Christiane Wolff Agriculture and Commodities Division

World Trade OrganizationChristiane.Wolff@wto.org

IICA ForumTrade Facilitation and the SPS Agreement

Trade facilitation in the context of the SPS Agreement

Outline

• Brief overview of SPS Agreement

• Relationship between SPS and TF Agreements

• Relevant work of Standards and Trade Development Facility (STDF)

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• a multilateral framework of rules and disciplines to guide development, adoption, and enforcement of sanitary and phytosanitary (SPS) measures

• applies to SPS measures which may, directly or indirectly, affect international trade

SPS Agreement

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SPS measures include:

All types of measures

end product criteria

processing methods

quarantine measures

certification

inspection

testing

sampling …

some also covered under TFA

Measures with these objectives:

Food safety

Animal health protection

Plant health protection

Protection from invasive species

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Recognizing the right to protect human, animal, plant life or health

Avoiding unnecessary barriers to trade

What is the objective of the SPS Agreement?

Facilitating safe trade

Development/adoption of SPS measures

• SPS measures should be:

– non-discriminatory

– science-based (risk assessment)

– not more trade-restrictive than necessary to achieve ALOP

– Transparent

• Article 3: Members are encouraged to “harmonize” or base national measures on international standards, guidelines and recommendations (Codex, IPPC and OIE)

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SPS Agreement: International standards

Risk assessmentOR

SPS Measures must be based on:

International standards

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Standard-setting organizations

food safetyCODEX

plant healthIPPC

animal healthOIE

standards, guidelines, recommendations including on inspection, sampling, testing…

link to TFA Articles 5 and 10.3

SPS Agreement: International standards

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Enforcement/implementation of SPS measures

•Members required to avoid unnecessary trade disruption andtransaction costs for traders when performing control,inspection and approval procedures (Article 8 and Annex C)

•no undue delays; information requirements limited to what isnecessary; non-discriminatory fees (not higher than actual costof service), non-discrimination in siting of facilities and selectionof samples; procedure to review complaints, take correctiveaction, etc.

Annex C closely linked to TF

SPS Agreement International standards

For example, relevant Codex standards include:

• Principles for Food Import and Export Inspection and Certification (CAC/GL 20-1995)

• Guidelines for the Exchange of Information between Countries on Rejections of Imported Foods (CAC/GL 25-1997)

• General Guidelines on Sampling (CAC/GL 50-2004)

• Recommended Methods of Sampling for the Determination of Pesticide Residues for Compliance with MRLs (CAC/GL 33-1999)

Important to involve standard-setting bodies in TF work

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Examples of specific trade concerns (STCs) raised in SPS Committee

• Japan – Pesticide maximum residue level (MRL) enforcement system - raised by China, US

• Indonesia's port closures – raised by China, NZ, EU, US

• EU, Greece - Inspection and testing procedures for imported wheat - raised by Canada

TF issues already discussed in SPS Committee

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Relationship between SPS and TF Agreements

“nothing in this Agreement shall be construed asdiminishing the rights and obligations of Membersunder the TBT and SPS Agreements.”

BUT…..

some of the provisions in the TF Agreement may beconsidered as "SPS-plus", possibly resulting inobligations going beyond those contained in the SPSAgreement

Final provisions, para. 6 TF

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“SPS-plus”

Provide advance rulings besides

tariff classification and origin

(TF Art. 3)

Publish wide range of information related to

import/export requirements and

procedures

(TF Art. 1)

Border Agency Cooperation

(TF Art. 8)

Inform on detention of goods and facilitate test

procedures

(TF Art. 5) Allow pre-arrival processing /

Publish average release times

(TF Art. 7)

Freedom of transit: Limit formalities and

documentation requirements

(TF Art. 11)

Review and publish fees and charges

(TF Art. 6)

Review and reduce import/export transit

formalities

(TF Art. 10)

Considerations for implementation

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• awareness of SPS/customs officials regarding rights/obligations under all relevant WTO Agreements; need for coordinated approaches, systems

• involvement of SPS officials in TF needs assessments; opportunity for SPS entities to benefit from increased funding opportunities

