ࡱ> OQNu@ Fbjbj T[=    u $+R}x  /    2       C "E0u$    ϲʹ Public Symposium 2004: Multilateralism at Crossroads Environmental Requirements and Market Access: An Update on Policy and Practice Inside and Outside the ϲʹϔ Gaps in the Policy Framework Paulo Ferracioli I would like to thank the organisers of this workshop for inviting me to speak on Environmental Requirements and Market Access, focusing on the theme Gaps in the Policy Framework. Trade and environment present, nowadays, a high level of interrelation since a considerable number of internationally traded goods, some of them important for developing countries, are subject to measures taken by governments for the protection of human health and life and the environment. Additionally, there is a growing number of private sector measures and requirements such as voluntary standards with the same objectives, increasingly more complex and stringent. The challenge we face is to establish a policy framework that recognise the importance and necessity of these requirements but that manages to prevent them from becoming instruments that hinder market access, particularly for developing countries. I think we should initiate our discussion considering that to reach our goal it is important to understand clearly that different approaches must be adopted to avoid barriers to trade when we deal with environmental requirements by governments and by private companies. In the case of government regulations, there are some disciplines in the ϲʹ Agreements that aim at avoiding their use as a protectionist barrier. With respect to these regulations, I believe that full implementation of the TBT and SPS ϲʹ Agreements can be effective in improving market access. However, under the TBT Agreement there are provisions to promote transparency and co-operative actions that still need further strengthening. When we consider voluntary standards established by the private sector, it is necessary to understand that these requirements, although called voluntary, may have a negative impact on developing countries exports. They may consist in what are called barriers behind the borders which, in practice, have the same effect as a government regulation. Among these voluntary standards, I would like to address special attention to the standards developed by private companies or by their associations that intend to meet new consumer preferences for products with less harmful environmental effects. In such case, large companies usually develop standards which, although adequate to this objective do not take into account needs and production conditions of developing countries. The search for a framework that could prevent these private standards from becoming barriers to trade must start with the acknowledgement that ϲʹ Agreements are not enough to deal with this issue, since private requirements were not the central issue during ϲʹ trade negotiations. If we consider both mandatory and voluntary environmental requirements, we have to admit that full implementation of ϲʹ agreements is important and may have a considerable role in solving part of the problems concerning market access, but a more global solution requires the development of new tools outside ϲʹ. Initially, it is necessary to address the issue of participation of developing countries in the international standardising process. It is, so far, unsatisfactory as for such a participation it is necessary not only to have financial resources but also technical capacity. This issue is often discussed in meetings at the ISO Developing Countries Committee, DEVCO, and a number of approaches are currently being developed in order to change this unfair situation. The effectiveness of these new approaches is still to be properly evaluated. An additional problem is that the majority of environmental requirements, either governmental or private, are not developed in international standardising bodies like ISO. A significant number of them are developed either nationally or by large companies. Concerning the latter, there are no provisions in the ϲʹ Agreements related to such private activities and it is difficult for the exporters of developing countries even to know that these standards are being developed. Its absence in the development of those standards makes the resulting process of adaptation of their productive structures more difficult, costly and time consuming. However, it is crucial mentioning that even when they have access to information it is difficult for small and medium companies of developing countries to comply with these supply-chain-driven requirements. A substantial part of them are not financially and technically prepared to implement the required changes in their production processes. In some cases, the new standards, developed without their participation, force the SMEs to adopt technologies that differ altogether from the ones they traditionally employ. In other words, having access to information alone does not prevent the exclusion of SMEs from the global markets, which leaves the door open for larger companies. However, even with a disproportionate effort, a lot of SMEs succeed in adopting these standards. But, after the adoption, to get results in the international markets they face a new challenge, equally difficult: they have to demonstrate compliance with the requirements to the authorities, in the case of mandatory requirements, or to the buyers, in the voluntary case. This demonstration usually means some type of product certification. Certification processes demand considerable laboratory infrastructure, for example to determine levels of chemical residues in fruits, and certification bodies with the capacity to analyse traceability, results of tests and management practices, items often present in environmental standards. This, in turn, requires considerable technological infrastructure, not readily available in the majority of countries. Moreover, when a country establishes a national certification program for a product, it is necessary to demonstrate its technical equivalence with those of importers. In its article 2.7, the TBT Agreement encourage members to give positive consideration to accepting as equivalent technical regulations of other members, even if these regulations differ from their own, provided they are satisfied that these regulations adequately fulfil the objectives of their own regulations. However, there are no provisions related to private buyers standards. In both cases, the process of demonstrating equivalence is complex and may be considered very difficult for developing countries. Last but not least, one of the most difficult tasks for SMEs is the acceptance of their certificates of conformity. In the case of government regulations, the mutual recognition agreements are of the utmost importance. In the TBT Agreement, article 6 states that members are encouraged to enter into negotiations with other members for the mutual recognition of results of each others conformity assessment procedures. However, the experience shows that developing countries still face considerable difficulties in obtaining recognition of their conformity assessment systems as was highlighted by several ϲʹ members during the TBT Third Triennial Review, occurred last year. Themes like conformity assessment procedures, accreditation and mutual recognition agreements were discussed in depth, and the Committee noted the importance of members ensuring that they follow the provisions of the agreement. It was also emphasised the importance that Members exchange with other Members information concerning their conformity assessment procedures and systems in order to increase acceptance of the results. As a result of the TBT Third Triennial Review, Members agreed to promote new discussions and workshops on these issues. Environmental requirements will certainly be one important issue