4th Standards Conclave Session 5: Risk assessment in Agri-food Trade and Policy Options May 1 & 2, 2017 The Lalit Hotel, New Delhi

Transcription

1 GLOBAL SPS BASED MRL STANDARDS AND ITS IMPACT ON EXPORTS: COMPLIANCE IMPACT ON INDIA 4th Standards Conclave Session 5: Risk assessment in Agri-food Trade and Policy Options May 1 & 2, 2017 The Lalit Hotel, New Delhi Dr. Murali Kallummal, Professor Centre for WTO Studies, IIFT

2 OUTLINE Part I 1. (CWS study submitted to DoC) Titled EC s SPS and TBT Notifications on Endocrine Disruptors and Market Access Implications: Case of India s Exports 199 pages Part II 1. General issues related to transparency of non- Codex MRL standards 2. Based on UNIDO Study 2011 differential impact of border rejections Part III 1. Recommendations for INSS

3 TRADE TO GDP RATIOS (1988 TO 2015) Exports and Imports Shares to GDP: India Trade to GDP US$ current Imports to GDP US$ current Exports to GDP US$ current

4 PART I CWS STUDY EUROPEAN COMMISSIONS REGULATION ON ENDOCRINE DISRUPTORS AND ITS IMPACT ON INDIA FULL REPORT AVAILABLE AT: NG%20PAPER%20NO.33.PDF

5 SPS AGREEMENT: ARTICLE V - ASSESSMENT OF RISK AND DETERMINATION OF THE APPROPRIATE LEVEL Article 5.7 in reads.. In cases where relevant scientific evidence is insufficient, a Member may provisionally adopt sanitary or phytosanitary measures on the basis of available pertinent information, including that from the relevant international organizations as well as from sanitary or phytosanitary measures applied by other Members. In such circumstances, Members shall seek to obtain the additional information necessary for a more objective assessment of risk and review the sanitary or phytosanitary measure accordingly within a reasonable period of time.

6 ENDOCRINE DISRUPTORS: DEFINED An endocrine disruptor is an exogenous substance or mixture that alters function(s) of the endocrine system and consequently causes adverse health effects in an intact organism, or its progeny, or (sub)populations. A potential endocrine disruptor is an exogenous substance or mixture that possesses properties that might be expected to lead to endocrine disruption in an intact organism, or its progeny, or (sub)populations. Source:

7 WHAT ARE THE ISSUES IN EDS Chemicals with endocrine-disrupting properties impact the hormone system of animals and humans. Endocrine disruption is a relatively recent way of looking at the toxicity of chemicals. There is now scientific consensus in many areas, though diverging views exist on specific points within the scientific community and regulators worldwide.

8 IMPACT ON INDIA S EXPORTS

9 Present Analysis (methodology) 1. Broadly five Categories of Endocrine Disruptors; (Plant Protection Products; Biocidal Products; Cosmetics; Medical Devices and Water Framework Directive) 2. Identification of CAS numbers for those ED with blanks; 3. Mapping of Chemical Abstracts Service (CAS) to HS Codes; 4. Seven sectors were identified and impact on these seven sector in terms of - 1. India s Exports to EU and World; 2. EU imports from World.

10 THE REGULATION OF ED FOLLOWS, IN DIFFERENT PIECES OF LEGISLATION, DIFFERENT APPROACHES ED Classifications Plant Protection Products Biocidal Products Regulatory decision making taking into account Mainly Hazard with limited risk elements Hazard (general public uses) Risk / socioeconomic considerations (approval) Cosmetics Medical Devices Water Framework Directive Hazard / Risks (to be reviewed) Risk / socio-economic considerations (proposal currently in co-decision) No decision making directly applicable on the authorisation of products; the provisions are risk-based REACH (not Classified as ED) Source: European Commission ROADMAP, dated July, Hazard (for listing)/ /Risk / socioeconomic considerations (to be reviewed)

