chapter v estimation of trade impact of sps...
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Chapter V
Estimation of Trade Impact of SPS standards
5.0 Introduction
In case of horticultural trade it is estimated that trade in fresh and processed
horticultural products can contribute to the spread of plant pests and diseases and
to the consumption of microbial pathogens, chemical residues, naturally occurring
toxins, heavy metals MRLs, contaminants etc. Consumers in industrialized countries
have long had concerns about certain important dimensions of food safety,
especially the presence of chemical residues and contaminants in food.
This growing concern on food safety issues has resulted into increased rate of
notifications of SPS measures to WTO. FFV is one of the categories of food items
most frequently affected by sanitary and phytosanitary (SPS) measures. This is
certified by the fact that over 30 per cent of the specific trade concerns brought to
the attention of the WTO SPS Committee in the period 2001‐2005 referred to SPS
measures affecting trade in FFV. Amongst fruits and vegetables, higher number of
notifications has been notified in case of Fruits as compared to vegetables. Annexure
2.1 of chapter 2 indicates this number to be highest in case of USA with total number
of SPS notifications on fruits and vegetables amounting to 2401, followed by Japan
1371 and EU with 589 during the period 2005‐2011.
These frequently announced notifications explain the ever growing stringency of the
food safety regulations which have been the outcome of periodic outbreaks of food‐
borne illnesses being prevalent for more than a decade. This stringency prevailing in
most of the export markets for Indian FFV and the global importers of FFV have
been resulting into high frequency of import rejections, detentions, rapid alerts,
notifications and finally leading to complete export restrictions and ban ending up
into trade disputes. This is very much clear through the growing number of dispute
settlement cases registered under WTO‐SPS committee. (Annexure 2.2 of chapter 2)
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The chief concern of the developing countries about SPS requirements is that they
will impede their access to the developed country markets. The capacity of the
developing country exporters to enter the markets of the developed countries will
depend critically on their ability to meet stringent food safety standards imposed by
the latter and thus proving to have an impact on trade flows between countries.
The trade impacts of SPS measures have therefore been grouped into three
categories. (i) Firstly, they can reduce overall trade flows by increasing costs or
raising barriers for all potential suppliers (ii) secondly, they can divert trade from
one trading partner to another by laying down regulations that discriminate across
potential suppliers and (iii) thirdly; they can prohibit trade by imposing an import
ban or by prohibitively increasing production and marketing costs.
5.1 Analysis of trade flows affected by SPS regulations
Trend analysis of fruits and vegetable exports from India during 2005‐2009, as
indicated in chapter I, depicts that except for certain traditional fruits and vegetable
export including mango, grapes and potato; most of them have been declining
during past five years. In case of fruits, this has been witnessed for pineapples
wherein the exports have come down from the level of 847 USD000 in 2005 to 596
USD000 in 2009. This declining trend was much steeper in case of oranges (‐9.52%).
Vegetable exports have similarly witnessed a negative growth with curry leaves
depicting a striking trend coming down to absolutely zero in 2009 from as high a
value as 2980 USD 000’.(Fig 5.1) Even for fruits and vegetables which have always
been traditional strength for India (mango, grapes, potatoes), there has been a
decline in the export values during the year 2008‐09.
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Figure 5.1: Export growth and trend in exports for FFV sector for India
Source: CMIE, India Trades (2010)
Further the analysis of export destinations for fruit and vegetable exports from
India highlights that the concentration of Indian horticulture exports is in
neighboring countries including SAARC and Middle East. As indicated in figure 5.2,
India has not been able to have its presence in any of these major importers except
for meager share in total grape and onion imports in UK and Netherlands and
extremely poor share in total mangoes being imported into USA. Horticulture
exports from India are not able to find place in the developed country markets.
India has been losing its presence in developed markets with share of developed
country in total fruit exports from India declining from 60.42% in 2006 to 58.58%
by the end of 2010 as against the rise in share of developing countries from 63.2%
to 70% during the same period. Similar are the trends visible in case of export
markets for vegetables.
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Figure 5.2: Shift in the concentration of India’s export markets for FFV
Fruits Vegetables
Source: ITC, Trademap(2010)
However, the responsibility of this reduction in export levels across all product
categories taken into consideration may not solely be attributed to the SPS issues
faced in the export markets. This was pretty clear by the responses drawn from the
small sample of 40 exporters across Delhi and NCR on the factors considered as
most important by them which were hampering their exports of FFV.
As stated by the exporters, issues affecting their exports of FFV included insufficient
coordination among border agencies, multiple border controls, long waiting times
reducing the quality, thus price of perishables, non‐availability of online
documentation processing, lack of the cross‐border data harmonization and use of
international standards, high duty rates in some markets, tariff rate quotas,
escalations, emerging RTAs etc. Other problems included basic infrastructure cool
chain management a. Transport (Local transport, loading/ unloading) b. Cold
storage (poor post‐harvesting tech) c. Process (Washing, Waxing) d. packaging,
insufficient training opportunities and raising the level of productivity and quality
standard to international demand.(Farmpack India limited, Pune)
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These numerous problems stated by exporters were broadly clubbed together into
four major categories: (i) SPS requirements (ii) other technical requirements (iii)
transport and other logistics cost (iv) tariffs (high import duties) and (v) other non‐
tariff barriers. It was however seen that these factors were related with one another
wherein inefficiencies in any one factor had an impact on the other factors leading
to the final import rejection due to the combined effect. The case evidence 5.1 as
stated below clearly brings out this inter relationship between the above stated
factors.
