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Market Access, Trade
Agreements and Standards for
Agricultural Products
EAN Thailand, Food Seminar
Bangkok, 28 August 2001
Tom Heilandt
Agricultural Standards Unit, UNECE Trade Division
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“The difference between selling
your product domestically and
selling it abroad is the amount of
paperwork involved”
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Outline
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Principles of market access
Example: European Union
Example: United States
Questions, discussion
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Market Access: a definition
“The extent to which a country permits
imports. Tariffs and non-Tariff trade
barriers can be used to limit entry of
foreign products into a country”
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Things are complicated,
they depend on…
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Where you are
What you want to export
Where you want to export to
When you want to export
What the importer wants to do with it
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Assumption
“Let’s assume an exporting company
has done initial market research and
decided to which country it wants to
export their product to.”
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Overview of tasks
• Identify export requirements
• Identify import requirements
• Obtain the necessary certificates
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How it used to be…a myriad of
non-tariff measures
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Quotas
Import bans
Variable levies
Export subsidies
Discrimination
No transparency
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How a multilateral trading system
should be
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Without discrimination
Without barriers
Predictable
Allowing fair competition
Make access easier for less developed
countries
• Have rules for conflict resolution
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Basic principles of the existing
multilateral trade agreements
• National treatment rule
• Most favoured nation treatment (MFN) or
normal trade relations rule (NTR)
• Mainly tariffs but less and bound
• Rules for non-tariff measures
• Rules for red tape
• Rules for subsidies (less and only some)
• Dispute settlement
• Notification/transparency
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“treat your neighbours like your
family”: National treatment
“Treating foreigners and locals
equally. Imported and locallyproduced goods should be treated
equally — at least after the foreign
goods have entered the market..”
“Everybody’s equal...”:
Most favoured nation rule (MFN)
or normal trade relations (NTR)
• Each member treats all the other members equally as
“most-favoured” trading partners.
• If a country improves the benefits that it gives to one
trading partner, it has to give the same “best” treatment to
all the other WTO members.
• Today because of the many preferential agreements one
speaks about “normal trade relations” NTR
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“…but some are more equal than
others”:
Exceptions to the MFN rule
• Customs unions and free trade areas
• One-way preferential arrangements
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Customs unions and free trade
areas
• European Union
• East European Free Trade Arrangements
• Australia/New Zealand Closer Regional Trade
Arrangement
• North America Free Trade Agreement (NAFTA)
• ASEAN Free Trade Area
• Mercado Commun del Sur (MERCOSUR)
• Andean Pact
• Common Market for Eastern and Southern Africa
(COMESA)
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One-way preferential
arrangements
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Generalized system of preferences (GSP)
Lomé Convention (and follow-up)
Caribbean basin agreement
Global system of trade preferences
…
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Mainly tariffs
• Many confusing non-tariff bbarriers were
translated into tariffs (tariffication)
• Tariffs were bound against increase
• Tariffs are reduced or phased out
• Each member has a tariff schedule giving the max
tariffs for each product
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Current and minimum access
opportunities:Tariff quotas
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Exceptions: duties allowed
• “antidumping” duties against selling at a price
lower than the exporting contries domestic price
• “countervailing” duties to offset the subsidies
provided to producers in the exporting country
• Additional duty to safeguard domestic production
under a special emergency situation
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Exceptions, non-tariff measures
allowed…
• Special safeguard measures
• SPS (Application of Sanitary and Phyto-sanitary
measures)
• TBT (Technical barriers to trade)
• Precautionary principle
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Technical barriers or justified
measures to ensure quality
• Many national technical regulations and standards exist
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Protection of human, animal, plant safety or health
Protection of the environment;
National security
Prevention of deceptive practices;
trade facilitation and quality assurance
• They have an impact on trade and can disadvantage foreign
producers, increase their costs and discourage them to try
to sell abroad
• They might be adopted only to protect domestic industry
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TBT agreement or
“standards code”: principles
• Avoidance of unnecessary obstacles to trade
• Non-discrimination (MFN) and national treatment
• International harmonization, use of international standards:
benefits for all, special differential treatment for some
• Equivalence of technical regulations: recognize others
standards if they have the same objectives
• Mutual recognition of conformity assessment procedures:
multiple testing is expensive, countries are encouraged to recognize
others’ results, code of good practice
• Transparency: notifications, enquiry boards
• Technical assistance
Agreement on sanitary or
phyto-sanitary measures: Why
another agreement?
