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GLOBAL SPS BASED MRL STANDARDS AND ITS
IMPACT ON EXPORTS:
COMPLIANCE IMPACT ON INDIA
Dr. Murali Kallummal,
Professor
Centre for WTO Studies, IIFT
4th Standards ConclaveSession 5: “Risk assessment in Agri-food Trade and Policy
Options”May 1 & 2, 2017
The Lalit Hotel, New Delhi
OUTLINE
Part – I 1. (CWS study submitted to DoC)
Titled “EC’s SPS and TBT Notifications on
Endocrine Disruptors and Market Access
Implications: Case of India’s Exports” – 199 pages
Part –II
1. General issues related to transparency of non-
Codex MRL standards
2. Based on UNIDO Study – 2011
differential impact of border rejections
Part III
1. Recommendations for INSS
TRADE TO GDP RATIOS (1988 TO 2015)
11.0
41.943.1
31.3
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.01988
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Exports and Imports Shares to GDP: India
Trade to GDP US$ current Exports to GDP US$ current
Imports to GDP US$ current
PART – I
CWS STUDY
EUROPEAN COMMISSIONS REGULATION ON ENDOCRINE
DISRUPTORS AND ITS IMPACT ON INDIA
FULL REPORT AVAILABLE AT:
HTTP://WTOCENTRE.IIFT.AC.IN/WORKINGPAPER/CWS%20WORKI
NG%20PAPER%20NO.33.PDF
SPS AGREEMENT:
ARTICLE V - ASSESSMENT OF RISK AND DETERMINATION OF THE APPROPRIATE
LEVEL
Article 5.7 in reads…..
In cases where relevant scientific evidence is
insufficient, a Member may provisionally adopt
sanitary or phytosanitary measures on the basis of
available pertinent information, including that from the
relevant international organizations as well as from
sanitary or phytosanitary measures applied by other
Members.
In such circumstances, Members shall seek to obtain the
additional information necessary for a more
objective assessment of risk and review the sanitary or
phytosanitary measure accordingly within a reasonable
period of time.
ENDOCRINE DISRUPTORS: DEFINED
An endocrine disruptor is an exogenous
substance or mixture that alters function(s) of
the endocrine system and consequently causes
adverse health effects in an intact organism, or
its progeny, or (sub)populations.
A potential endocrine disruptor is an exogenous
substance or mixture that possesses properties
that might be expected to lead to endocrine
disruption in an intact organism, or its progeny,
or (sub)populations.
Source: http://www.who.int/ipcs/publications/en/ch1.pdf.
WHAT ARE THE ISSUES IN EDS
Chemicals with endocrine-disrupting
properties impact the hormone system of
animals and humans.
Endocrine disruption is a relatively recent
way of looking at the toxicity of
chemicals.
There is now scientific consensus in many
areas, though diverging views exist on
specific points within the scientific
community and regulators worldwide.
1. Broadly five Categories of EndocrineDisruptors; (Plant Protection Products; Biocidal Products;
Cosmetics; Medical Devices and Water Framework Directive)
2. Identification of CAS numbers for thoseED with blanks;
3. Mapping of Chemical Abstracts Service(CAS) to HS Codes;
4. Seven sectors were identified and impacton these seven sector in terms of -
1. India’s Exports to EU and World;
2. EU imports from World.
Present Analysis (methodology)
THE REGULATION OF ED FOLLOWS, IN DIFFERENT PIECES OF
LEGISLATION, DIFFERENT APPROACHES
ED ClassificationsRegulatory decision making taking into
account
Plant Protection
Products Mainly Hazard with limited risk elements
Biocidal Products Hazard (general public uses) Risk / socio-
economic considerations (approval)
Cosmetics Hazard / Risks (to be reviewed)
Medical Devices Risk / socio-economic considerations
(proposal currently in co-decision)
Water Framework
Directive
No decision making directly applicable on
the authorisation of products; the provisions
are risk-based
REACH (not
Classified as ED)
Hazard (for listing)/ /Risk / socio-
economic considerations (to be reviewed)
Source: European Commission “ROADMAP”, dated July, 2014.