11 PROJECTED IMPACTS - EU S NOTIFICATIONS (SPS AND TBT) Scope of ED s Coverage 1. Agricultural products Indirect through the MRL restriction on Active substances; 2. Chemical Products Direct restrictions; 3. Cosmetics Products Direct and indirect restrictions; 4. Leather Products Indirect based on the composition of Dye used; 5. Textile and Textile Products Indirect based on the composition of Dye used; 6. Medical Devices Direct restrictions 7. Water (Aquatic lives) - Direct Restrictions 8. Other products which contains EDs

12 NON-CHEMICAL LISTED AS ENDOCRINE DISRUPTORS Name of Endocrine Disruptors CAS HS Code Creosote Disodium tetraborate, anhydrous Distillates (coal tar), naphthalene oils, naphthalene oil Laminarin Limestone Low temperature tar oil, alkaline, extract residues (coal), low temperature coal tar alkaline Musk Xylene Propyzamide Sea-algae extract (formerly sea-algae extract and seaweeds) Not applicable 1302 Sucrose Source: European Commission, Brussels, / SWD(2016) 211 final / PART 5/16

13 ACTUAL IDENTIFIED (ENDOCRINE DISRUPTORS ACTIVE SUBSTANCES) & 6 DIGIT HS TARIFF LINES Total of 588 Active Substances are listed as Endocrine Disruptors (EU document Annex 4) Water Framework Directive REACH Cosmetics Bio-cidal Products Plant Protection Products Endocrine List of 588 Active Substances (100%) Five Sectors (based on HS Tariff Lines) (46.8 %) Water Framework Directive 7% Water, 0.1 REACH 23% Plant Protection Products 49% Medical Devices, 0.9 Textile and Textile Products, 12.1 Chemical and Chemical Products, 17.1 Cosmetics 7% Biocidal Products 14% Leather and Leather Products, 1.2 Food and Food products, 14.9 Cosmetics, 0.5

14 CHAPTERS COVERED (SECTORAL) Percentage Share of Tariff lines (%) Number of Chapters Seven Major Sectors 47 Lowest tariff lines shares of 8 % has been one percent (chapter 51) and highest of 100 percent coverage in 41 chapters. Therefore, EC s legislations could have coverage of 47 Chapters.

15 SUPPLY: INDIA S EXPORT TO WORLD Seven Sectors Avg. Shares of India s Exports Chemical and Chemical Products 12.9 Cosmetics 0.2 Food and Food products 11.0 Leather and Leather Products 1.3 Medical Devices 0.3 Textile and Textile Products 9.7 Water 0.0 Sub Total of Seven Sectors 35.5 % Non-ED Products (EU s Legislations) 64.5 % India's World Exports (US$ bn.) (US$ bn.) Nearly 36% of India s global exports are impacted: 1. Chemical and Chemical products accounted for 13 % closely followed by food and food products with 11 % and Textiles and Textile products with nearly 10 % shares in India s global exports of US$ 304 billion; 2. Water, Leather, Cosmetics and Medical Devices accounted for nearly 2 % shares; 3. There is a clear evidence of concentration of Impact, with three of the seven sectors having more than 10 % shares.

16 INDIA S EXPORTS TO EU-27 MARKET Seven Sectors Average Shares of EU's Imports Chemical and Chemical Products 14.9 Cosmetics 0.1 Food and Food products 7.6 Leather and Leather Products 4.1 Medical Devices 0.4 Textile and Textile Products 18.2 Water 0.0 Sub Total of Seven Sectors 45.2 % Non ED prouducts 54.8 % India's World Exports (US$ bn.) 50.5(US$ bn ) 45 percent of India's export are impacted - US$ 50.5 billion: 1. Impact on Textiles and Textile products is the highest with 18.2 % share of the exports to EU of US$ 50.5 billion; 2. Chemical and Chemical products accounted for 15 %; 3. Followed by food and food products with 7.6 %; 4. Leather and Leather products was found to have a significant impact of 4.1 % share; 5. Water, Cosmetics and Medical Devices accounted for only 0.5 % shares; 6. There is a clear evidence of concentration of Impact, with two of the seven sectors having more than 10 % shares. Labour intensive sectors are seen to be taking a hit.