present in these discussions. For the SMEs of developing countries, it should demand less effort to adapt their operations to nationally developed programmes, technically equivalent in terms of results to those of the importers, but that take into consideration their specificity. Additionally, demonstrating compliance to certification bodies located near their facilities could reduce their costs, contributing to their competitiveness. Otherwise they have to look for recognised international certification bodies, what considerably increases the exporters costs, reducing their competitiveness. This set of questions brings up the necessity of addressing the subject of technical assistance and capacity building. Even though the issue of technical assistance is covered by the TBT Agreement under Articles 11 and 12, its full implementation stills falls behind developing countries needs and expectations, as was also highlighted by several ϲʹ members during the TBT Third Triennial Review. Now, I would like to make some remarks considering my experience in Inmetro, the Brazilian Institute of Metrology, Standardisation and Industrial Quality, which is also the Brazilian Enquiry Point of the ϲʹ TBT Agreement. I think that having access to information about regulations and standards, improving transparency, is not at all an easy task. The problem of lack of information has made us develop a more pro active action to help Brazilian SMEs. Inmetro, as the Brazilian Enquiry Point, has taken the responsibility to supply Brazilian manufacturers with information on technical regulations existing in foreign markets, trying to make exporters aware of the requirements that might demand adaptation of their products. Inmetro developed an early warning system, called Alerta Exportador!, on new draft technical regulations and conformity assessment procedures issued by ϲʹ member countries and notified to TBT Secretariat. Inmetro works together with equivalent institutes of other Mercosul members and this service is now available, free of charge, to exporters of the four countries. Companies can register themselves in Alerta Exportador, informing products and countries of their interest. After matching this information with new notifications gathered daily from the ϲʹ web page, Inmetro sends, automatically, an e-mail warning the company that its product might be affected. This gives the company time to analyse the new requirement and, when necessary, adapt its products, avoiding problems in its exports. However is important to point out that, despite of its usefulness, Alerta Exportador! is not, for the time being, able to provide information on private sector standards not notified to the ϲʹ, a very common situation when we talk about environmental requirements. The main difficulty Inmetro faces is how to obtain an updated and continuous flow of information to be sent timely to registered exporters. In my opinion, this could be overcome by a stronger encouragement for the countries to supply information about their voluntary requirements, specially environmental ones, even in a voluntary basis. Transparency is fundamental to business facilitation and market access, specially to developing countries. Additionally, trying to improve market access, Inmetro decided to cope with the constraints brought up by environmental requirements affecting Brazilian companies developing two certification programmes, with wide participation of all stakeholders, the Integrated Production of Fruits - PIF, for fruits and the CERFLOR, for timber products. Concerning the production of fruits, the PIF programme intends to assure, among other characteristics, environmentally and socially adequate processes. Its design took into consideration national production patterns and international market requirements as well, aiming at giving more competitiveness to Brazilian exporters. We are now in the process of obtaining recognition from EUREPGAP standards that are considered in the imports of the leading supermarkets in Europe. Just to give an example of how EUREPGAP standards influence market access for developing countries, 70% of Brazilian fruits exported to Europe are directed at retailers members of EUREP. Not meeting their requirements, even if they are voluntary, means the risk of not being able to sell to them. The second certification scheme developed by Inmetro is related to the sector of timber and furniture, another important sector that is facing demands from environmental requirements developed in the private sphere. The Brazilian forest certification programme, CERFLOR, establishes good practices for forest management and has been spread for products of the forest custody chain. Within the scope of CERFLOR we are trying to obtain the recognition from the Programme for the Endorsement of Forest Certification schemes - PEFC, the worlds largest umbrella organisation for promoting certification of sustainable management of forests. Still concerning the sector of timber and furniture, the four Mercosul countries have agreed on the creation of the Forum for Timber and Furniture. This Forum encompasses entrepreneurs and governments of the four countries, aiming at the improvement of competitiveness of this sector with the objective of increasing Mercosul exports. It was recognised that environmental issues, specially certification and international recognition of the certificates, are fundamental to creating better conditions for these products exports. It is important to remark that it took a long time for Brazil to develop both PIF and CERFLOR programmes. Now, our efforts concentrate in having these programmes formally accepted and recognised internationally. These initiatives requires technological capacity and a great amount of funding, what are not easily found in developing countries. Brazilian experience shows that it does require a great amount of effort to implement programs to prevent the exclusion of their companies from the international markets. The steps undertaken for the development of these programmes, from their beginning until their formal international recognition, are a clear example of the general problems I mentioned in the first part of my presentation. Finally, I would like to inform that Inmetro and UNCTAD are working to implement a new system to help exporters of developing countries in obtaining information on voluntary environmental requirements. Associating UNCTADs expertise in trade, development and environment with the experience Inmetro developed operating its early warning system may result in an important additional tool, which may contribute to increase the possibility of developing countries benefiting from the trade liberalisation process. Intending to discuss these and other issues, UNCTAD and Inmetro will promote a workshop on Environmental Requirements and Market Access and Market Entry for Developing Countries to be held in Rio de Janeiro in the beginning of June, as part of pre-UNCTAD XI events. The workshop will bring together experts from national governments, institutions active in standards issues, private sector and non-governmental organisations. One of the expected outcomes from the workshop is to develop the concept of a Consultative Task Force on Environmental Requirements and Market Access for Developing Countries. This workshop will, also, explore the feasibility of expanding Inmetros existing early warning system to cover certain private sector standards and promote co-operative arrangements concerning, particularly, the information gathering. We hope, with the results of this workshop, to contribute to enhance the market entry capabilities for all developing countries. 26 May 2004  Paulo Ferracioli is Head of Foreign Affairs at Inmetro, the Brazilian Institute of Metrology, Standardization, and Industrial Quality. 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