UNIDO Trade Capacity Building Activities in Africa UNIDO Trade Capacity Building Branch Conformity Assessment for Sustainable Development and Trade

Globalization and Trade Participation: Developing Country Concerns GLOBAL TRADE SCENARIO WTO creation Uruguay round - RULES BASED TRADING SYSTEM Free trade “benefits all” – Better resource utilization WTO rules foresees equitable treatment for all Competition grows on international and national markets Creation of regional markets, trade agreements BENEFITS FROM A SUCCESSFUL DOHA ROUND Global income INCREASE by US$ 500 billion by % gain to developing countries (pull 144 million people out of poverty) 70% of Doha benefits to poor countries – freeing trade with each other MILLENNIUM DEVELOPMENT GOALS (MDGs) 2015 Reducing those living under US$ 2 a day, by half (EU - Common Agriculture Policy - Each Cow US$ 2 a day, Japan US$ 6 a day )

World exports, (US$ billion)  Share of developing countries in global trade only 26%  Over 75% of global trade is in manufactures (Industry the key)  Every 1% growth in Trade, LEADS TO one-half % Income increase Global Trade Growth & Marginalisation

GLOBAL TRADE CHALLENGES: Present Inadequacies “for 168 out of 216 US trading partners, transport cost barriers clearly outweigh tariff barriers. For the majority of Sub-Saharan African countries, tariffs amounted to less than 2%, while transport cost incidence often exceeded 10%. Since the introduction of AGOA, transport costs have risen relative to tariffs. World Bank Trade Note 15; May 10, 2004 COST OF COMPLIANCE TO FOOD SAFETY RULES - UNIDO Estimates Shrimp exports to the EU - Testing and Compliance cost adds 2.8% Enterprise Quality/safety set up cost – adds 5% to product cost National Quality & Testing infrastructure – US$ 5.0 Mn. to US$ 25.0 Mn. US$ 1.75 bn. exports from developing countries have been disrupted in 2004, due to SPS (food safety) non-compliance. While only US$ 53 mn. spent by donors on SPS support. Steven Jaffee & Spencer Henson, Standards and Agro-Food Exports from Developing Countries – Rebalancing the Debate, World Bank 2004

EU – EPAs – a regional Challenge (SADC, ESA, CariCom, Ecowas, CEMAC) EPAs are instruments for development and not tools for opening ACP markets. EC Trade Commisioners Peter Mandelson and Louis Michel have been openly promoting EPAs as vehicles for addressing supply-side constraints and institutional shortcomings in ACP countries. (Private Sector development, Investment, agro Processing, TBT/SPS) EPA negotiation process: Stage 1 09/2002 –09/2003: All ACP negotiations Stage II 10/2003 –2007: Regional negotiations: ECOWAS+: West Africa CEMAC+: Central Africa ESA: East and Southern Africa SADC: Southern Africa CARIFORUM: Caribbean Pacific Forum: Pacific Phase I 2003/4 –2005/6: RI, TBT/SPS, Phase II 2006: substantive issues, EPA legal text Phase III 2007: final agreements, conclusion Significant EU – Aid For Trade Funding Euro 800 mn.

Immediate opportunities: Non Traditional Agro-food exports World and Developing country exports of fish,processed fruits & vegetables now exceed the combined value of exports of tropical crops: Cotton, Coffee, Sugar, Tobacco. (source: UN COMTRADE) - 20% +19% +11% - 9%

Message by the President of the 58 th session of the UN General Assembly on the occasion of the Africa Industrialisation Day on 20 November 2003 Africa’s Trade Participation Gaps? “The countries of the African continent have together taken due note of policy and infrastructure support needed to enable its enterprises - specifically its manufacturing units - to gain market access through: Development of productive capacity - to Compete; Enhance capacity to meet standards - to Conform; To connect to markets – Connectivity”

“Diversification of production and exports” “Industrial upgrading and investment” “Focus on agro processing” “More products with high value-added” “Development of standards infrastructures” “Better market access” “Equally beneficial participation in the MTS” “Facilitation of exchanges, flows of goods and services” Trade Capacity-building: Consensus on Needs

Survey on Africa Quality Infrastructure and EGM - Tunis - Detailed survey of standards and conformity infrastructure status in Africa - Identified specific gaps with a view to formulating TA projects - Outcome - Concrete Action Plan for Africa - What are Africa’s capacity gaps? – Standards development and harmonization – Laboratory upgrading and accreditation – Metrology/calibration capacity

WTO ACCESSION – a Challenge

Key Challenges: Developing countries lack capacity to implement agreements Conformity assessment technology and standards evolve More technical assistance is needed Implementation of WTO TBT /SPS Agreements A Challenge TBT – Agreement on Technical Barriers to Trade SPS – Agreement on Application of Sanitary & Phytosanitary Measures Recognises importance of standards and conformity assessment for Trade Encourages the development of standards & conformity assessment systems However does not want standards/technical regulations create obstacles to trade Recognises country rights to ensure:  Quality of imports/exports, Product Safety  Protection of human, animal, plant life, health, environment Aims to prevent standards/technical regulations creating obstacles to trade Only legitimate objectives- national security, prevent deceptive practices  protection of human, animal health, plant life, safety, environment Recognises special problems of developing countries in this area Members shall, if requested..grant assistance to developing country members