17 TOTAL DEMAND - EU-27 IMPORT COVERAGE OF ED PRODUCTS Sectors Average (2012 to 2015) Chemical and Chemical Products 15.0 Cosmetics 0.4 Food and Food products 7.9 Leather and Leather Products 1.1 Medical Devices 1.5 Textile and Textile Products 4.2 Water 0.1 ED's Products Sub-total 30.3 % Non ED products (US$ Trillion) US$ In Trillions (EU total) 1. Nearly 30 % is the Impact on EU s Import market. 3.8 (US$ Tr.) 5.6 (US$ Tr.) 1. Chemical and Chemical products accounted for 15 percentage of the total imports of US$ 5.5 trillion; 2. Followed by food and food products with 8 percent shares and Textiles and Textile products with 4.2 percent; 3. Medical Devices accounted for nearly 2 percent shares; 4. Water, Leather, Cosmetics and Medical Devices accounted for nearly 2.6 percent shares.

18 DEPENDENCE ON EU: INDIA S EXPORT SHARES (IN %) Seven Sectors India s Exports Shares to EU Imports (in %) Chemical and Chemical Products 19.2 Cosmetics 10.1 Food and Food products 11.5 Leather and Leather Products 50.4 Medical Devices 19.1 Textile and Textile Products 31.1 Water 5.1 Sub-Total of Seven Sectors 21.2 Non ED Products 14.1 Total Indian Exports to EU (%) % share of India s seven sector is dependent by way of exports to EU: 1. The Impact on Leather exports will be highest with almost 50 % exports to EU; 2. Textile is second highest in terms of impact, with 31 % of exports to EU; 3. Followed by Chemical and medical devices with 19.2 %; 4. Food and food products will be impacted of up to 12 %; 5. Water accounted for only 5.1 % shares; 6. There is a clear evidence of concentration of Impact, with six of the seven sectors having more than 10 % shares. Most labour intensive sectors can be seen to take a hit.

19 METHODOLOGY CHALLENGES Deeper Analysis - Information Asymmetry Market survey for MRL standards and restrictions on active substances (AS); Market survey to identification the products containing the EDs; Need for a completely different structure at the multilateral level (more effective and better transparency mechanisms)

20 SUMMARY TABLE OF AGRI. PRODUCTS COVERAGE OF EDS (ANNEX TABLE NO. 3) Range of Agricultural Products (numbers) Coverage of Agricultural Products (No.) Maximum Agricultural products Minimum Agricultural products Coefficient of Variation (CV) - % age 1 to to to to to Agricultural Products Agricultural Substances Sources: Calculated based on Endocrine list based on EC s regulation of 2011 and Global MRL Database. (now maintained by Bryant Christie Inc.)

21 Vital Statistics from Chemicalbook 40,000 total active substances (according to chemicalbook.com) 588 active substances declared as endocrine disruptors; ED s accounting for approximately 1.5 percent of total active substances misses the logic.

22 PART II GENERAL ISSUES RELATED TO TRANSPARENCY OF NON-CODEX MRL STANDARDS DIFFERENTIAL IMPACT OF BORDER REJECTIONS

23 NON-CODEX MRL STANDARD? There is no Definition (internationally) 1. But from the empirical analysis, we found that these are those active substances/ingredients for which there are no comparable Codex measures; 2. Therefore, these are purely national by application; 3. Like the other MRL standards these are applicable on Agricultural crops used as food or feed; 4. Calculation of stringency in these cases is not possible as there is no comparable Codex measures (international).

