Lecture 9 ib 404 institutional framework for international business

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WTO AGGREMENTS
Sanitary and
Phytosanatary
(SPS)Measures

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 Negotiated in parallel with major agricultural trade
negotiations
 Came into force in 1995
 Applies to all measures used to protect human,
animal and plant life and health which may directly
or indirectly affect trade
Agreement On The Application Of Sanitary &
Phytosanitary Measures (SPS)

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 All countries have rights to take Sanitary and
Phytosanitary (SPS) Measures for protection of
human, animal and plant life and health
 All countries maintain measures to ensure that food is
safe for consumers and to prevent the spread of pests
or diseases among the population, animals and
plants. The name of these measures is Sanitary and
Phytosanitary Measures (SPS). They can take many
forms, such as requiring products to come from a
disease-free area, inspection of products, specific
treatment or processing of products, setting of
allowable maximum levels of pesticide residues or
permitted use of only certain additives in food... They
apply to domestically produced food as well as to
products coming from other countries.
SPS AGREEMENT

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 Promotion of the economic development,
 Alleviation of poverty.
SPS measures may influence on: many restrictions
in international trade.
– International trade can play a major role in the promotion
of economic development and the alleviation of poverty.
This is the reason for the establishment of a multilateral
framework of rules and disciplines to guide the
development, adoption and enforcement of sanitary and
phytosanitary measures in order to minimize their negative
effects on trade.
National Trade Influences

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 On the other hand, sanitary and phytosanitary
measures may result in restrictions on
international trade. All governments accept the
fact that some trade restrictions may be
necessary to ensure food safety and animal
and plant health protection. However,
governments are sometimes pressured to go
beyond what is needed for health protection
and to use sanitary and phytosanitary
restrictions to shield domestic producers from
economic competition.
International Trade Influences

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 Must be based on scientific
evidence and risk assessment
 Must not create any sort of
unjustified barriers and
 Must not create any restrictions in
international trade.
SPS MEASURES

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 The SPS Agreement explicitly recognizes the
autonomous right of every country to undertake
measures for protecting human, animal and plant
life and health on its territory. Nobody, not even
externally/ by arbitrage, is allowed to define the
level of protection that each sovereign country shall
decide to apply on its territory.
 Especially, there must be no discrimination against
various food supply sources (domestic or
imported). The measures and regulations must be
based on scientific bases and risk assessment.
They must not create any sort of unjustified
barriers and restriction in international trade.
SPS MEASURES

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• Rights
 Members have the right to apply sanitary &
phytosanitary measures necessary for the protection
of human, animal & plant life or health (Article 2.1)
• Obligations
 Members shall ensure that any sanitary or
phytosanitary measure is applied only to the extent
necessary for the protection of human, animal &
plant life or health (Article 2.2)
 Science provides the balance
SPS Agreement – A carefully crafted
balance

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From
 Risks arising from
additives, contaminants,
toxins or disease causing
organisms in their food,
beverage, feedstuffs
 Plant or animal carried
diseases
 Pest diseases or disease-
causing organisms
 Damage caused by the
entry, establishment or
spread of pests
To Protect
 Human or animal life
or health
 Human life or health
 Animal or plant life or
health
 A country
Definition of an SPS measure

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 “Animal” includes wild fauna and fish
 “Plants” include forest and wild flora
 “Parasites” include weeds
 “Contaminants” include pesticide residues, veterinary drug
residues and extraneous matter
Important Footnote

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 Risk assessment
methods
 Quarantine treatments
related to
transportation of
animals or plants
 Packaging & labelling
requirements related
to food safety
 End product criteria
 Process & production
methods
 Testing
 Sampling
 Inspection
 Certification &
approval procedures
Types of Measures

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 Protection of the environment
 Consumer interests other than
health
 Animal welfare
 Not Covered by SPS Agreement but may
be TBT Measures
Other Types of Measures

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 To protect and improve the current human
health, animal health and phytosanitary
situation of all Member countries
 To protect Members from arbitrary or
unjustifiable discrimination due to different
sanitary and phytosanitary standards
 To maintain the sovereign right of any Govt. to
provide an appropriate level of protection ie
allow countries to set their own standards for
health and safety
Objectives of the SPS Agreement

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 Right to apply sanitary & phytosanitary measures
necessary for the protection of human, animal &
plant life or health
 Measures based on scientific principles
 Non-discriminatory
 No disguised restrictions on trade
SPS Agreement –Basic Rights &
Obligations (Article 2)

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 Scientific Justification Article 5
 Harmonization Article 3
 Equivalence Article 4
 Disease-free areas Article 6
 Technical assistance Article 9
 Transparency Article 7
Key Provisions