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• Giving more specific and in-depth coverage than
the TBT to the relationship between health
protection and trade measures
• GATT allowed measures to be exempted from the
provisions if it was "necessary to protect human,
animal or plant life or health".
• In absence of clearer more detailed rules it was
feared that this might lead to barriers in trade
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SPS principles
• Harmonization: international standards should be used otherwise
risk assessment necessary
• Equivalence: the burden of the proof is with the exporting country
• Risk assessment: evaluation of the actual risk or use of int.
standards
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Disease-free areas: burden of proof with the exporting country
Transparency
Developing countries
Dispute settlement
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Loop-hole or justified protection:
Precautionary principle
• The SPS Agreement allows Members to take precautionary
measures in cases of emergency and when sufficient
scientific evidence does not yet exist to support definitive
measures.
• Example: following the BSE scare in 1996, and in the
absence of sufficient scientific evidence, several
emergency bans were immediately introduced.
• Emergency measures should only be provisional. Within a
reasonable period of time, a more objective assessment of
the risks involved is necessary and the methods hould be
reviewed
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Red tape - the final barrier:
customs and trade administration
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Customs valuation
Rules of origin
Pre-shipment inspection
Import licensing
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Subsidies: Domestic support
• Green box measures: no/minimal trade destorting effects;
can be maintained or increased
• Blue box measures: new measures to limit production
• Amber box measures: trade destorting; e.g. market price
support measures; are subject to reduction commitments
(except if value of subsidy below 5% of total value of
product in one year)
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Export subsidies are prohibited
unless….
• They are subject to product-specific reduction
commitments as specified in the schedule of the WTO
Member concerned;
• any excess of budgetary outlays for export subsidies or
subsidized export volume over the limits specified in
transitional provisions;
• export subsidies consistent with the special and differential
treatment provision for developing country Members
• export subsidies other than those subject to reduction
commitments, e.g. food aid
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Import requirements
• customs duties including seasonal duties and preferential
rates
measures
• tariff rate quotas Tariff
(TRQ), TRQ
administration
• special safeguard measures in emergency situations;
(agreement
of agriculture)
antidumping
duties, countervailing
duties to offset the
subsidies provided to producer in the exporting country
• technical regulations and standards, packaging and
Non
tariff
measures/requirements
allowed
labelling,
rules
of origin, precautionary principle
under
agreements
(TBT,
SPS,
• sanitary
andWTO
phytosanitary
measures Import
licensing,
rules for valuation
of goods
at customs, preshipment
TRIPS,
TRIMS…)
inspection
• customs surcharges, import license fees, variable levies
• import bans, discretionary licensing, import quotas,
Non tariff
measures: not allowed
quantitative
restrictions
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Example:
European Union
Generalities
• High levels of self-sufficiency in primary agricultural
products: wheat, dairy, meat
• Access on high-tariff items through tariff quotas TRQ.
– Administration of tariff quotas controversial
– Access difficult for agricultural items produced in the Community
during the season (tariffs depend on the season)
• Reform: support to producers shifts from market price
support to direct payments subject to production-limiting
programmes (blue-box measures)
• market access conditions foodstuffs are affected by the
EU's policy of greater food safety, linked to a number of
“food scares” at Community level
• not everything is harmonized - then national provisions
apply
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EU Tariffs: TARIC
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europa.eu.int/comm/taxation_customs/databases/taric_en.htm
Average MFN tariff 4.9% (1996), 4.2% (1999);
Simple average tariff on agri-products estimated at 17.3%
Preferential duty rates within and outside tariff quotas
published in TARIC (also internet)
• Only companies established in the EU can apply for an import
license for a TRQ
– First come first served
– Based on traditional flows
– In proportion to the quantities requested (TRQs were established the
former quota system and are often allocated to certain countries)
• In accordance with the WTO agreements the EU has opened
up further opportunities for access to reach 5% of market
access for third countries.
