Trade is an increasingly international business, but not all countries are able fully to take part. Products must meet exacting international standards, which can be a barrier to trade for countries without adequate infrastructure, regulations, quality testing and certification. They are working with the EU to address these issues and help exporters to thrive.
Although the ‘red tape’ of regulations is often bemoaned, the need for internationally-recognised standards is clear in the case of kava. The calm-inducing root, used for thousands of years by Pacific islanders as a ceremonial drink, became a major export to the EU in the 1990s. Islanders set aside land to cultivate kava, and came to depend on its revenues: around $200 million each year.
Then in 2002, fears that kava was causing liver damage led Germany to withdraw licenses for kava products. The ban spread to other European countries, Australia and New Zealand. Despite thin medical evidence, trade came to a halt. The economic impact on Vanuatu, Fiji, Samoa, the Solomon Islands and Tonga was severe.
After much campaigning, Germany lifted its ban last year. But the islands lacked the capacity to undertake scientific assessments to rehabilitate kava’s reputation, develop safety protocols or propose standards for international trade.
This is where the EU’s ACP-EU Technical Barriers to Trade (TBT) programme comes in. It is working at the islands’ request to help establish quality and safety standards. A specialist has collected dozens of kava samples for laboratory testing to identify the best strains of kava to plant. The analysis will form the basis of an internationally-recognised FAO Food Code to protect consumers – as well as farmers.
“The importance of the project to us is tremendous,” said Mere Falemaka, Permanent Representative of the Pacific Islands Forum Secretariat to the World Trade Organisation. “Hopefully international standards will open the way for more exports, with far-reaching benefits to the rural communities in our islands who produce kava.”
Beyond kava
The Pacific Islands are party to various trade agreements which let them export products duty-free and quota-free to Australia and New Zealand (through SPARTECA) and the EU (through an interim Economic Partnership Agreement).
“But the problem lies with the regulatory requirements and standards, which are a particular issue in trying to access the New Zealand or Australian market,” said Falemaka. “Market access is very much dependent on quality standards.”
Only two Pacific countries, Fiji and Papua New Guinea, currently have the legal and institutional infrastructure to implement quality regulations. “The rest of the Pacific island countries, 12 of them, are at different stages of developing this infrastructure,” said Falemaka.
The starting point is to put national quality policies and regulations in place with legal backing. Next is developing a certification system, and the analytical capacity to verify products’ quality. “Those are the areas which need a lot of assistance, and it will be different for each country,” said Falemaka.
“We really need to work with governments of developed countries to make sure we have the capacity to conform to their standards, so I think capacity building is one area that developed countries can address in working with us to achieve conformance to standards for our exports.”
Certification & Standardisation
As well as working with the EU and other importers, developing country exporters are learning from each other. “One benefit of sitting in the [TBT Programme’s] Steering Committee is we can share experiences of what other regions are doing,” said Falemaka. “The way the African regions are moving sets some good lessons for the Pacific in addressing standards.”
One transferable tip is that “some certification programmes can be done more successfully by the private sector than government agencies.”
Before a transaction can take place, an exporter must satisfy the customers’ requirements. “If you don’t have approval from the other side, conformity, or as we call it in quality infrastructure, you will not trade with the person,” said Hermogène Nsengimana, Secretary General of the African Organisation for Standardisation. “Conforming to standards required by the European market, by the American markets, has been a big challenge.”
Small and medium-sized enterprises in Africa are taking on the task of implementing ISO 9001 standards, the recommendations by the International Organisation for Standardisation, to ensure companies consistently meet customer expectations.
“The TBT programme helps a lot with the certification process, helping to build capacity for our staff in order to be able to test a product, looking at available standards,” said Nsengimana. “It’s not just focusing on supporting public institutions, but supporting all stakeholders, private people who are the real ones doing business. We found that when you work with the private sector, the certification – the implementation – is better than working with the public sector. You see results immediately,” said Nsengimana.
These improved procedures could create new jobs in ACP countries. Historically, they have mainly exported raw materials, which require much less adherence to technical specifications. As technical barriers to trade are addressed, ACP countries could move into manufacturing ‘value-added’ goods.
“When you trade in raw materials, you are selling jobs, actually,” said Nsengimana. “You are selling your raw materials to people in developed industries to transform your raw materials, because you couldn’t really conform to the standards in the chain, and then the final product comes back to you.”
This is one factor behind high trade deficits in some ACP countries. By reducing the need to import goods which could be manufactured domestically, and allowing ACP manufacturers to sell to global markets, the TBT Programme could be an economic boost: creating new trade opportunities and jobs, while reducing trade deficits.
“We should start discussing how this project can continue beyond 2017,” said Nsengimana.
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The ACP-EU TBT Programme focusses on three areas:
The Programme is financed by the European Union in partnership with the ACP Secretariat under the 10th European Development Fund (intra-ACP). It is a demand-driven Programme responding to requests for capacity building from ACP countries to ensure full ownership by the ACP beneficiaries. |
Group
Private Sector Trade & Regional Integration
Building Resilience of Small Island Economies
Image: ADB Creative Commons license
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Overcome trade barriers, and then see how much good exporters and importers both can do to the society. Jobs will come, business will come, and businesses will come as it motivates people.
Sadiq Inam