FOOD SAFETY STANDARDS AND REGULATORY MEASURES: IMPLICATIONS FOR SELECTED FISH EXPORTING ASIAN COUNTRIES

Abstract

ABSTRACT Developing Asian countries continue to record an impressive trade surplus in fish products. However, raising consumer concerns about a range of food safety matters and increasingly stringent regulatory standards related to fish product supply pose on-going challenges to the sustained international market access of many developing country suppliers. This paper provides an overview of emerging trade patterns in fish products and the trade regime in which this is occurring. It then reviews the implementation of various food safety standards on fish and seafood exports in the major fish-exporting countries in Asia, and analyzes the costs and benefits of compliance with these standards and regulations in these countries. Results show that, at the factory level, implementation of the standards has significantly increased the cost of processing, and the cost per unit of fish processed is higher for the smaller plants. These economies of scale could exclude small operators in developing countries. Continued competitiveness of small plants would seem to require government policies and support designed to minimize the cost of compliance with international standards. Keywords: food safety standardsfish tradeSPS measuresHACCPAsian developing countries ACKNOWLEDGMENTS This paper is based in part on data collected under a WorldFish Center coordinated project entitled "Strategies and options for increasing and sustaining fisheries and aquaculture production to benefit poor households in Asia" and partially funded by the Asian Development Bank (ADB RETA 5945). The authors are indebted to their research partners, particularly Dr. Sonny Khoeshendrajana, Dr. Luping Li, Dr. Jikun Huang, Dr. Costales, and Ms. Lim Chai Fong for collecting and compiling some of the data used in this paper. The authors are also grateful to two anonymous referees for providing several valuable comments and suggestions for the improvement of the paper. This paper carries the WorldFish Center contribution number 1745. Notes Source: Deere (Citation1999) and Dahuri (Citation2002). Source: Complied by authors from various WTO and government (e.g. reports of customs departments) documents. 1 This refers to the tariffs prior and subsequent to the Uruguay Round. Source: China's WTO Protocol of Accession, November 2001. Source: 1Ali & Islam (Citation2002). 2 Based on field visits by the authors. Source: 1Cato & Santos (Citation1998). 2 Field survey by the authors and research partners in the respective countries. Source: Field survey, 2002. 1 Two years' certification cost, $2,380 in the first year and $476 in the second year. Source: Field survey, 2002. Source: INFOFISH Trade News (Citation1998–2001, various issues). Source: Department of Foreign Trade, Thailand, Citation2002. 1. Fish is defined broadly to include finfish and shellfish (mollusks and crustaceans). 2. There are arrays of international issues which have been raised in relation to world fisheries trade, including fisheries management and sustainability issues, fish industry subsidies, and technical measures such as food safety regulations, labeling requirements, and quality and composition standards. As the traditional barriers to trade, such as tariffs and quantitative restrictions, have been partially liberalized through the General Agreement on Tariffs and Trade (GATT) and, more recently, the World Trade Organization (WTO), technical measures are becoming a particularly important issue for developing country exports. There is a global proliferation of technical measures, particularly in developed countries. Technical measures can take a variety of forms and include both risk reducing and non-risk reducing measures. The risk-reducing measures are aimed at the protection of food safety, plant and animal health, and the natural environment, commonly known as sanitary and phytosanitary (SPS) measures. This paper focuses on the food safety dimension of SPS measures. 3. HACCP is a process, or a set of operating systems, that identifies the critical points in the manufacturing system where hazards may occur for continuous monitoring of those critical points (Henson & Holt, Citation2000). Mazzocco (Citation1996) defined HACCP as a tool in process design and control for operations that minimizes resource costs. For further information on HACCP, readers may also see Mortimore and Wallace (Citation2000). 4. Many believe that in case of USA and Japan, the system is not very transparent as many tariffs are specific rather than ad valorem and this provides relatively high levels of protection. 5. However, the pace of trade liberalization in the developing countries is slow compared with the progress of developed countries. This slow implementation is due to structural rigidities and, most importantly, to fear of losing market shares for their fish and fish products both in domestic and international markets. In recognition of the problems faced by developing countries (including Bangladesh, India, and China), the WTO has extended the time for these countries to fully comply with tariff reduction goals to 2005. In addition to reducing tariff barriers, the WTO has ensured increased market access for fish-producing countries by providing tariff bindings that ensure legally secure market access. 6. There are two WTO agreements relevant to food safety and quality issues: (a) SPS Agreement and (b) Agreement on Technical Barriers to Trade (TBT Agreement). Although the SPS and the TBT agreements have common objectives, the scope of the two varies in terms of enforcement and application. The SPS agreement covers measures that protect human, animal, or plant life or health. It aims to protect human or animal health from food-borne risks, animal or plant borne diseases, and pests or diseases (Khan, Citation2002). The TBT agreement covers all technical regulations, voluntary standards and procedures and may include issues ranging from car safety to energy-saving devices, the shape of food cartons, and human disease control (unless carried by plants or animals). Labeling requirements, nutrition claims and concerns, quality and packaging regulations are also subject to TBT agreement (Musonda & Mbowe, Citation2002). This study focuses explicitly on food safety measures and regulations, which fall under the purview of SPS agreement. The readers are referred to Josling et al. (Citation2004) for a detailed discussion of SPS and TBT agreements. 7. Readers are referred to section 3 of Henson & Mitullah (Citation2004) for detailed discussions on the food safety requirements in the EU, Australia, Japan, and the USA. 8. Some believe that consumers are increasingly assuming that all supplies meet relatively stringent safety standards. They (consumers) will not pay a premium for those who follow the safety standards but will boycott those who do not. 9. Similar bans were also imposed on fish and seafood imports from African developing countries. The EU has banned fish imports from Kenya three times: in November 1997, January 1998, and April 1999. The 1997 ban claimed the presence of Salmonella, the 1998 ban was based on a report of a cholera outbreak, and the 1999 ban followed a report that pesticides had been used in Lake Victoria to kill fish. These bans respectively caused 13%, 32%, and 68% drops in Kenya's foreign exchange earnings from fish exports (Abila, Citation2003). The EU banned imports of shrimp from Tanzania and Uganda in 1999. 10. As it is for other developing countries.