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Only MFN/NTR treatment
• The EU has numerous preferential trade agreements and
arrangements
• Exclusive MFN treatment applicable only to imports from
eight WTO Members:
– Australia; Canada; Hong Kong, Japan; Republic of Korea; New
Zealand; Singapore; and the United States.
• 20% of lines are duty free
• EU exports benefit from preferential agreements in 17
countries. Export to the rest of the world under MFN.
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Preferential trade agreements
• Europe agreements: Bulgaria, Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Poland, Romania, Slovakia,
Slovenia
• Mediterranean co-operation agreement: Algeria, Egypt,
Israel, Jordan, Lebanon, Morocco, Palestinian authority,
Syria, Tunesia
• Mexico, South Africa
• Andorra, Cyprus, Malta, Turkey (industrial products only)
• 80% of lines are duty free
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Preferential agreements
(non reciprocal)
• In February 2000, the EU and 70 African, Caribbean and
Pacific (ACP) countries agreed on a successor to the
Fourth Lomé Convention: the Partnership Agreement of
Suva
• It continues the EU's non-reciprocal trade preferences until
2007 at the latest, to permit the parties to conclude new
trading arrangements, with the aim of WTO-compatibility.
• WTO Members are considering a request for a waiver.
• Preferential treatment for bananas is examined by WTO
• 95% of lines are duty free
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GSP
• Who benefits (146 developing countries), basically Asian
and Latin American countries for which no other
agreements exist: 54% of lines duty free
• Regional cumulation of origin allowed for ASEAN,
ANDEAN, CACM
• Products are classified into 4 groups according to
sensitivity = modulation
• Countries are reviewed to determine if some of their trade
sectors can face international competition without
preferences = graduation
• Incentives for countries combatting drug production or
adhere to labour standards or environmental standards
• LDC enjoy duty free access for 95% of lines (“everything
but arms initiative”)
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New GSP: what changes?
• Simplify modulation of tariffs: only 2 categories
• Increase graduation: remove preferences for high GDP
countries to open more opportunities to LDC
• Countries using incentives:
– Social and environmental: benefits doubled
– To fight drugs: increased and extended until 2004
– Incentives subject to control of implementation otherwise not
justifyable to WTO
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Mutual recognition
• Australia, Canada, New Zealand, Switzerland, and
the United States,
• Negotiations with Japan.
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Food Safety: concerns
• Shift from a period where producers interests dominated to
one where consumers’ concerns are the most important
• Over-intensive practices of industrial farming not yet
eliminated (might be related to spread of BSE and foot and
mouth)
• New techniques and whole new technologies might raise
efficiency and solve some problems but introduce different
sorts of risks (GMO, Hormones)
• Diverse food scares due to residues, bacteriological
contamination etc
• Policy not harmonized sufficiently
• High pressure from consumers for increased information
and food safety
Food safety: measures
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• Prevention: HACCP
• “General Food Law”: consumer protection:
– horizontal/harmonized law
– robust and independent scientific advice to support any
approvals;
– traceability of ingredients, should problems arise.
• “European Food Authority”
– to provide a coherent, independent, scientific basis for
European policy and legislation
• legislative reform covering more than 80 actions.
– hygiene legislation; pesticides; labelling; official inspections;
food supplements; animal foodstuffs and animal waste. a
ban on meat-and-bone meal in animal foodstuffs.
• encourage production of higher quality food
– recognition of regional specialities,
– through the setting of standards for organic food.
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Apply the precautionary principle
more systematic
• Important for risk management because
– sometimes science may come up with the answer too late. No
“proof”, does not mean no problem.