Case 5.1: Interrelationship between parameters affecting trade: case evidence of non compliance of Desai fruits from Navasari, Gujarat
Desai fruits from Navasari in Gujarat have been exporting tomatoes to USA since
2007. The total value of export consignment was approximately 6720 US$. The
company accrued ISO 9001, GLOBALGAP and ISO 22000:2005 and was able to
maintain the quality standards prescribed by USA. Company used Kandla port for
its exports to USA. Basic steps involved in the process included preparation of
export documents including commercial invoice, packing list, bill of lading,
certificate of origin, customs declaration, residual analysis certificate (for exporting
fruits to EU), sanitary and phytosanitary certificate, etc. that were mainly needed for
customs clearance at Kandla. The procedure of transportation and customs
declaration at Indian side followed by Desai fruits were as follows:
Step I: Registration of Application
Company (through CHA) submitted an application to officer‐in‐charge of concerned PQ station at Kandla port or to the concerned inspecting and certifying authority notified by the Ministry of Agriculture 2‐3 days prior to the actual date of shipment of consignment.
The application is accompanied by a copy of invoice, packing list, shipping/airway bill, letter of credit or trade agreement or purchase order, export license (if applicable) and fumigation certificate, if any.
On receipt of the application PQ officer scrutinized the application and if found complete in all respects registered the application and assess the
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inspection fee.
The company paid the inspection fee at the prescribed rates as mentioned below:
Commodity Volume Inspection Fee Fumigation or Disinfection charges
Less than 1.5 cu. m Re. 1/‐ Rs. 6/‐ 1.5 cu. m. and above
Re. 1/‐ extra for every additional 3.0 cu. m. or part thereof up to a maximum of Rs. 100/‐
per consignment.
Rs. 2/‐ extra for every additional 1.5 cu. m. or part thereof
On specific request from the company, the consignment was inspected at the
factory at Navasari (outside PQ station) on payment of Rs. 10/‐ per visit. The company also met the traveling and dearness allowances of the PQ officer and staff deputed for inspection at the factory as per their entitlement and also accommodation charges.
On receipt of inspection fees, a quarantine order was issued by the officer‐in‐charge of concerned PQ station for presenting the consignment for inspection by the applicant.
Step II: Inspection / Sampling & Laboratory testing
The company presented the consignment at the office of PQ station at Kandla port for inspection as per the quarantine order issued. The company provided necessary transport, labor and other facilities for opening, sampling, repacking, sealing etc.
Sampling was done as per Bureau of Indian Standards (IS: 2814/1978 and IS: 3714/1978). The company associated with inspecting officer while undertaking inspection.
The PQ officer deputed for inspection drew appropriate size of sample for detailed laboratory testing. The samples of tomatoes were visually inspected with the help of illuminated magnifier specifically for live insect infestation.
Step III: Fumigation & treatment of consignment
In the event of live insect infestation is noticed, the company arranged for fumigation of consignment or container at his premises or any other approved place by an approved pest control operator under the supervision of PQ officer.
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The company submitted an undertaking for the purpose along with payment of supervision charges of Rs.25/‐ per container and provided necessary transport/labour facilities, if the fumigation is carried out in the fumigation chambers at PQ station and pay fumigation or disinfestation or disinfection charges as prescribed above.
The company paid storage charges @ Rs. 10/‐ per cu. m. space per day or part thereof, if the consignment is not immediately removed after degassing and re‐inspection. The consignments were re‐inspected after degassing of consignment or container to ensure freedom from live infestation.
Step IV: Issuance/Rejection of Phytosanitary Certificate (PSCs)
Phytosanitary Certificates (PSCs) were issued in duplicate viz., original for the company and duplicate copy for office record, if consignment on inspection was found to be free from quarantine pests1.
On specific request from the company, PSC was re‐issued after canceling the earlier original certificate to facilitate the incorporation of corrections/ amendments, subject to the production of shipping documents in proof thereof. Such re‐issuance of PSC, for incorporating amendments / corrections, was done within 7‐10 days from the date of issue of original certificate and thereafter no such requests were entertained.
The issue of PSC was rejected if the commodity on inspection is found to be a prohibited one or found affected by quarantine pest or the commodity could not be fumigated to render it pest‐free as it is packed in impermeable container or packed with objectionable plant material or contaminated with soil, reasons for rejection immediately had been communicated in writing to the company under intimation to customs/port authorities.
The time‐procedure chart developed in the figure below on the basis of inputs from
the company as well as from Department of Plant quarantine, Government of India.
Total number of maximum days involved in the certification process for availing
phytosanitary certificate turned out to be 30 days. Including the number of days for
transportation and documentation, total days turns out to be 50 days.
1 However in case of re‐exported consignments the PSCs were issued in re export format prescribed under IPPC.
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In the month of Jan 2011, US demanded for proper grading of tomatoes as per the
grading standards prescribed by USA. Company wanted to go for mechanical
grading which is still in its infancy in India and grading equipment is either not
available or has not been put to large scale commercial use. Mechanical grading has
been introduced only in three states in India and therefore the export consignment
from Surat was taken to Mumbai and a shift from Kandla port was made to JNPT
port, Mumbai. Company used traditional form of packaging such as bamboo baskets
and wooden boxes and very limited use of corrugated fibre board (CFB) boxes to cut
down the cost.