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Scientific Justification of SPS Measures
Measures conform to
international standards
(Article 3)
Measures based on a
risk assessment
(Article 5 & 2)

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 Covers assessment of risk & determination of appropriate
level of SPS protection
 SPS measures to be based on
 assessment of risks to human, animal or plant life or health, taking
into account risk assessment techniques developed by international
organizations.
 available scientific evidences; process and production methods;
inspection & sampling methods; prevalence of specified disease or
pests; existence of pests/disease-free areas,etc
 relevant economic factors & cost effectiveness of alternate
approaches
 Avoid arbitrary/unjustifiable distinctions in the levels in
different situations if these result in disguised restrictions
Risk Assessment Article 5

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 Right:
– To take provisional measures in case of insufficient
scientific evidence
 Obligation:
– Can seek explanation of reasons for SPS measures if
constraining exports
– review SPS measures based on more objective risk
assessment within a reasonable period of time
Precaution Article 5.7

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Harmonization Article 3
 Encourage use of international standards
Food safety Animal health Plant health
Codex (International Food Standard) OIE (World Organization for Animal Health) IPPC (International
Plant Protection Convention)
 SPS measures conforming to international standards, are
presumed to be consistent with SPS Agreement
 Right to impose more stringent requirements if based on
scientific justification or risk assessment

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 Adaptation of SPS measures to regional conditions,
including pest- or disease- free areas, differing
climatic conditions & different pest or diseases or
food safety conditions so as to lead to the
development/imposition of different SPS
requirements
 Exporter to demonstrate (reasonable access to be
given for inspection/testing)
Disease free areas Article 6

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 Accept other members’ SPS measure as equivalent,
even if different from their own
 Exporting member must objectively demonstrates to
the importing member that its measures achieve their
appropriate level of SPS protection – “equivalence” not
“sameness”
 Importing member to be given reasonable access for
inspection/ testing
 Equivalence Agreements - Members shall upon request,
enter into consultation with the aim of achieving
bilateral or multilateral agreements or recognition of
the equivalence of specified SPS measures
Equivalence Article 4

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 Conformance to import requirements
 Avoid duplication – use collective
resources more effectively &
efficiently
 Provide mechanism for cooperative
exchange of expertise, assistance &
information to meet requirements
Equivalence Agreements - Purpose

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 Members are required to notify all SPS regulations
which are adopted/ proposed to be adopted
 Notifications made in the event of non-existence of
an international standard or where substantially
different from it or where there is a significant
effect on trade
 Provisions also exist for emergency notifications
when urgent problems of health protection arise
Transparency -Notification obligations
Article 7

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 Made through the National Notification Authority
to the SPS/TBT Committee
 ‘Enquiry Points’ to be notified by each Member to
disseminate information about existing and
proposed SPS regulations, control and inspection
procedures, quarantine treatment etc./ TBT
standards, technical regulations & CA procedures
 Provision of ‘Emergency Notification’
 Notifications as per prescribed format
Transparency –Notifications

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 Take account special needs of developing countries
when developing SPS measures
 Allow longer time frames for compliance with
measures for products of special interest to
developing countries
 Specific and time-limited exceptions on request to
comply with Agreement
 Facilitate developing country participation in
international organizations
Special and Differential Treatment
Article 10

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 Aim is to adjust to & comply with SPS measures to
comply with SPS requirements of importing country &
expand market access opportunities
 Areas include
 Processing technologies
 Research & infrastructure
 Establishment of regulatory bodies
 Form of advice, credits, donations, grants, training,
equipment
 Source - bilateral or through international
organizations
Technical assistance Article 9

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 Regulation regarding fertilisers
SPS if relating to residues in food or animal feed
(objective protection of human/ animal health)
TBT if related to quality or efficacy of the product or
health risk to handlers
 Labelling requirements for foods
SPS if related to food safety
TBT if the regulation concerns issues such as;
positioning, letter size, nutrient content, grade, etc.
Difference Between SPS &TBT

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 Regulation regarding containers for the shipment
of grains
SPS if relating to fumigation or other treatment
of these containers, i.e., disinfection in order to
prevent the spread of disease TBT if the regulation
regards the size or structure of the containers
Difference Between SPS &TBT

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 Participation in international standardising bodies
 Non representativeness of international standards
 Plethora of standardizing bodies at the national and
sub-national levels & lack of role clarity
 Absence of a national notification system
 A general lack of awareness
 Some aspects not very well developed –
traceability, risk assessment, R&D, residues, data
Problems In Implementation

Lecture 9 ib 404 institutional framework for international business

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