Developing countries’ potential in Agro-Food area but have to comply with market requirements Conditions to export agro-food: WTO TBT & SPS agreement compliance – Products sourced from areas free of pests & diseases – Fruits/vegetables - minimum pesticide residue standard – Meats/fish meet minimum antibiotic residue requirement – Standards of hygiene applied in manufacturing HACCP/ISO – Development of accredited labs - an immediate requirement

Standards and Food Safety related Market Requirements become more stringent AFLATOXINS Found in African cereals, dried fruits and nuts - causes liver cancer Treated as carcinogenic food contaminants EU regulation based on the objective to reduce health risks by about 1.4 deaths per billion annually impact of this regulation would cut African exports of nuts, cereals, and dried fruits products by 64% or US$ 670 mn., compared with their level under international standards Source: Otsuki, Sewadeh & Wilson, “A Race to the Top? A case study of Food Safety Standards & African exports”, The World Bank, 26 Feb 2001

Quality Management System (ISO 9001) –Designed to give Quality assurance in the supply chain –Promotes continuous improvement Environment Management System (ISO 14001) –Minimum compliance to environment laws and commitment to continuous improvement –Important for global trade/Environment protection New ISO Food Safety Management Standard –Replacing old HACCP –A food safety standard –Becoming mandatory for USA (also possibly EU) Social Accountability Standard (SA 8000) –Avoid child labour, exploitation –Union rights, collective bargaining etc. (controversy) –ISO to develop a new SA standard Occupational Safety Standards (OSHAS) Corporate Social Responsibility (CSR) MARKET COMPLIANCE – Standards, Metrology, Testing, Conformity Management Systems - Becoming Standards

Traceability EU Directive EC 178/2002 – 2005 –All Edible products, despite of their origin, will have to be accompanied by detailed information on source, production system and processing procedures so as to make consumers, sanitary and inspection institutions able to follow back and forward the distribution stream of the product. –A new Challenge – UNIDO Egypt First project Terrorism related Safety (Shipping) –Bio terrorism MARKET COMPLIANCE – Standards, Metrology, Testing, Conformity Management Systems - Becoming Standards

FDA IMPORT REFUSALS FOR THE AFRICAN COUNTRIES DISTRIBUTED BY SUBREGIONS Source: US Food and Drug Administration (FDA) (January December 2006)

RASSF IMPORT REFUSALS FOR THE AFRICAN COUNTRIES DISTRIBUTED BY SUBREGIONS Source: European Commission Rapid Alert System for Food and Feed (RASFF) (January December 2006)

RASSF NOTIFICATIONS FOR THE AFRICAN COUNTRIES DISTRIBUTED BY REASONS FOR NOTIFICATION Source: European Commission Rapid Alert System for Food and Feed (RASFF) (January December 2006)

Increasing Trade Participation: UNIDO 3 Cs Approach “Countries must have marketable products for exportation”  COMPETITIVITY of productive capacities “Products must conform to requirements of clients and markets”  CONFORMITY with standards “Rules for trade must be equitable and customs procedures harmonized”  CONNECTIVITY to markets

Productive Supply Capacities (UNIDO) Industrial policy and supportive institutional structure Investment and technology transfer SME development and access to finance Productivity and quality Industrial upgrading, sectoral technology support Cleaner production, energy efficiency Standards & Conformity Assessment (UNIDO) Development and harmonization of standards Development of testing services including RM & PT Certification and accreditation schemes Training of auditors and inspectors Calibration chain Integration into the MTS (WTO, UNCTAD, ITC, WB) WTO rules, negotiations Trade facilitation (customs, documentation) Infrastructure (transport, ports) Trade Capacity Building: Key Inputs

“Fair Trade for All”: Priority Areas to meet Product Standards Requirements “Developing countries lack the ability to assist their producers to meet product standards, which often act as a barrier to developing country exports Significant assistance from developed countries is required to build up their capabilities to conform to product standard requirements” “UNIDO recommends the following priority areas for assistance 1. A national/regional standards/standardization body 2. A national/regional metrology system 3. A certification/conformity assessment system 4. An accreditation system” Source: J. Stiglitz & A. Charlton, Fair Trade for All – How Trade can promote Development, Oxford University Press, 2005

Mutual Recognition of Certificates/Conformity

ISO Standard –Physical facilities –Equipment –Human resources –Calibration –Test methods and test validation –Quality system –Independent accreditation –Recognition LABORATORY ACCREDITATION ENSURING CREDIBILITY OF TESTING Tested Once – Accepted Everywhere

Forming Strategic Partnerships for Trade Capacity Building

“The WTO – UNIDO agreement is a formal recognition that assisting developing countries to build capacities to produce exportable goods is an important part of “trade-related” technical assistance and capacity building” Cancun, September 2003 The resulting technical cooperation programme involves focus on:  Supply Chain Constraints  Lack of Conformity Capacity to Int’l Standards and Technical Requirements  Marginalization in the Multilateral Trading System Pilot countries involved are Armenia, Cambodia, Cuba, Egypt, Ghana, Kenya, Mauritania. UNIDO - WTO Agreement September 2003