Considering the non availability of reefer vans, use of traditional packaging methods
and extra time to move the consignment from Surat to Mumbai; quality of tomatoes
degraded due to poor shelf life of tomatoes (3 weeks =21 days at 7。C) by the time
it was ready to be exported. It further took time for the company to avail the
phytosanitary certificate now at JNPT port. Therefore these additional requirements
stated by USA resulted into the added cost of domestic transportation and the delay
leading to quality issues due to poor shelf life of tomatoes. As a result of this
company could manage to comply with the grading standards of USA2, however lost
on quality grounds due to the presence of mealy bugs due to delay caused on
account of domestic inefficiencies including huge limited availability of facilities on
mechanical grading, time lost during domestic transportation etc.
2 www.ams.usda.gov/standards/
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TimeProcedure chart for exporting vegetables from India to USA
1 Buy 9 Obtain certificate of origin 2 Obtain export permit 10 Collect containers for loading 3 Company stuffing permission 11 Transfer to warehouse in port 4 Export registration 12 Customs clearance 5 Inform shipping line 13 Send the goods to vessel in port 6 Excise Inspection 14 Send the goods to importer’s warehouse 7 Obtain cargo insurance 15 Pay 8 Getting sanitary & phytosanitary approval
Source: Exporter and Department of Plant Quarantine, GOI
8.1 Submission of application to PQ station
8.2 Scrutiny of the application
8.3Issuance of quarantine order by PQ officer for consignment inspection
8.4 Submission of consignment at PQ office
8.5 Sample selection detailed laboratory testing
8.6 Visual inspection
8.7 Fumigation of consignment
8.8 Re‐inspection of the consignment after degassing
8.9 Issuance of phytosanitary certificate
8.10 Reissuance of PSC (if required)
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The company further faced competition from the tomatoes coming from Mexico
under the Tomato suspension agreement.
Source: Economic research service, USDA
Also company could not explore the possibility of selling its tomatoes in Mexican
market due to the “Mexican regulations on import tolerance for stem and leaf matter
not to exceed 5 pieces per 100 tomatoes”. Since the company had prepared itself to
enter into the USA market where this regulation does not exist, the possibility of this
shift was ruled out. The strictness of the Mexican regulations comes out of the fact
that despite having a regional trading agreement of NAFTA with USA, Mexico had
not allowed tomatoes from USA to enter into its market on the basis of the said
regulations which had compelled USA to enter into a WTO dispute settlement case
with Mexico on this issue. APHIS (USA) and California Tomato Association are
continuing to pressurize Government of Mexico to raise the tolerance level above
the current restriction.
The above mentioned case clearly brings out the interrelativity between various
factors hampering the exports of FFV from India. Hence in order to check the
significance of SPS as a barrier, perception analysis was conducted across 93
exporters dealing in various fruits and vegetables exports across different states in
the country.
Tomato Suspension Agreement between Mexico & United States hampers tomato exports from India
There is significant two‐way trade between the United States and Mexico due to the shared border and
zero tariffs under the North American Free Trade Agreement (NAFTA). A new Tomato Suspension
Agreement between Mexico and the United States was signed in January 2008, and binds virtually all
Mexican exporters to sell in the United States at or above the applicable reference price. The reference
price for exporting fresh tomatoes for the summer season (July 1‐October 22) is 17.2 cents per pound,
and the reference price for the winter season (October 23‐June 30) is 21.69 cents per pound.
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Survey respondents across various FFV producing zones were asked to rate the
significance of each factor on a five‐point rating scale from ‘highest priority’ (5) at
one extreme to ‘lowest priority’ (1) at the other.
In order to determine whether the perception of exporters with regard to the factor
influencing their ability to export to developed country’s market is statistically
significantly different or not, paired sample t test was used. Four paired t test were
conducted between SPS requirement and other variables. Table 5.1 describes the
results of the paired t test.
Table 5.1 (a) Paired Samples Statistics
Mean N Std. Deviation Std. Error Mean
Pair 1
SPS requirements 3.81 93 1.145 0.119
Other technical requirements 2.63 93 1.121 0.116
Pair 2
SPS requirements 3.94 83 0.967 0.106
Tariffs 1.96 83 1.518 0.167
Pair 3
SPS requirements 3.94 86 0.986 0.106
Transport and other logistics cost 3.98 86 0.826 0.089
Pair 4
SPS requirements 3.95 80 0.967 0.108
Other Non tariff barriers 3.01 80 0.803 0.09
Table 5.1 (a) compares the relative significance of SPS regulations in the export
markets as a barrier to trade as against the other factors in the minds of the Indian
exporter of FFV. A higher mean value for SPS as compared to other factors clearly
indicates the relative importance of SPS as the most stringent barrier.
Table 5.1 (b) Paired Differences
Mean
Std.
Deviation
Std. Error Mean
95% Confidence Interval of the Difference
Lower Upper t df Sig. (2‐tailed)
Pair 1 SPS ‐ tech 1.172 1.544 0.16 0.854 1.49 7.322 92 0
Pair 2 SPS ‐ Tariffs 1.976 1.718 0.189 1.601 2.351 10.48 82 0
Pair 3 SPS ‐ _TC ‐0.035 1.241 0.134 ‐0.301 0.231 ‐
0.261 85 0.795
Pair 4 SPS ‐ NTB 0.938 1.325 0.148 0.643 1.232 6.329 79 0
Tech : other technical barriers; TC : transportation cost; NTM : non tariff barriers (p<.05)
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As per the table 5.1 (b); the mean of the 93 respondents who marked SPS
requirement (M=3.81) is statistically significantly different from the mean of the
same group marking on the factor, other technical requirement (M=2.63).
