A proposal to evaluate the legitimacy of S anitary and T echnical measures in B razil

1. A proposal to evaluate the legitimacy of Sanitary and Technical measures in Brazil Sílvia Helena Galvão de Miranda Geraldo Sant’Ana de Camargo Barros San Diego – CA 4-6th December 2005

2. Summary • Introduction: • Concepts • Objectives • Important Previous Work • Relevance Index • Economic Relevance • Legitimacy • Legality • Consistency • Final comments

3. 1 - Introduction • LDCs need to develop tools to: • antecipate and/or react to sanitary and technical barriers; • rationalize decisions on public policies • Public and private interests • Complexity to define/identify sanitary and technical barriers => establish some criteria to build a ranking of priorities • Need to evaluate benefits and costs of sanitary and technical barriers

4. Concepts • Developed Countries => Sanitary and technical requirements • Developing Countries • Problems on accessing information and scarcity of trained personnel and financial resources • Difficulties to implement necessary changes: • Capital investments ($) to meet requirements • Technology gap: • Availability • Technological change in production • Technical and financial assistance from Developed Countries • Developing Countries: welfare gains from restrictions

5. 2 - Objectives • Propose a relevance indexto react to technical and sanitary measures. • Which elements should be part of the criteria? • Suggest a weighing system of such elements • Suggest a checklist to be used by policymakers and trade negotiators

6. 3 - Important Previous Work • Roberts et al. (1999) – two-step classification system for technical barriers • WTO Trade Policy Staff Committee (TPSC, 1998): a questionnaire to evaluate the Consistency of Trade Measures with the SPS Provisions • Popper et al (2004): USA National Institute of Standards & Technology (NIST) checklist as identification criteria for TBT

7. 4 – Relevance Index Nature of the measure: a regulation on • technical, sanitary regulation,on conformity assessment,or a standard (mandatory or voluntary) • Economic Relevance • Does the measure have significant impact on trade and other economic variables (employment)? • Legitimacy • Legality • Is the measure nationally and internationally legal? • Consistency • Is the measure technically and scientifically justifiable?

8. Economic Relevance • Sector’s relevance for the affected Country Trade Balance? • Current and potential domestic relevance? • Employment and wages • national and regional income • Relevance for the other country (that proposed the regulation)? • within the production structure and interest groups • trade relevance of the good

9. Economic Relevance Checklist • Range of the measure and impact on trade balance: specific for a good, set of goods or sector(s) ? • Is it a new requirement? Existing but not currently enforced one. • Intensity of impact on current and future exports • Impact on current and future market prices? • Does it affect a traditional trade partner or a new one? • Additional costs associated with compliance to new requirements ? • Delays in the customs procedures? • Immediate or progressive adjustment required? • Impact on trade of the country imposing the measure • Are there alternative, politically preferred, suppliers to that country?

10. Legality • Adequacy of the measures to the SPS, TBTand WTO provisions? • Legality elements: • Transparency • Non-discrimination among foreign suppliers • Non-discrimination between domestic and imported goods • Scientific basis

11. Legality Checklist • To what extent the proponent complied with all the legal requirements to implement the measure: - proper deadlines to consult on the notifications; - fair deadlines to implement the measure and - level of compliance with the comments and criticisms from the other WTO members • Does the measure discriminate between foreign and domestic suppliers? • Does it discriminate among different foreign suppliers? • Is there a scientific support for its proposition?Is it from international organisms? • Does it refer to theAgreements’ legitimate objectives?

12. Consistency • Technical and scientific background: • IPPC, the IOE and the Codex Alimentarius? • Other scientific institutions? • Type of risks • Sanity: human, animal or plant health • Environment • Quality attributes • Seriousness of the problem intended to be mitigated • Lethality • Reversibility • Mitigating costs

13. Consistency checklist • What is risk level of not complying with the proposed measure? • Is there scientific proof of this risk level and of the necessity of applying the measure? • What is the degree of scientific convergence about the issue? • Is the scientific basis recognized internationally, or only in a domestically context? • Are there lower cost alternatives?Have they already been tried by the affected countries?Do they assure the same requiredlevel of security/safety? • Is the required technology available to implement the measure? What are costs (labs, personnel) related to its compliance?

14. Economic Relevance Example High impact Low impact Medium impact LEGITIMACY Legality Highly contestable Partially contestable Uncontestable Consistency Highly consistent Inconsistent Partially consistent Relevance Index => Government reaction Requirements accepted WTO Dispute Disputing Negotiation Collaborative Negotiation

15. Weighing system for Economic Relevance Checklist * The higher the number of points, the higher would be the priority inquestioning to WTO.

16. Weighing system for Legality Checklist Level of not - compliance Weigh * Co mpletely legal 0 Close to legality 1 Close to illegality 2 Highly illegal 3 Special case (completely illegal) 4 * The higher the number of points, the higher would be the priority in a questioning to WTO.

17. Weighing system for Consistency Checklist Level of con sistency Weigh* Highly consistent 0 Medium consistency 1 Low consistency 2 Highly in consistent 3 Special Case (Inconsistent) 4 * The higher the number of points, the higher would be the priority in a questioning to WTO.

18. EXAMPLE –FMD– Brazil – Indonesia ban on exports of beef Economic Relevance Checklist: • beef share in the Brazilian agribusiness exports: • i) more than 10% (weigh 3) • ii) from 5% to 10% (weigh2) • iii) from 1% to 5% (weigh1) • iv) less than 1% (weigh0)

19. b) Brazilian market-share in Indonesian beef imports • more than 50% (weigh 3) • from 50% to 30% (weigh 2) • from 30% to 10% (weigh 1) • less than 10% (weigh 0)

20. Legality Checklist: • There is no international reference to support the proposed measure (weigh 3) • There are some international references to support the measure (weigh 2)   • There is almost a consensus about the few international references available to support the technical or sanitary measure (weigh 1) • The measure is totally based on the international references (weigh 0)

21. Consistency Checklist: a) risk for human health if the regulation is not adopted : • zero probability (weigh 3) • low probability (weigh 2) • high probability (weigh 1) • almost sure (weigh 0)

22. Consistency Checklist: b) risk for animal health if the regulation is not adopted : • zero probability (weigh 3) • low probability (weigh 2) • high probability (weigh 1) • almost sure (weigh 0)

23. Example: Economic Relevance - Ilegitimacy Low Priority Disputing Negotiation High Priority Disputing Negotiation High Priority Collaborative Negotiation Low Priority Disputing Negotiation High Priority Disputing Negotiation

24. RELEVANCE INDEX

25. RELEVANCE INDEX

26. 5 - FINAL COMENTS Proposals for addressing these questions 1 - Keep track of the notifications on SPS and TBT 2 - Develop an automatic consulting system of based on a network of agents from scientific institutions, firms and government organisms 3 - Develop criteria to classify – with priority ranks -the private and public demands of actions to solve sanitary and technical complains 4 –Develop detailed studies and strategies for the cases considered relevants.

27. Sílvia Helena Galvão de Miranda smiranda@esalq.usp.br Geraldo Sant’Ana de Camargo Barros gscbarro@esalq.usp.br Phone: 55 – 19 – 3429 8801 http://www.cepea.esalq.usp.br