– there are so far too few specialists capable of giving scientific
guidance – and many work for companies promoting the
technology
• precaution should not become protectionism:
– Transparent, non-discriminatory
– proportional
– Subject to review
Labeling
• Name under which product is sold
• List of ingredients in descending order of weight
– ingredient of less than 25% does not need to be broken down
– Some ingredients may be mentioned by category (spices)
– Quantity of certain ingredients
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Net quantity of prepackaged foodstuffs (metric)
Shelf life
Any special storage conditions or conditions of use
Contact details of manufacturer, packager or vendor in EU
Place of origin (if absence might mislead consumer)
Alcoholic strength if more than 1.2%
Mark identifying lot
additives
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Labelling: goal and possible
changes
• Give consumers full information to make the choice
• Presently: List of ingredients (in descending order of
weight) – components of an ingredient constituting less
than 25% of the finished product do not have to be labelled
separately
• Planned for the future: all ingredients to be labelled and all
known allergens must be labelled (e.g. wine with sulphite
concentration of at least 10mg/kg)
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GMO: Status
• 18 GMO's authorised in the EU by a Commission Decision
• In two cases the Commission Decision has not yet been
implemented by the Member State
• Since October 1998 no further authorisations have been
granted and there are currently 14 applications pending
• Some countries have invoked the so-called safeguard
clause, to temporarily ban genetically modified maize and
oilseed rape products in their territories.
• cases have been examined by the Scientific Committee on
Plants, which in all cases deemed that the information
submitted by Member States did not justify their bans.
• Many consumers demand (and would pay more for) GMO
free food
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Present GMO labelling
• Food consisting of or containing GMOs.
• Food produced from GMOs if traces of DNA or protein
from the genetic modification are detectable in the final
product (such as flour produced from genetically modified
maize
• No labelling of feed
• Simplified procedure for foods derived from GMOs but no
longer containing GMOs which are "substantially
equivalent" to existing foods,such as highly refined soya or
maize oil.
• The accidental presence of GM-material in food up to 1%
is exempted from the labeling obligation.
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New GMO food labelling
• Traceability of GMOs from farm to the table
– business operators have to transmit/retain information at each stage
– industry must have systems in place that identify to whom and
from whom GM products are made available.
– Information must be retained for five years.
• Labelling of all food produced from GMOs irrespective of
whether there is DNA or protein of GMO origin in the
final product
• Accidental presence of up to 1% still exempted from
labeling
• Labelling of feed along the same principle as food
• The simplified procedure for substantially equivalent GMfoods will be abandoned.
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Import of fruit and vegetables
• Phyto-sanitary certificate
• Import license
• variable tariffs according to marketing season of
local produce
• standard import price for some products
• compliance with marketing standards for products
that are sold directly to the consumer
• compliance with horizontal legislation on
pesticides, contaminants and labeling
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EU marketing organisation for
Fruit and Vegetables
• Goals: facilitate fair trade and keep off the market
unsatisfactory products
• Defining commercial quality of foodstuffs
• 33 products to be standardized taking into account
UNECE standards
• Inspection done prior to import (possibility to
recognized inspection services from third
countries - not used at present)
• Future: standards will change to take into account
consumers requirements e.g. internal quality
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Meat
• All beef pork and horsemeat imported into the EU
must come from slaughterhouses, cutting plants,
and cold storages that have been approved by the
EU
• Since 1989 ban on meat from cattle treated with
growth hormones - Canada and the US have
challenged this
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US/EU Poultry issue
• Most forms of anti-microbial treatments are
prohibited in the EU
• United States use chlorinated water and other antimicrobial treatments; US authorities could not
sign export certificates complying with EU
requirements
• $50 million loss to US exporters per year
• EU has commissioned scientific study
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Beef labelling and traceability
• In force now:
– Reference number ensuring link between meat and animal(s)
– Slaughterhouse: country and approval number
– Cutting plant: country and approval number
• From 2002:
– Country of birth
– Country/ies where fattening took place
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Inspection visits
• Many countries have been visited by EU
inspection teams concerning products to be
exported into the EU: e.g.