Here we can see that p=.000, at t=7.322,that is p<0.001, which means null
hypothesis is not supported and that there is a statistically significant difference
between the two means even though it is the same group marking on the factors.
Similar results are seen against tariff barriers and other non tariff barriers apart
from SPS.
This difference in mean is (+ve) i.e biased toward SPS with respect to almost all the
other factors affecting trade except in case of transportation cost (Paired Mean
difference= ‐ 0.035) indicating transportation cost being perceived as a much
stringent trade barrier as compared to SPS; however, the difference in mean is
statistically insignificant (p=0.795) which is p> 0.05.
This mean difference between SPS and tariff is highest and significant (paired mean
difference = 1.976, p<0.05). This is due to the fact that the horticulture exports do not
face high tariff barriers in the developed markets. Applied MFN tariffs are low in most of the
developed countries ranging between 0‐1 % in USA to 0‐5% in Australia as depicted in
Table 5.2.
Table 5.2: Average Tariff range for fruits and vegetables in major markets
Banana Pineapple Guava Grapes Apple Tomato Onion Cucumber
Australia 0 0% 0 5‐5 0 0‐0 0 0
Canada 0 0% 0 0‐6 0‐9 0 0 0
USA 0‐1 0 0 0 0 0 0 0
EU 0 6‐6 0 8‐14 7‐7 0 10‐10 0
Japan 3‐25 7‐17 3‐3 8‐17 17‐17 3‐3 0‐9 3‐3
Source: WITS Trade database
Hence it is clear that although developing countries’ exports of FFV to developed
country markets face obstacles such as reference prices, tariff quotas and safeguard
measures yet tariff structure over last few years depicts that tariffs have been
reduced to low levels through various rounds of WTO negotiations.
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This stringency of SPS barrier has been increasing over the period of time and
developing country exporters of high‐ value food and agricultural products face
these barriers as they penetrate industrialized country markets striving to increase
their market share. Historically, the standards applied to international trade in
horticultural products were quality standards related to varietal selection, physical
and visual characteristics, tolerances for foreign matter, and other variables giving
rise to mandatory country level standards to be implemented by customs including
HACCP,ISO 9001, GLOBALGAP, Organic and ISO 22000:2005.
Further apart from these public standards, the proliferation of the food safety
standards has also been at the private level (through supply chain requirements and
in response to the demands of consumer and other civil society organizations). The
private food safety guidelines and standards (EUREP‐GAP, HACCP, BRC, SQF, and
ISO 9000) are imposed by importers and retailers at different levels in the food
supply chain production, handling, and distribution of fresh fruits and vegetables.
While chapter VI explains the trade impact of each of these standards in the form of
enhanced cost of compliance, this chapter draws our attention to an interesting
trend in the exports of FFV from India highlighting the direct trade impact of the
emerging standards on the trade flows of select FFV.
WTO agreement on Sanitary and Phyto sanitary measures which came into
existence on 1st January 1995 brought in fruitful results seen in the form of
increased value of exports in almost all the major European markets and also USA
for three consecutive years until 1998. For instance although the exports of FFV
from India to these markets were very meager, however there has still been a
positive impact of the WTO SPS agreement bringing exports of 0.48 US$ mn to 1.69
USD mn within a span of one year in case of Netherlands. This success story
continued for UK, Germany and USA wherein Indian FFV figured in the US market
for the first time in 1996. (Table 5.5)
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However, this trend could be continued only until the end of 1998. As indicated in
figure 5.5 below, British Retailer’s consortium now called the BRC Global Standard
for Food Safety emerged in 1998. This standard was initially developed by UK
supermarket retailers to assist them in fulfilling their legal obligations and
protection of the consumer. The BRC standard started being recognized by the
majority of UK supermarkets. As a consequence, most (but not all) of the major UK
food retailers started to move away from implementing their own individual firm
food safety standards, while existing independent standards organizations and
companies shifted the focus of their business to certification against the BRC
Standard.
Figure 5.5: Historical evolution of Private standards in European markets
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This impact of BRC raising the implementation cost of compliance and thus having
negative impact on the trade flow can seen by the sudden reduction of most of the
fruits exported from India during the BRC implementation year (1998‐1999). (Table
5.4). After the implementation of BRC in 1998, there was a sudden reduction in the
export values in 1999 with dates, pineapples, mango export going down from 20.69
US$ mn to 19.93; grapes going down drastically from 17.97 to 9; apples and pears
from 3.1 to 2.4 and citrus fruits from 4.59 to 3.61 US$ mn.
Table 5.4 : Impact of BRC implementation of the trade flows of FFV from India
HS Code Commodity Name 1995 1996 1997 1998 1999 0804 Dates, figs, pineapples,
avocados, guavas, mangoes, and mangosteens, fresh or dried
15.12 12.16 13.52 20.69 19.93
0806 Grapes, fresh or dried 13.01 16.4 14.84 17.97 9 0808 Apples, pears and
quinces, fresh 2.19 2.94 3.83 3.1 2.4
0805 Citrus fruit, fresh or dried 2.33 4.27 5.32 4.59 3.61 0809 Apricots, cherries,
peaches, plums fresh 0.1 0.37 0.11 0.13 0.1
Source: CMIE, India trades 2010
The emergence of BRC standard in 1998 was followed by the initiative from German
food retailers who developed the International Food Standard (IFS) emerged in
2000. In 2003, French food retailers further elaborated IFS became the first pan‐
European collective post‐farm‐gate private food safety standard. The impact of this
standard can be visualized by the complete absence of France as an export market in
2003 onwards.