PROJECTED IMPACTS - EU’S NOTIFICATIONS (SPS AND TBT)
Scope of ED’s Coverage
1. Agricultural products – Indirect through theMRL restriction on Active substances;
2. Chemical Products – Direct restrictions;
3. Cosmetics Products– Direct and indirectrestrictions;
4. Leather Products – Indirect based on thecomposition of Dye used;
5. Textile and Textile Products – Indirectbased on the composition of Dye used;
6. Medical Devices – Direct restrictions
7. Water (Aquatic lives) - Direct Restrictions
8. Other products which contains EDs
NON-CHEMICAL LISTED AS ENDOCRINE DISRUPTORS
Name of Endocrine Disruptors CAS HS Code
Creosote 8001-58-9 2707
Disodium tetraborate, anhydrous 12179-04-3 2528
Distillates (coal tar), naphthalene oils,
naphthalene oil84650-04-4 2707
Laminarin 9008-22-4 2309
Limestone 1317-65-3 2521
Low temperature tar oil, alkaline, extract residues
(coal), low temperature coal tar alkaline122384-78-5 2707
Musk Xylene 81-15-2 2653
Propyzamide 23950-58-5 2395
Sea-algae extract (formerly sea-algae extract
and seaweeds)Not applicable 1302
Sucrose 57-50-1 1701
Source: European Commission, Brussels, 15.6.2016 / SWD(2016) 211 final / PART 5/16
ACTUAL IDENTIFIED (ENDOCRINE DISRUPTORS –ACTIVE
SUBSTANCES) & 6 DIGIT HS TARIFF LINES
Pla
nt
Pro
tectio
n
Pro
ducts
Bio
-cid
al
Pro
ducts
Cosm
etic
s
RE
AC
H
Wate
r
Fra
mew
ork
Dire
ctiv
e
347 98 49 163 48
Total of 588 Active Substances are listed as Endocrine Disruptors (EU document Annex 4)
Plant Protection
Products
49%
Biocidal Products
14%Cosmetics
7%
REACH23%
Water Framework Directive
7%
Endocrine List of 588 Active
Substances (100%)
Chemical and
Chemical Products,
17.1
Cosmetics, 0.5Food and Food
products, 14.9
Leather and Leather
Products, 1.2
Medical Devices,
0.9
Textile and Textile
Products, 12.1
Water, 0.1
Five Sectors (based on HS
Tariff Lines) – (46.8 %)
CHAPTERS COVERED (SECTORAL)
Percentage Share of Tariff
lines (%)Number of Chapters
8 1
18 1
31 1
44 1
97 1
98 1
100 41
Seven Major Sectors 47
Lowest tariff lines shares of 8 % has been one percent (chapter 51)
and highest of 100 percent coverage in 41 chapters.
Therefore, EC’s legislations could have coverage of 47
Chapters.
SUPPLY: INDIA’S EXPORT TO WORLD
Seven Sectors Avg. Shares of India’s Exports
Chemical and Chemical Products 12.9
Cosmetics 0.2
Food and Food products 11.0
Leather and Leather Products 1.3
Medical Devices 0.3
Textile and Textile Products 9.7
Water 0.0
Sub Total of Seven Sectors 35.5 %
Non-ED Products (EU’s Legislations) 64.5 %
India's World Exports (US$ bn.) 303.4 (US$ bn.)
Nearly 36% of India’s global exports are impacted:
1. Chemical and Chemical products accounted for 13 % closely
followed by food and food products with 11 % and Textiles and
Textile products with nearly 10 % shares in India’s global exports of
US$ 304 billion;
2. Water, Leather, Cosmetics and Medical Devices accounted for
nearly 2 % shares;
3. There is a clear evidence of concentration of Impact, with
three of the seven sectors having more than 10 % shares.
INDIA’S EXPORTS TO EU-27 MARKET
Seven Sectors Average Shares of EU's Imports
Chemical and Chemical Products 14.9Cosmetics 0.1
Food and Food products 7.6Leather and Leather Products 4.1
Medical Devices 0.4
Textile and Textile Products 18.2Water 0.0
Sub Total of Seven Sectors 45.2 %Non ED prouducts 54.8 %
India's World Exports (US$ bn.) 50.5(US$ bn )
45 percent of India's export are impacted - US$ 50.5 billion:
1. Impact on Textiles and Textile products is the highest with 18.2 % share of the
exports to EU of US$ 50.5 billion;
2. Chemical and Chemical products accounted for 15 %;
3. Followed by food and food products with 7.6 %;
4. Leather and Leather products was found to have a significant impact of 4.1 %
share;
5. Water, Cosmetics and Medical Devices accounted for only 0.5 % shares;
6. There is a clear evidence of concentration of Impact, with two of the seven sectors
having more than 10 % shares.