• Thailand on fishery products and poultry meat;
• Australia on bovine meat and fishery
products…etc.
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Example: United States
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Generalities
• Continuing strong exporter of agricultural products
advocating free trade
• potential distortions to competition may arise as a
consequence of various forms of assistance provided by
federal and state governments to some sectors (notably
agriculture)
• Maintains liberal trading and investment regimes
• policies, practices and measures relating to trade and
investment are, by and large, transparent
• Government has resisted pressure from industry for
protection because of alleged “unfair” trading practices of
foreign producers
• low level of use of standards set by international standard
setting bodies
• third party conformity assessment compulsory
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HTSUS: Tariffs
• http://dataweb.usitc.gov/SCRIPTS/tariff/toc.html
• Most imports either enter the United States duty free or are
subject to very low tariffs, mainly bound
• Zero tariffs apply to nearly one third of national tariff lines
and the
• simple average applied MFN tariff rate has declined from
6.4% in 1996 to 5.7% in 1999; expected to fall to 4.6%
implemented.
• U.S. agricultural tariffs average under 10%.
• low overall level of tariff protection, 5% of MFN tariffs
involve rates exceeding three times the overall average;
such tariff "peaks" affect some agricultural and food
products as well as textiles, clothing and footwear.
Preferential trade agreements
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• NAFTA (free trade agreement with Mexico and Canada)
– accelerated tariff reductions was put in place with Mexico, on 1
August 1998.
– tariffs covered by the NAFTA were eliminated between the United
States and Canada on 1 January 1998.
• Free trade agreements with Israel, Jordan
• Negotiations within the Asia-Pacific Economic
Cooperation (APEC) to push forward an agenda of tariff
cuts in eight sectors
• Negotiations towards a Free Trade Area of the Americas
(FTAA) .
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Other bilateral agreements
• The United States concluded 63 bilateral trade, investment,
and intellectual property rights agreements between 1996
and 1998, 53 of which entered
• into force on 31 December 1998 concerning:
– a trade practice by a U.S. trading partner
– market-opening agreements
– sector or area specific, mostly for the protection of investment or
intellectual property rights;
– mutual recognition agreements on standards.
• Some with countries not Members of the WTO and aimed
at setting disciplines similar to those already in existence in
the multilateral trading system.
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Preferential agreements - non
reciprocal
• General System of Preferences (GSP),
• Andean Trade Preferences Act (ATPA),
• Caribbean Basin Economic Recovery Act
(CBERA).
• initiative to grant wider preferences to African
countries, is being considered by congress
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GSP
• Product enters US without duty if:
– from designated beneficiary country (many but not all developing
countries; some Asian countries “graduated”)
– eligible for GSP treatment;
– It meets the rules of origin.
– Regional cumulation rule for: the Andean Group, the Association
of Southeast Asian Nations (ASEAN) excluding Singapore and
Brunei Darussalam, the Caribbean Common Market (CARICOM),
the Southern Africa Development Community (SADC), and the
West African Economic and Monetary Union (WAEMU).
• Product eligibility mentioned in HTSUS
• Competitive Need Limitation (CNL) preventing
preferences to countries who are competitive for an item
• 38 LDC have a wider range of products and no CNL
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Products requiring import licenses
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alcoholic beverages
animals and animal products
certain drugs
firearms and ammunition
fruits, nuts
meat and meat products
milk, dairy, and cheese products
plants and plant products
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US Food safety
• Food safety standards applying domestically also
apply to imported foods
• Several federal agencies involved: FDA, USDA,
EPA, FTC
• HACCP
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Labelling
• Name of the food (also english, if standard exists it must
be used)
• Net quantity of contents
• Manufacturer, packer or distributor
• Ingredients (order predominance by weight) unless
standardized
• Food additives and colour
• Nutrition information
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GMO Attitude
• Ensure Fair Treatment For Agricultural Products Made
With Biotechnology.