While BRC Global Standard for Food safety, Dutch HACCP and the IFS were
operating side‐by‐side in Europe, while the SQF standard had been developed in
Australia and subsequently migrated to the United States. Thus, many of the larger
food processors were simultaneously complying with, and being certified to,
Year of BRC implementation
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multiple private food safety standards. Situation improved with the emergence of a
new collective standard on Global Food Safety Initiative (GFSI) in 2005. This
improvement is well depicted by gradual rise in the exports of FFV since 2005 in
case of UK, Belgium and Germany amongst European markets and to some extent in
USA.
Table 5.5: Impact of emerging public & private standards on trade flows of Indian FFV
Importing Country 1995 1996 1997 1998 1999 2000 2001 2003 2004 2005 2006 2007 2008 2009
Nethds 0.48 1.69 2.01 3.96 0.78 0.66 2.56 3.82 4.29 9 14.22 22.11 33.8 29.3
UK 6.34 6.89 6.67 8.86 4.53 7.19 8.43 9.48 7.38 7.32 13.36 16.91 15.8 14.4
Belgium 0.02 0.69 0.72 0.07 0 0.23 0.22 0.7 0.56 2.69 3.43 0.78 4.88
Germany 0.05 0.12 0.33 0.45 0.08 0.36 0.28 0.71 2.08 1.03 2.51 3.18 1.95 1.03
France 0.01 0.04 0 0.02 0.02 0 0 0 0
USA 0.02 0 0.05 0.02 0.03 0.02 0.02 0 0.01 0.02 0 0
Source: ITC Trademap, 2010 This clearly reinforce the fact that the declining trend of exports of fruits and
vegetables from India have primarily been the outcome of emerging private
standards in domestic markets of the global importers for FFV. Further increased
stringency of the existing country specific regulations have resulted into the rising
number of import detentions, rejections and export bans faced by Indian FFV
exports in major developed country markets.
Increasing stringency and complexity of Country regulations leading to trade loss
Increasing stringency of the developed country standards are proven by the fact
that these developed markets have established their country standards much higher
than the accepted levels of standards established by the Codex Alimentarius
Commission. Some of the examples of this increased stringency are listed below:
GFSI introduced in 2005
WTO SPS (1995)
BRC in UK (1998)
IFS in Germany(2000)
Elaboration of IFS in France (2003)
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In the case of garlic, the EU standard includes residue levels for 111
substances. The standard of Japan contains 61 substances, whereas in China
only 37 substances are controlled. The EU standard sets residue levels of
0.05 milligram per kilo (mg/kg) or less for over 150 substances, including
residue levels of 0.01 mg/kg for some 23 substances.
The limit of cypermethrin in scallion is 0.1mg/kg in Japan, 0.2mg/kg in the
European Union, while it is 0.5mg/kg in China, i.e. 5 times the limit in Japan
and 2.5 times the limit in the European Union. The limit of chlorpyrifor in
spinach is 0.01mg/kg in Japan and 1 mg/kg in China, i.e. 100 times more
stringent in Japan.
Standards change quickly. After a large volume of quick‐frozen vegetables
were imported from China, Japan started to apply the pesticides residue
limits for fresh vegetables to quick‐frozen vegetables as well. Because the
production of 1 kg of frozen spinach usually requires 4 kg of fresh spinach, it
is argued that applying the same limits per kg to both fresh and frozen
spinach is unreasonable and unscientific.
Inspection of hygiene and food safety is being tightened and spot‐checks are
being applied more frequently. The scope of quality inspection of agricultural
products is being expanded: apart from the product itself, the sanitary
conditions of the workplace now also need to be inspected and various kinds
of inspection and testing certificates need to be provided.
The inspection and testing of vegetables exported to Japan are becoming
much stricter. Japan carries out mandatory strict inspection of a number of
vegetables, testing every batch of vegetables such as rape, asparagus and
cauliflower on residues of various substances. Additional testing is applied
for residues of 47 pesticides in 18 kinds of quick‐frozen vegetables.
Further private‐sector standards were normally based on the MRLs established in
Government regulations. However, it is reported that in some cases, e.g. pineapples
imported into Germany, certain retailers apply a more rigorous standard on MRL
than the EU does.
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The increasing stringency of these standards therefore result into the trade loss for
the exporters in the form of import rejections in some cases and complete export
ban in case of frequent and repeated rejections. The analysis of such trade losses is
discussed in section 5.3 below.
5.2: Estimation of trade loss due to Import restrictions/ bans
The analysis of the import detentions collated through Import Refusal Reports (IRR)
data from United States Food and Drugs Administration (USFDA) and Rapid Alert
notifications on Food and Feed (RASFF) in EU has been conducted to understand the
extent of the trade impact.
5.2.1 Analysis of import detentions of FFV in US market3
The analysis of the rejections of imports from Africa, Asia and Latin America over
the period of June 1996‐97, depicts the major cause as microbial contamination, filth
and decomposition.