Labour intensive sectors are seen to be taking a hit.
1. Nearly 30 % is the Impact on EU’s Import market.
1. Chemical and Chemical products accounted for 15 percentage
of the total imports of US$ 5.5 trillion;
2. Followed by food and food products with 8 percent shares and
Textiles and Textile products with 4.2 percent;
3. Medical Devices accounted for nearly 2 percent shares;
4. Water, Leather, Cosmetics and Medical Devices accounted for
nearly 2.6 percent shares.
TOTAL DEMAND - EU-27 IMPORT COVERAGE OF ED PRODUCTS
Sectors Average (2012 to 2015)
Chemical and Chemical Products 15.0
Cosmetics 0.4
Food and Food products 7.9
Leather and Leather Products 1.1
Medical Devices 1.5
Textile and Textile Products 4.2
Water 0.1
ED's Products Sub-total 30.3 %
Non ED products (US$ Trillion) 3.8 (US$ Tr.)
US$ In Trillions (EU total) 5.6 (US$ Tr.)
DEPENDENCE ON EU: INDIA’S EXPORT SHARES (IN %)
22 % share of India’s seven sector is dependent by way of exports to EU:
1. The Impact on Leather exports will be highest with almost 50 % exports to
EU;
2. Textile is second highest in terms of impact, with 31 % of exports to EU;
3. Followed by Chemical and medical devices with 19.2 %;
4. Food and food products will be impacted of up to 12 %;
5. Water accounted for only 5.1 % shares;
6. There is a clear evidence of concentration of Impact, with six of the seven
sectors having more than 10 % shares.
Most labour intensive sectors can be seen to take a hit.
Seven SectorsIndia’s Exports Shares to
EU Imports (in %)
Chemical and Chemical Products 19.2
Cosmetics 10.1
Food and Food products 11.5
Leather and Leather Products 50.4
Medical Devices 19.1
Textile and Textile Products 31.1
Water 5.1
Sub-Total of Seven Sectors 21.2
Non ED Products 14.1
Total Indian Exports to EU (%) 16.6
METHODOLOGY CHALLENGES
Deeper Analysis - ‘Information Asymmetry’
Market survey for MRL standards and
restrictions on active substances (AS);
Market survey to identification the products
containing the EDs;
Need for a completely different structure at the
multilateral level (more effective and better
transparency mechanisms)
SUMMARY TABLE OF AGRI. PRODUCTS COVERAGE OF EDS(ANNEX TABLE NO. 3)
Range of
Agricultural
Products
(numbers)
Coverage of
Agricultural
Products (No.)
Maximum
Agricultural
products
Minimum
Agricultural
products
Coefficient of
Variation (CV)
- % age
1 to 100 115 100 1 79.7
101 to 200 42 200 101 16.6
201 to 300 21 297 203 11.5
301 to 400 10 395 309 8.6
401 to 600 6 534 413 11.1
Agricultural
Products534 534 1 105.5
Agricultural
Substances194
Sources: Calculated based on Endocrine list based on EC’s regulation of 2011 and Global MRL Database. (now
maintained by Bryant Christie Inc.)
40,000 total active substances(according to chemicalbook.com)
588 active substances declared as
endocrine disruptors;
ED’s accounting for approximately
1.5 percent of total active
substances – misses the logic.
Vital Statistics from Chemicalbook
PART –II
GENERAL ISSUES RELATED TO TRANSPARENCY OF
NON-CODEX MRL STANDARDS
DIFFERENTIAL IMPACT OF BORDER REJECTIONS
NON-CODEX MRL STANDARD?
There is no Definition (internationally)
1. But from the empirical analysis, we found that
these are those active substances/ingredients for
which there are no comparable Codex
measures;
2. Therefore, these are purely national by
application;
3. Like the other MRL standards these are
applicable on Agricultural crops used as food or
feed;
4. Calculation of stringency in these cases is not
possible as there is no comparable Codex
measures (international).
EU’S UNDERSTANDING ON HARMONISATION EFFORTS BY WTO
Number of MRL on Active Ingredients of EU
Source: Global MRL Database. (now maintained by Bryant Christie Inc.)
