environmental labelling in certain
export industries.

23. 23
Electronics
EU:
• The Waste from Electrical and Electronic
Equipment (WEEE) Directive
• The Restriction of the use of certain
Hazardous Substances in electrical and
electronic equipment (RoHS) Directive
• Integrated Product Policy (IPP)
• Green Purchasing Law (GPL)
• The Draft Strategy for a Future Chemicals
Policy
Japan
• Recycling regulations

24. 24
Electronics: implications
• Since manufacturing of electronics
components and other products are being
increasingly outsourced to developing
countries, companies and governments in
these countries need to promote pro-
active policies with regard to information
gathering/management and product
engineering/design
• Developing country companies should
also seek cooperation with transnational
corporations and obtain information from
customers

25. 25
Electronics
Thailand
• A high-level subcommittee set up under the
National Committee for International Trade
and Economic Policy to monitor the
development of the EU WEEE and RoHS
directives and propose a plan of action
• The subcommittee has commissioned a study
to investigate the specific implications and
adjustment requirements

26. 26
Developmental aspects
• Environmental requirements that
adversely affect market access can have a
negative effect on development and
poverty alleviation
• There can be longer term advantages
from trade-induced shifts to more
stringent standards in terms of greater
resource efficiency, higher occupational
safety, improved health conditions and
less environmental pollution
• There may be trade-offs especially in
resource-constraint countries

27. 27
Developmental aspects
• SME development
• WTO issues
– Special and differential treatment (S&D)
– Technical assistance
– Notification
– Transfer of technology

28. 28
Action at national level
 Raise awareness (gov., private sector)
 Dissemination of standard-related
information, early warning system
 Strengthen national and regional
institutions to conduct risk analysis and
testing; monitor enforcement of standards
and carry out certification.
 R&D, innovation and enterprise
development
 Promote business partnerships
 SMEs

29. 29
Action international community and
WTO
Bilateral cooperation
Participation and adequate time to adjust
Information dissemination
Promoting harmonization and mutual
recognition of product standards and
regulations based on equivalence in the
WTO
Standards developed without involvement
of producing and consuming countries
should have a default assumption of being
discriminatory to trade.

30. 30
Aid agencies
 Strengthen capacities and assist
developing countries to become standard
setters
 Assist developing countries in their
participation in the work of international
standardization bodies
 National/regional cooperation
 Cases where developing countries have
successfully enhanced their participation?
 Best practices on appropriate involvement
of key trading partners in setting of
environmental standards and regulations
 Early warning systems

31. 31
Technical assistance
 Large range of programmes
 Piecemeal?
 Often emerges when developing countries
face problems in meeting requirements of
importing countries
 Long-term
 Link TC/CB to enhance capacities to
comply with environmental standards with
broader TC/CB to enhance export
comptetiveness

32. 32
Consultative mechanism
To support:
• Research on new trends in environmental
requirements and likely implications for
products of export interest to developing
countries
• Information management and dissemination
• Pro-active adjustment strategies in exporting
developing countries
• Strategies for SMEs
• Reliable statistical information to facilitate
support policy-oriented research