3 Food Safety and Imports: An Analysis of Food-Related FDA Import Refusal Reports / EIB-39, Economic Research Service/USDA
In the United States, there are two main regulatory agencies for food safety with Federal jurisdiction over fruits and vegetables: Environmental Protection Agency (EPA) licenses pesticide products and establishes maximum allowable limits (tolerances) for pesticide residues in food and animal feed. (FDA and FSIS enforce pesticide tolerances for the commodities under their jurisdiction.) In addition, EPA manages regulatory and research programs related to water‐ and food borne toxic chemicals such as dioxin (President’s Council on Food Safety, 2001). Food and Drug Administration (FDA) is responsible for all import inspections except for meat, poultry, and processed egg products, which fall under FSIS jurisdiction. Responsibility for particular food groups is often shared among agencies. For example, for fruits and vegetables, EPA and USDA share pesticide regulation responsibilities, while FDA handles import inspections.The FDA’s mission is to enforce the Federal Food, Drug, and Cosmetic (FD&C) Act and other laws designed to protect consumer health, safety, and welfare (FDA, March 17, 1999). These laws apply equally to domestic and imported products. All food under FDA jurisdiction, as defined in the FD&C and related Acts, is subject to examination by FDA when it is being imported or offered for import into the United States. Imported foods must be pure, wholesome, safe to eat, produced under sanitary conditions, and contain informative and truthful labelling in English.
Food Safety Oversight in the United States
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Table 5.6: Number of contraventions cited for U.S. Food and Drug administration
import detentions (percentage of total) (June 1996 – June 1997)
Reason for Contravention Africa Latin America
and Caribbean
Europe Asia Total
Food Additives 0.7 1.5 5.8 7.4 5.0
Pesticide Residue 0. 21.1 1.7 0.4 7.7
Heavy Metals 0.3 10.9 2.2 1.5 4.8
Mould 6.3 12.2 2.3 0.8 5.1
Microbiological contamination 41.3 6.3 13.4 15.5 12.8
Decomposition 3.0 5.3 0.6 11.5 8.0
Filth 17.8 32.2 14.8 35.2 31.5
Low acid canned foods 1.3 3.6 35.9 14.3 12.5
Labeling 12.5 5.2 20.0 10.8 9.8
Others 16.8 1.7 3.3 2.6 2.8
Total 303
(100%)
3895
(100%)
1184
(100%)
5784
(100%)
11166
(100%)
Source: FAO (1999)
The status has not improved beyond 1998. The analysis of data on refusals of food
offered for importation into the United States from 1998 to 2004 has been
conducted using newly available data from FDA Import Refusal Reports (IRR) from
1998 through 20044. IRR data include only those shipments5 ultimately refused
entry into U.S. commerce, and thus are a better indicator of potential violations in
food imports than the previously reported detention data.
The analysis of import detentions from USA depicts that during 1998‐2004, 49,448
shipments were refused entry into U.S. markets by FDA. There were roughly twice
as many refused shipments in each of the last 3 years of the data than in each of the
previous 4 years.
4 Previous studies used detention data, which refl ect shipments where FDA issued Notice of Detention actions. A large share of the detained shipments are not ultimately refused entry (i.e., admission) into the United States, but are eventually released into trade. The data did not provide information on the ultimate administrative outcome for each shipment 5 We use the term shipment for each of the entry lines in the FDA refusal data. An entry line is a unique shipment or lot of a particular food by a particular shipper offered for admission into U.S. commerce at a particular place in time.
148 | P a g e
Table 5.7: Shipments refused for importation by FDA, 19982004
Source: ERS calculations using FDA Import Refusal Reports, 1998‐2004.
Three food industry groups with the most violations were vegetables (20.6 percent
of total violations), fishery and seafood (20.1 percent), and fruits (11.7 percent). An
examination of violations in these three categories reveals that refusals for sanitary
violations in fruit products and pesticide violations in vegetables were persistent
over time.
Box 5.1 : US Rejects 256 Indian Food Consignments Indian again tops the list of rejection of export consignments
India again tops the list of rejections of food and drug consignments by the US in August, 2010 on grounds of sanitary, phytosanitary (SPS) and technical parameters. As many as 37 consignments were rejected having pesticide residues.
The US rejected as many as 256 food export consignments from India in August, 2005 followed by rejection of 227 from China, 197 from Mexico and 177 from the Dominican Republic. The last largest rejection totaled 251 consignments in May, 2007. The rejection rate came down to 216 in June and 78 in July, 2005 the movement of export consignments was lower due to floods in Mumbai.
Indian export consignments were rejected by the US on account of being ‘filthy’, technical parameters like incorrect labeling as not disclosing the process of manufacture. Salmonella was fond in coriander powder, shrimp, cashew preparation, turmeric, Haldiram snacks and sesame seeds. Pesticide residue was found in roasted chickpeas and red chili.
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Figure 5.7: USFDA import violations by food industry
Source: ERS calculations using FDA Food‐Related Import Refusal Reports
An examination of violations in these three categories reveals that refusals for
sanitary violations in seafood and fruit products, pesticide violations in vegetables,
and unregistered processes for canned food products in all three categories were
persistent over time (fi g. 5.7).
Reasons of Import Refusals for fruits and vegetable consignments into USA
Table 5.8 presents the most common violation for fruits and vegetable industry
group. Vegetables and vegetable products have the largest total number of
violations; unsafe pesticide residues were the most cited reason. Violations include
chemical residues not registered in the United States or residues that exceed
tolerance levels set by the U.S. Environmental Protection Agency. The FDA provides
additional information about the nature of pesticide residue violations in domestic
and imported produce for 2002 and 2003 (FDA, 2002; FDA, 2003). In both 2002 and
150 | P a g e
2003, more violations occurred in imported produce for unregistered pesticide
residues than for violative residues that exceed U.S. tolerance levels. Unregistered
chemicals may or may not pose health risks; they may be unregistered because they
are not used in American production.