19 Agricultural
productsEU’s AIs
Stringent over
the CODEX
Total Non-
Codex AIs
Share of Non Codex to
Total AIs (%)
Guar 141 2 131 92.9
Chickpea 318 6 283 89.0
Sesame, seed 28 1 24 85.7
Milk (Pesticide) 660 10 548 83.0
Mustard (oilseed ) 31 1 25 80.6
Coffee bean, green 19 2 15 78.9
Soybean 218 13 168 77.1
Sugar cane 41 2 28 68.3
Cucumber 202 16 130 64.4
Tea, leaves 10 1 6 60.0
Peanut 87 3 51 58.6
Corn, grain 113 7 60 53.1
Nut, cashew 77 6 38 49.4
Pepper, non-bell 107 21 50 46.7
Wheat, grain 100 10 46 46.0
Onion, bulb 75 5 34 45.3
Rice 58 6 21 36.2
Grape, table 111 15 39 35.1
Cattle, meat (Pest.) 129 26 44 34.1
NON-CODEX MRL STANDARDS ON ACTIVE INGREDIENTS - GLOBAL TRENDS
58.6
51.9
45.0
43.7
10.7
6.3
0.7
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0
United States
Dominican…
Honduras
Mexico
Japan
Hong Kong
Canada
South Africa
Eurasia Customs…
Iceland
Norway
Australia
Turkey
European Union
Egypt
Morocco
United Arab…
Russia
Argentina
Brazil
China
South Korea
Taiwan
Indonesia
New Zealand
Malaysia
India
Bahrain
Gulf Cooperation…
Kuwait
Oman
Qatar
Chile
Switzerland
Singapore
Israel
Brunei
Thailand
Vietnam
Saudi Arabia
Share of Non-codex MRLs Standards
What do Border Rejections tell us about Trade Standards Compliance of Developing
Countries? Analysis of EU and US Data 2002-2008
UNIDO Working Paper (August 2011)
[Pages 55]Analysis of RRR for four Agricultural Products
1. Fish & Fishery Products
2. Fruit & Vegetables
3. Nuts & Seeds
4. Herbs & Spices)
Study downloaded from:
www.unido.org/tradestandardscompliance
RELATIVE REJECTION RATES OF IMPORTS BY THE EU (DEVELOPED AND
DEVELOPING COUNTRY)
Relatively Rejection Rates Categorised
Developing Developed Total
High RRR 43 43
Low RRR 36 8 44
Medium RRR 42 3 45
No Data 48 19 67
Number of Countries 169 30 199
High
0%
Low
27%
Mediu
m10%
No
Data63%
30 Developed Countries
High26%
Low21%
Medium25%
No Data28%
169 Developing Countries
RELATIVE REJECTION RATES OF IMPORTS BY THE US (DEVELOPED AND
DEVELOPING)
Relatively Rejection Rates Categorised Developing Developed Total Numbers
High RRR 51 2 53
Low RRR 34 17 51
Medium RRR 46 8 54
No Data 38 3 41
Number of Countries 169 30 199
169 Developing Countries
High
30%
Low
20%
Medium
27%
No Data
23%
30 Developed Countries
High
7%
Low
56%
Medium
27%
No Data
10%
By Way of Conclusion
1. EC’s Endocrine Disruptors regulations have an significant
impact both in terms of India’s exports to EU and EUs
Imports,
1. further there are significant Sectoral differences;
2. In general the chemical exports would suffer under the
new regime.
2. As protectionism is observed across the world - India needs
strategies that support the exporting activity by creating
systems for an effective response mechanisms based on
exporters feed back – external market surveillances;
3. As a matter of principle, standards have moved away from
‘Risk-based approach’– which in itself can be challenged –
so more and more ‘technological alone approach’ while
ignoring the commercial and development angles.
By Way of Conclusion
1.No certainty about its full scale of impact,
as this would require an analysis of what
goes in to the industrial production
process. (need wider domestic stakeholders
consultation)
1.Trade Facilitation issue in Goods Trade: if
not addressed through Negotiations;
1.India will have to create institutions and
mechanisms to address these MRLs through
the process of DSM of the WTO.
1. Domestically - the developing countries needs tounderstand the use of NTMs and theirimplications for formulation and implementationof effective development strategies.
2. Internationally - HS codes to be mademandatory for all SPS and TBT notifications tothe WTO – as it is trade regulatory body
3. International effort should be targeted toimprove access and increasing transparencywith regard to NTMs, to collect and classifyinformation about these measures (as suggested byvarious studies like, UNCTAD 2016, Kallummal, 2007 & 2015,Kallummal and Gurung 2016 & 2017).
4. Comprehensive and reliable information onMRL (NTMs) is scarce and difficult/costly toobtain.
RADICALLY DIFFERENT APPROACH (MRL)