• national SPS and TF committees/bodies, Enquiry Points need to communicate, have contact points in each other’s structures

• TA providers in SPS/TF need to have familiarity with both areas

Global partnership in SPS technical cooperation

Partners: FAO, OIE, WHO, World Bank, WTO (includes participation Codex/IPPC Secretariats)

• Coordination mechanism among providers of SPS technical cooperation to strengthen coherence, avoid duplication and enhance results

• Knowledge platform for sharing experiences, identification and dissemination of good practice, discussion of cross-cutting topics

• Funding for development and implementation of projects that support compliance with international SPS requirements to gain and maintain market access

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Context

• Outdated border clearance procedures and excessive red tape are greater barrier to trade than tariffs (WB, 2011)

• Performance gap between health/SPS agencies and others

• Lower performing countries:

• Much more physical inspection

• Longer import / export lead times

0%

5%

10%

15%

20%

25%

30%

2010 2012 2014

Private sector % rate of satisfaction with selected border agencies

(bottom quintile respondents)*

Customs

Quality and Standards

Health/SPS

Source: World Bank Logistics Performance Index

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Research in Southeast Asia and Southern Africa: How are SPS measures implemented in practice?

• Focus on SPS controls for specific products (and Article 8/Annex C of SPS Agreement)

• Are there transaction costs that can be reduced without compromising health objectives?

• What are good practices to ensure health protection, while minimizing transaction costs?

• No direct link to WTO TFA – but opportunity to enhance dialogue and leverage additional funds to improve SPS border management

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Examples of SPS-related procedural obstacles to trade

Challenges • Complex and lengthy procedures

• Excessive document requirements

• Limited information

• Multiple inspections

• Little coordination between border agencies

• No complaints / appeal procedures

• Arbitrariness, unpredictability

Consequences

• More controls than justifiable

• Longer than necessary waiting times

• Uncertainty

• Increased costs for traders, sometimes also for government

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Key conclusions of STDF research

• SPS measures may result in justifiable transaction costs based on the need to protect health

BUT

• Ineffective and inefficient SPS controls result in poor health protection – and disrupt trade more than necessary

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The opportunity

• Enhance health protection and reduce costs (win-win) through

better implementation of SPS Agreement:

• Streamline / simplify regulations

• Implement risk-based approaches

• Improve transparency

• Increase harmonization with international (Codex, IPPC, OIE)

standards

• Improve coordination among SPS agencies and with Customs

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Experiences from developing countriesNew STDF Film: Safe Trade Solutions*

How are developing countries in other regions rising up to the challenge?

• Better coordination betweenSPS agencies and with Customs

• Streamlined controls

• Joint inspections

• More transparency

• Integrating SPS controlsin national single windows

* See: http://www.standardsfacility.org/video-gallery and https://www.youtube.com/watch?v=Eww1MsewAOk

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Implementing SPS electronic certification: Potential challenges

• Need to change legislative and institutional set-up

• Lack of political will (financial resources, sustainability)

• Lack of expertise in SPS institutions in operating electronic systems (need for capacity building)

• Lack of essential prerequisites (database of official requirements, database of operators, etc.)

• Lack of IT equipment

• Need for enhanced coordination among SPS agencies

• Possible vested interests

• Lengthy negotiations on transmission protocols (limited use of the system, low return on investment)

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Relevant ongoing and future STDF work

• STDF Project in Azerbaijan (STDF/PG/316)

• STDF Project on e-Phyto (STDF/PG/504)

• Global workshop on SPS electronic certification :

state of play and experiences (July 2016, Geneva)

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Various practical solutions exist

Where to start?

• Improve transparency

• Reduce document requirements

• Reduce waiting times

• Reduce possibilities for rent-seeking

• Coordinate with trading partners

• Implement a risk-based approach (inspections)

Advanced solutions

• Single windows

• Single electronic windows

• One-stop border posts24

IDB study on SPS and trade facilitation in Latin America

How well prepared are the quarantine authorities to protect their countries’ SPS status as well as facilitate trade? The Latin America Case

• IDB: Juliana Salles Almeida

• Study was presented in 2014, but was not finalized

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SOURCE: INT’S CALCULATIONS BASED ON WB- LOGISTICS PERFORMANCE INDEX REPORT (2010).