Three most common violations for the FFV refused by FDA, 19982004
The top three reasons are consistent for vegetables and vegetable products and
account for over half of all violations every year. Unsafe pesticide residues and
process violations are the most persistent violations for this industry group. Fruits
and fruit product violations occurred most frequently due to a filthy designation, but
the second and third most common reasons varied. Unsafe pesticide residues,
processing violations, and inadequate nutrition labeling are most important from
2002 to 2004, while the relative importance of violations due to unsafe coloring and
additives has diminished. Sanitary issues and pesticide issues in vegetables were
also identified in previous studies as areas of concern in food imports.
151 | P a g e
Main Findings
Of the 45,941 adulteration violations found, those for pathogens comprised
15.3 percent (10 percent of all violations), chemical contamination totaled 25
percent (16 percent of all violations), and other sanitary violations made up
59.7 percent (39 percent of all violations). The vegetables and vegetable
products group had the most violations for chemical contamination and
“other sanitary violations.”
Salmonella was the most common violation for a pathogen adulterant,
accounting for 63 percent of pathogen violations. Out of 4445 Salmonella
violations, 139 were for vegetables and vegetable products (3.1 percent), 131
were for fruits and fruit products (2.9 percent), and 100 were for nuts and
edible seeds (2.2 percent).
Out of 1,746 violations for Listeria, 15.5 percent for fruits and fruit products.
Shigella was the only other pathogen with its own violation code in the
sample. Of the 48 violations for Shigella, 37 were for vegetables and
vegetable products, and 11 were for fruits and fruit products. Of the
vegetable violations, 31 were for celery, largely in response to an import
alert calling for a DWPE# for shipments from listed manufacturers, shippers,
and growers due to historical problems.
5.2.2 Analysis of the Rapid Alert System for Food and Feed (RASFF) of EU (2009)
In order to ensure the quality of the food imported into the European market,
Article 50 (EC) Regulation N° 178/2002 had established the Rapid Alert System for
Food and Feed as a network involving the Member States, the Commission as
member and manager of the system and the European Food Safety Authority (EFSA).
The RASFF was put in place to provide food and feed control authorities with an
effective tool to exchange information about measures taken responding to serious
risks detected in relation to food or feed. This exchange of information helped
Member States to act more rapidly and in a coordinated manner in response to a
health threat caused by food or feed.
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Whenever a member of the network has any information relating to the existence of
a serious direct or indirect risk to human health deriving from food or feed, this
information is immediately notified to the Commission under the RASFF. Article
50.3 of the Regulation lays down additional criteria for when a RASFF notification is
required. Without prejudice to other Community legislation, the Member States
shall immediately notify the Commission under the rapid alert system of:
a. Any measure they adopt which is aimed at restricting the placing on the
market or forcing the withdrawal from the market or the recall of food or
feed in order to protect human health and requiring rapid action;
b. Any recommendation or agreement with professional operators which is
aimed, on a voluntary or obligatory basis, at preventing, limiting or imposing
specific conditions on the placing on the market or the eventual use of food
or feed on account of a serious risk to human health requiring rapid action;
c. Any rejection related to a direct or indirect risk to human health, of a batch,
container or cargo of food or feed by a competent authority at a border post
within the European Union.
According to the seriousness of the risks identified and the distribution of the
product on the market, the market notification is classified after evaluation by the
Commission Services as alert notification or information notification before the
Commission transmits it to all network members.
153 | P a g e
An ‘alert notification’ or ‘alert’ is sent when a food or a feed presenting a serious risk is on the market or when rapid action is required. Alerts are triggered by the member of the network that detects the problem and has initiated the relevant measures, such as withdrawal/recall. The notification aims at giving all the members of the network the information to verify whether the concerned product is on their market, so that they can take the necessary measures.
An ‘information notification’ concerns a food or a feed on the market of the notifying country for which a risk has been identified that does not require rapid action, e. g. because the food or feed has not reached the market or is no longer on the market (of other member countries than the notifying country).
A ‘border rejection notification’ concerns a food or a feed that was refused entry into the Community for reason of a risk to human or animal health.
A ‘news notification’ concerns any type of information related to the safety of food or feed which has not been communicated as an alert, information or border rejection notification, but which is judged interesting for the food and feed control authorities in the Member States.
154 | P a g e
Figure 5.8 Schematic representation of the information flow of the RASFF
In 2009, a total of 3322 original notifications were transmitted through the RASFF,
of which 1796 market notifications, 1484 border rejections and 42 news
notifications. 578 market notifications were classified as alerts, and 1218 as
information notifications. These original notifications gave rise to 4767 follow‐up
notifications, representing on average about 1.4 follow‐ups per original notification.
These figures represent a 5.8 % increase in original notifications and more
importantly, a 17.7 % increase in follow‐up notifications; resulting in an overall
increase of 13.4 %.
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156 | P
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157 | P a g e
RASFF of European Union states the fact that extremely high levels, upto 55 mg/kg of
triazophos, also a highly toxic substance, were found in curry leaves from India.
Triazophos was also found in okra but at a much moderate levels. Other causes of
rising alerts which could restrict horticulture exports from India aremycotoxin, foreign
bodies, spoilage etc. Unauthorisedisofenphosmethyl is a new hazard in the RASFF
system with a significant number of notifications.