Cooperation to ensure that LDCs, developing countries and economies in transition will be able to reap the benefits of the world trading system which is made freer and fairer based on international standards. The team work will focus on awareness creation and competency building in the respective countries. This will materialize through workshops, seminars and training on standards development. UNIDO - ISO Agreement December 2003

UNIDO - ILAC Cooperation May 2004

UNIDO- BIPM - OIML Draft MoU being signed Joint Committee on Coordination of Assistance to Developing Countries in Metrology, Accreditation and Standardization (JCDCMAS) UNIDO is currently holding the JCDCMAS Secretariat (Pro tempore) for two years, UNIDO - JCDCMAS

UNIDO TCB - Coverage Regional Programmes SAARC Afghanistan Bangladesh Cambodia Ethiopia Mozambique Nepal Senegal Tanzania UEMOA/ ECOWAS MEKONG Country Programmes EAC Madagascar Mauritania Source: OECD DAC List EAC Uganda Tanzania Burundi (2007) Rwanda (2007) SAARC Bangladesh Bhutan Maldives Nepal MEKONG Delta Countries Cambodia Lao PDR CARICOM Haiti CARICOM Haiti SADC UEMOA/ECOWAS Benin Burkina Faso Cape Verde Gambia Guinea Guinea Bissau Liberia Mali Niger Senegal Sierra Leone Togo SADC Angola Congo Lesotho Madagascar Malawi Mozambique Tanzania Zambia CEMAC Central African Rep. Chad Congo Equatorial Guinea CEMAC On-going and planned

UNIDO TCB SIGNIFICANT FUNDING MOBILIZED Total funding for recent &ongoing projects: $64.6 million

UNIDO TCB projects 2005: US$ 64.6 Mn. Additional US$ 90.4 Mn. under negotiations Source: UNIDO elaboration Total UNIDO TRTA Portfolio: OECD/WTO TCB Data Base

In cooperation with: Regional Trade: UNIDO/EU - UEMOA Programme € 14 mn. EU funding Productive Capacities and Quality Promotion Food safety, productivity and quality promotion 68 pilot enterprises prepared for ISO 9001 National and regional Quality awards Training of journalists in consumerism and product quality Standards and Conformity Assessment Harmonization of standards for export products Harmonization of testing procedures, reg. database on labs Upgrading of 50 laboratories, 24 for international accreditation Regional accreditation scheme Training of 16 Lab. auditors Training of 40 ISO 9000 auditors UEMOA Phase 2: under development (€ 6 mn.) UEMOA Upgrading: funding received (€ 10 mn.) TCB Programme Examples:

ISO FOCUS Volume 3, October 2006 A Quality Programme for Africa The main objective of the UQP was to build and/or to reinforce all the steps of a conformity assesment infrastructure for the UEMOA region, and ensure its recognition at the international level through the process of accreditation. It has already helped UEMOA countries towards their goal of meeting the provisions of the WTO Agreement on Technical Barriers to Trade, thus enhancing their ability to participate in international trade. “The experience gained in implementing the UEMOA Quality Programme will be invaluable for other regions of Africa” The experience gained in implementing the UEMOA Quality Programme (UQP) will be invaluable for similar programmes anticipated in other sub-regions of Africa. One such programme for the 14 member states of SADC is due to start shortly. “There is consensus at the highest political level on the need to boost quality infrastructures across the whole African region” TCB Programme Examples:

€ 21 mn. funding under negotiation with various donors Programme developed in cooperation with: - ACA (African Cotton Association) - ICAC (International Cotton Advisory Committee) Main activities: - Technical and managerial training - Pilot enterprise projects for productivity improvement - Cotton quality evaluation system - Upgrading of 11 cotton specialized laboratories - Cotton quality data base - Development of African Cotton Label - Enterprise partnerships (national and international) Impact expected: - Job creation in cotton/garment/textile enterprises - Productivity increase by 20-40% - Increased value added (+5%) in short term - Increased cotton transformation (from 5% to 25% by 2015) - Increased export revenues (+20-40% in medium term) 11 countries to be covered: Benin, Burkina Faso, Cameroon, Chad, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Nigeria, Senegal, Togo Product Specific TRTA: Regional Cotton Programme - a key issue in Cancún TCB Programme Examples:

CONCLUSIONS TBT/SPS compliance: vital for trade –Product rejections – a challenge New challenge: EU - EPAs - TBT/ SPS capacity needed What are Africa’s capacity gaps? –Standardization –Testing and conformity assessment –Metrology/calibration capacity Holistic Trade Capacity Building: –Development Competitive Supply Capacities –International recognition for Standards and Compliance services –Enhancing Connectivity to markets Inter-agency cooperation a key for a holistic solution UNIDO expertise in industrial upgrading, compliance issues Partnership with regional groupings is essential

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