NOTE: WEIGHTED BY PROBABILITY OF PHYSICAL INSPECTION

In LAC, it takes much longer to clear goods through

customs …

0

1

2

3

4

5

6

7

8

9

CHL CAN NIC USA COL PAN URY MEX DOM ECA GTM PER LAC EAP BRA CRI ECU ARG BOL VEN

Europe &

Central AsiaEast Asia

& Pacific

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CLEARANCE TIME (DAYS)(THE LOWER, THE BETTER)

NU

MB

ER

OF

DA

YS

…the paperwork to export/import from/to LAC is well above

the regional reference (Canada) …

SOURCE: INT’S CALCULATIONS BASED ON WB- LOGISTICS PERFORMANCE INDEX REPORT (2010).

0

1

2

3

4

5

6

7D

OM

CA

N

PAN

UR

Y

CH

L

NIC

USA

ECU

CR

I

AR

G

MEX

LAC

GTM

WO

RLD

BR

A

PER

BO

L

VEN CO

L

Import

Export

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NUMBER OF DOCUMENTS REQUIRED TO IMPORT

AND EXPORT

(INDEX; THE LOWER, THE BETTER)

NU

MB

ER

OF

DO

CU

ME

NT

S

SOURCE: LAC ECONOMIC SYSTEM REPORT MARCH 2010); ELECTRONIC SINGLE WINDOW–COORDINATED BORDER

MANAGEMENT (JBC INTERNATIONAL , IDB ; DECEMBER 2010).

Single Window: Development has been asymmetric in LAC

Operational

Advanced stage of development

No SW or not started

Not available

Initial stage of development

Zoom in Central America

STATUS OF SINGLE WINDOW

SYSTEM IMPLEMENTATION

Zoom in the Caribbean

28NOTE: IN DOMINICAN REPUBLIC THE SPS AUTHORITY IS NOT PART OF THE SW YET

Digital Phyto/Zoo

Certificate for export + manual

signature*

Phyto/Zoo Certificate for

export inpaper format

Single Window

(SW)

Chile(w/ Netherlands)

UruguayParaguayEcuador

BrazilMexico

SW Phase IInitial

coordination with other authorities

SW Phase IIE-SignatureE-payment

SW Phase IIIInteroperability

with other countries

ColombiaCosta Rica

Chile

El Salvador GuatemalaHondurasEcuadorParaguay

Dom RepublicMexicoBrazilPeru

Argentina

Customs

Agriculture

Immigration, etc

* Countries that have one of the two (Phy or Zoo Certificate) in digital format.

BoliviaNicaragua

1. Improvements toward digitalization of SPS certificates and SW have been gradual and continuous (cont…)

Single Windows: Main Findings

Other STDF work relevant to TF

• Study on national SPS coordination mechanisms (2012)

– Many countries have SPS coordination mechanism, with varying degrees of effectiveness. Only some include customs.

– Recommendations: raise awareness, ensure high-level buy-in, clarify organizational mandate, build on existing mechanisms, engage all stakeholders, communication strategies, take pro-active approach to sustainability…

Importance of linkages between National SPS and

TF Committees

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Projects

• Close to 140 SPS projects developed / implemented with focus on market access

• Examples relevant to TF:

• Azerbaijan – Strengthening phytosanitary inspection and diagnostic services at borders

• COMESA – Breaking barriers, facilitating trade (i.e. focus on improving development/adoption of SPS measures)

• IPPC – e-phyto

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For more information

• WTO website– www.wto.org/sps

– WTO Secretariat informal note on the relationship between TF and SPS Agreements

• STDF website– www.standardsfacility.org

– thematic topics, projects, virtual library

• Trade facilitation facility– http://www.tfafacility.org

• World Trade Report 2015: Speeding up trade: benefits and challenges of implementing the WTO Trade Facilitation Agreement

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