24 EU S UNDERSTANDING ON HARMONISATION EFFORTS BY WTO Number of MRL on Active Ingredients of EU 19 Agricultural products EU s AIs Stringent over the CODEX Total Non- Codex AIs Share of Non Codex to Total AIs (%) Guar Chickpea Sesame, seed Milk (Pesticide) Mustard (oilseed ) Coffee bean, green Soybean Sugar cane Cucumber Tea, leaves Peanut Corn, grain Nut, cashew Pepper, non-bell Wheat, grain Onion, bulb Rice Grape, table Cattle, meat (Pest.) Source: Global MRL Database. (now maintained by Bryant Christie Inc.)

25 NON-CODEX MRL STANDARDS ON ACTIVE INGREDIENTS - GLOBAL TRENDS Saudi Arabia Vietnam Thailand Brunei Israel Singapore Switzerland Chile Qatar Oman Kuwait Gulf Cooperation Bahrain India Malaysia New Zealand Indonesia Taiwan South Korea China Brazil Argentina Russia United Arab Morocco Egypt European Union Turkey Australia Norway Iceland Eurasia Customs South Africa Canada Hong Kong Japan Mexico Honduras Dominican United States Share of Non-codex MRLs Standards

26 What do Border Rejections tell us about Trade Standards Compliance of Developing Countries? Analysis of EU and US Data UNIDO Working Paper (August 2011) [Pages 55] Analysis of RRR for four Agricultural Products 1. Fish & Fishery Products 2. Fruit & Vegetables 3. Nuts & Seeds 4. Herbs & Spices) Study downloaded from:

27 RELATIVE REJECTION RATES OF IMPORTS BY THE EU (DEVELOPED AND DEVELOPING COUNTRY) Relatively Rejection Rates Categorised Developing Developed Total High RRR Low RRR Medium RRR No Data Number of Countries Developed Countries High 0% 169 Developing Countries Low 27% No Data 28% High 26% No Data 63% Mediu m 10% Medium 25% Low 21%

28 RELATIVE REJECTION RATES OF IMPORTS BY THE US (DEVELOPED AND DEVELOPING) Relatively Rejection Rates Categorised Developing Developed Total Numbers High RRR Low RRR Medium RRR No Data Number of Countries Developed Countries 169 Developing Countries No Data 10% High 7% No Data 23% High 30% Medium 27% Low 56% Medium 27% Low 20%

29 PART III RECOMMENDATIONS FOR INSS

30 By Way of Conclusion 1. EC s Endocrine Disruptors regulations have an significant impact both in terms of India s exports to EU and EUs Imports, 1. further there are significant Sectoral differences; 2. In general the chemical exports would suffer under the new regime. 2. As protectionism is observed across the world - India needs strategies that support the exporting activity by creating systems for an effective response mechanisms based on exporters feed back external market surveillances; 3. As a matter of principle, standards have moved away from Risk-based approach which in itself can be challenged so more and more technological alone approach while ignoring the commercial and development angles.

31 By Way of Conclusion 1.No certainty about its full scale of impact, as this would require an analysis of what goes in to the industrial production process. (need wider domestic stakeholders consultation) 1.Trade Facilitation issue in Goods Trade: if not addressed through Negotiations; 1.India will have to create institutions and mechanisms to address these MRLs through the process of DSM of the WTO.

32 RADICALLY DIFFERENT APPROACH (MRL) 1. Domestically - the developing countries needs to understand the use of NTMs and their implications for formulation and implementation of effective development strategies. 2. Internationally - HS codes to be made mandatory for all SPS and TBT notifications to the WTO as it is trade regulatory body 3. International effort should be targeted to improve access and increasing transparency with regard to NTMs, to collect and classify information about these measures (as suggested by various studies like, UNCTAD 2016, Kallummal, 2007 & 2015, Kallummal and Gurung 2016 & 2017). 4. Comprehensive and reliable information on MRL (NTMs) is scarce and difficult/costly to obtain.

33 THANK YOU