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The ACP and increased private sector demands for sustainability certification

25 May 2014

Introduction

In the two decades before the financial crisis, food consumption patterns in the EU underwent significant change, with an increased focus on products with different qualities, such as their method of production or place of origin. The economic downturn meant that many consumers became more price conscious, but this slowed rather than reversed the trend.

The trend gave rise to an official EU Agricultural Product Quality Policy, which now forms an integral part of the EU common agricultural policy (CAP) reform process, and has also led to a proliferation in private sector standards. In 2012, the use of “eco-labels or voluntary sustainability standards (VSS)” increased by 41%, creating a situation where there are now “no fewer than 435 sustainability standards or ‘eco-labels’ claiming some aspect of sustainability”. Voluntary sustainability standards (VSS) now cover multi-billion-dollar market segments in which ACP producers have a major export interest (e.g. fruit and vegetables, tea, coffee, cocoa, cotton, palm oil and fisheries products).1

To date, it appears that in an ACP–EU context, insufficient policy attention has been paid to the market and trade implications of these private standards. This can be seen as an important policy gap, with potentially serious consequences for ACP exporters.2

The emergence of private sector sustainability certification requirements takes a range of different forms. Significantly, it has been noted that “as VSS have moved into the mainstream, the average breadth and depth of sustainability requirements covered by such standards has declined, pointing toward the importance of understanding the impacts of mainstream adoption”.3 This is particularly the case in terms of the impact of VSS on poor farmers and smallholder producers in general.

A number of examples illustrate some of the major trends. In June 2012, “all major supermarkets, trading companies and NGOs in the Netherlands” signed a covenant, committing themselves to ensuring by 2020 that “all fresh fruits and vegetables in Dutch supermarkets are sustainably produced.” The covenant covers over 90% of the retail volume for fruit and vegetables sold in the Netherlands4 – which accounts for 14.6% of global trade in horticulture products (imports, exports and re-exports) and supplies 34.9% of German imports, 15.9% of UK imports and 7.6% of Belgian horticultural imports. Given the importance of Dutch ports and wholesale markets to fruit and vegetable distribution across large parts of northern Europe, this initiative, entirely led by the private sector, raises a number of challenges for ACP exporters.

June 2012 also saw the launch by the Irish Food Board of its ‘Origin Green’ labelling scheme, which is aimed at differentiating Irish food and drink products from imported products through ‘sustainability’ certification. This potentially carries implications for the market positioning of ACP exports. While these types of initiative can be seen as important in addressing climate change concerns, depending on their application they can create obstacles to competition from imports.

In the fisheries sector, sustainability requirements are being taken further, with efforts under way to link access to the EU market to the implementation of sustainable fishing practices. This first emerged with reference to the EU regulation to combat illegal, unreported and unregulated (IUU) fishing, but there are concerns that the measures could be used as a non-tariff barrier to trade.

In November 2012, the EU published a list of countries that could face trade sanctions for their lack of cooperation in the fight against IUU fishing.5 Subsequently, the US published a similar list of 10 countries engaged in IUU fishing. Despite an FAO plan of action which provides a common framework for assessing compliance with IUU requirements, there was little overlap between the two lists. This suggests a lack of objectively verifiable grounds for the drawing up of the lists, and a need for far greater transparency and dialogue on this issue, given the potential trade consequences.

Implications

The expansion of sustainability certification requirements carries a range of implications. The Dutch sustainability initiative raises questions as to how ready ACP suppliers are to meet the new standards compared to their competitors in non-ACP countries, many of which are gearing up to exploit market opportunities in the EU arising from newly concluded FTA agreements. It also raises questions about what happens to ACP fruit and vegetable exporting sectors when sustainability certification becomes the industry norm6 without the issue of how the costs and benefits of sustainability certification are distributed along the supply chain having been effectively addressed.

The introduction of national sustainability certification schemes, meanwhile, highlights the need to ensure that such schemes do not systematically discriminate against ACP products that meet the same underlying sustainability standards. Otherwise, this could relegate ACP exporters to serving only lower-priced market components, despite the fact that ACP products may meet the same underlying standards and may even have a smaller carbon footprint.

Of far wider concern are the developments in the EU fisheries sector. Once a legally defensible basis has been established for imposing production process requirements that limit market access to the EU market for fisheries products, it could potentially be extended to other products (e.g. certification of cocoa production as free of child labour; animal welfare certification for meat products; sustainability certification for palm oil). This issue of market access requirements based on production processes would appear to be another area for concerted ACP Group action.

Issues arising

While ACP exporters have not been passive in the face of the rise of sustainability certification requirements and the proliferation of certification schemes, the danger exists that national, regional and sector-based efforts by ACP producers could end up constantly playing catch-up as private standards continue to evolve, often under pressure from national producer organisations.

Against this background, there would appear to be a need for an initiative that helps ACP producers to get ahead of the curve on private standards, by establishing clear guidelines and codes of conduct for the elaboration of private standards. This could build on existing EU guidelines for voluntary certification schemes,7 but extending them to address issues of concern to ACP producers.

There would also appear to be a need for effective ACP engagement with emerging discussions on linking production process requirements to market access arrangements.

Early, informed, political intervention by the ACP while this dimension of EU policy is still under formulation could avert serious market access problems in the future. 

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