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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 2003WTO, Geneva

UNCTAD

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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

Papershttp://www.unctad.org/trade_env/index.htm

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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

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Case studies: South AsiaFishery 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

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Case studies: Central AmericaPoultry 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

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Case studies: AfricaFishery 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

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Expert Meeting onEnvironmental Requirements

and International Trade2-4 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

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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)

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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

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More stringent and complex…

• Environmental requirements are becoming more frequent– growing evidence of harmful

environmental effects of certain substances

– changes in consumer preferences

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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

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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  

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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)

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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”

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Sectors

Most studies done by UNCTAD refer to:

• Agricultural and fisheries products

• Leather and textiles• Forestry products• Electronics

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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

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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

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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

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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

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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

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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

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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.

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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 PolicyJapan• Recycling regulations

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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

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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

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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

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Developmental aspects

• SME development• WTO issues

– Special and differential treatment (S&D)

– Technical assistance– Notification– Transfer of technology

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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

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Action international community and WTO

Bilateral cooperationParticipation and adequate time to adjust Information dissemination Promoting harmonization and mutual recognition of product standards and regulations based on equivalence in the WTOStandards developed without involvement of producing and consuming countries should have a default assumption of being discriminatory to trade.

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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

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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

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Consultative mechanismTo 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