• the use of genetic engineering to raise productivity and
create pest-resistant plant strains, develop new medicines
and other innovations offers remarkable opportunities to
protect the environment and fight hunger in the years to
come.
• consumer concerns which must be met through fair,
transparent and scientifically based regulatory processes.
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GMO Status (1998)
• Planted and marketed: corn, canola, rice, tomatoes,
potatoes and soybeans
• In the pipeline for approval: peppers, sunflowers and
peanuts
• Developed and in test: sugar beets, wheat, squash, papayas,
berries, bananas and pineapples
• 1998: 25% of corn, 38% of soybeans, 45% of cotton and
42% of canola.
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GMO responsibilities
• FDA:Food, feed, food additives, veterinary drugs
“Safe to eat”
• USDA Plant pests, plants, veterinary biologic
“Safe to grow”
• EPA Microbial/plant pesticides, new uses of
existing pesticides, novel microorganisms “Safe
for the environment.”
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US GMO regulation
• Currently, no federal agency requires foods to be labeled as
genetically modified unless it contains a known allergen or
the nutritional content of the food is changed.
• The U.S. regulatory agencies assume that these genetically
engineered foods are similar to traditional counterparts
except for the modified genes
• FDA considers the voluntary label “gmo free” (or similar)
as misleading unless with a statement that there is no
difference in the healthfulness
• After a nation-wide hearing, FDA has now proposed
regulatory changes in the field of GMOs: mandatory
notification, guidelines for voluntary labeling
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GMO: Differences to EU
• Labeling: EU is process-based (in US it is contentbased). If one compares the US and EU regulatory
approaches,
• industry-driven vs. consumer-driven.
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Import of Fruit and Vegetables
• phytosanitary certificate issued by an official of
the exporting country.
• 14 Animal and Plant Health Inspection Services
(APHIS) plant introduction stations for
commercial importation of plant materials
• Where marketing orders exist products must
comply with them
68
US Marketing orders
• Standards of quality have been established for many
vegetables.
– minimum standards only
– specifications for quality factors such as tenderness, color, and
freedom from defects.
• food not meeting these standards
– must be labeled in bold type "Below Standard in Quality"
– followed by the statement "Good Food-Not High Grade" or
– a statement showing in what respect the product fails to meet the
standard, such as excessivelybroken," or "excessive peel“
• Grading and quality inspection by the Agricultural
Marketing Service, USDA is required for each lot
(shipment) imported.
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Products covered
• Products covered:
– avocados, dates (other than dates for processing),
hazelnuts (filberts), grapefruit, table grapes, kiwifruit,
limes, olives (other than Spanish-style), onions,
oranges, Irish potatoes, plums, prunes, raisins,
tomatoes, and walnuts.
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Meat
• Meat or meat products derived from cattle, sheep, swine,
goats, and horses are subject to the more specific
provisions of the Federal Meat Inspection Act enforced by
the Food Safety and Inspection Service of the U.S.
Department of Agriculture.
• Foreign meat products must originate in countries whose
meat inspection programs have been approved. Each
shipment must be properly certified by the foreign country
• Inspection by Federal meat inspectors, found to be
completely sound, wholesome, and fit for human food
before entry into the United States.
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Investigate the market need
• Does the market need the product – is there a shortage of
the particular commodity
• Or is there a significant price advantage with the proposed
commodity
• Can you meet the quality and other market requirements
• Have you access to a willing buyer
• Can you deliver the product in the volumes and in the
condition that the market demands
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Decide – Make contact - Evaluate
• approach to the most likely potential buyer to establish
market access requirements
• Contact and enquiries with your national Ministries of
Trade and both Animal/ Plant and Public Health authorities
• evaluate the cost benefits of any required plant or
infrastructure upgrading.
• in-depth investigation of the issues involves, although
involving some cost, will almost certainly give long term
savings and speed up any course of action taken.