Trade implication of these notifications is visible through the trend of exports. As
indicated in table 5.8, declining trend in exports from India is visible for vegetables
which had faced these rapid alerts. Moreover, for vegetables on which the frequency
of RASFF notifications was high have faced a much steeper decline in the export
value. For example, as a result of highest number of rapid alerts issued, curry leaves
exports which amounted to the extent of 2980 USD 000’ in 2005 witnessed a sudden
disappearance as an export item by the end of 2009. This was followed by Okra with
13 rapid alerts resulting into the decline of 40.62% during the same year. However
in case of gherkins, just one rapid alert resulted into the decline of 15% in the total
exports of gherkins.
Table 5.8: Impact of import rejections on exports of select vegetables from India [USD 000’]
2005 2006 2007 2008 2009 Growth (%)
Gherkins 606 376 146 1917 321 ‐14.69 Okra 345 625 1178 101 44 ‐40.62 Curry leaves 2980 5192 8093 2068 0 ‐100.00
Source: CMIE, India Trades, 2010
Border rejections
After having analyzed the rapid alerts issued against Indian FFV, in order to
understand the conversions of these rapid alerts into actual rejections, analysis of
‘border rejection notification’ has been done. Border rejections concerns a food or a
feed that was refused entry into the Community for reason of a risk to human or
animal health. Members of RASFF are required to notify rejections of food or feed at
158 | P a g e
the border if the consignment is rejected for reason of a direct or indirect risk to
human (food or feed) or animal (feed) health. This requirement was introduced
with Regulation (EC) 178/2002 in its article 50 which sets the basis for the RASFF.
In 2009, the number of notifications on products originating from outside the EEA
amounted to 2372, which is 75 % of the total number of notifications. This number
is influenced by the border rejections, which obviously are all about products from
third countries. In market notifications, still 53 % of notifications concern third
country products including India. For fresh fruits and vegetables the notifications
were majorly for pesticide residues.
Further most of these notifications have their origin in the major exporting markets
for Indian fruits and vegetables. For instance, about one‐third of the notifications
have their origin within European Union (414) and the rest of Europe (84). Brazil,
China, Thailand, and Turkey have been recorded (in 2002) with the highest number
of notifications, with over 100 each. Germany has issued the highest number of
notifications (455). Italy has issued 214, while the Netherlands, Spain, and the UK
have issued about 150 notifications each.
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The analysis of the above two import detentions procedure of USFDA and RASFF of
EU clearly bring forth the reality of growing stringency for Indian fruits and
vegetable exporters of the identified commodity groups. Developed countries are
coming out with an effective mechanism of monitoring the food imports thus
throwing challenges and cause of concern for Indian exporters.
The challenge faced by the Indian exporters becomes much higher on account of
increased number of independent food safety agencies. For instance, in Europe,
independent food safety agencies have been created in France, the United Kingdom,
and several other countries. A new Food Safety Authority has been created at the
level of the European Commission, and oversight for an array of food safety matters
has been shifted to a greatly empowered Health and Consumer Protection
Directorate General. Australia and New Zealand have created distinct agencies for
food regulations and standard‐setting, while in Japan an independent food safety
advisory commission has been established. In the United States a federal Council on
Food Safety was established to coordinate the efforts of various agencies. Some
countries have sought to coordinate regulatory arrangements with their trading
partners, requiring the existence of a competent authority to oversee the application
of various regulations.
In addition to the strict import procedures emerging out of country regulations, the
trade impact is worsened due to SPS implementation issues in the form of violation
of WTO SPS agreement further throwing challenge for an exporter. The case
evidences collated out of in‐depth interactions with the Indian FFV exporters across
various states in the country, as stated below, highlights some of these export
challenges.
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Case 5.2: MRLs issues: violation of Article 3.1, 3.3 and 3.4 of WTO SPS agreement
Article 3.1, 3.3 and 3.4 of WTO SPS agreement states that the member countries to the
extent possible shall follow international standards as listed by CODEX or IPC,
guidelines, and recommendations in establishing SPS measures. However, the
agreement also states that countries can establish their own standards, the only
condition being that the standards/regulations should be based on Science: regulations
governing animal and plant health and food safety shall be based on scientific evidence
leading to lack of harmonization: Articles 2.2, 3.3 and 5.2.Utilizing the latter, countries
have been fixing their own MRL standards creating a wide divergence on the
maximum residue limits that each of these countries have set for same chemical
/same product. Indian farmers must comply with the MRLs of several countries,
which may also vary from year to year thus hampering this export opportunity.
In order to understand this variability across different export markets, the data on
maximum residue limits set by 25 different countries across different pesticides for
the same FFV has been analysed.
Table 5.9 below explains a case evidence of such a variation across pesticides levels
in case of grapes. Total number of pesticides used in grapes is 19 as listed below.
Codex Alimentarius, a body developed jointly by FAO and WHO responsible to
harmonise these pesticides standards across various WTO member countries.
Although it is not mandatory for countries to follow the Codex standards, the very
fact that WTO SPS agreement allows countries to fix up their own standards has
caused a trade impact for the exporters from developing countries including India.
As can be seen very clearly from the table, while developing countries including El
Salvador and Malaysia completely are in line with the codex standards, however
developed markets of US and EU deviates from the established codex standards.
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Table 5.9: Maximum Residue Levels (MRLS) for Grapes across countries
Codex US EU El Salvador Mexico Malaysia
24 D 0.1 0.1 0.05 0.1 0.1 0.1
Azinphos Methyl 1 4 0.05 1 4 1
Bifenazate 0.7 0.75 0.01 0.7 0.75 0.7
Boscalid 5 3.5 EU 5 3.5 5
Carbaryl 5 10 0.05 5 10 5
Clofentezine 1 1 0.02 1 1 1
Cyprodinil 3 2 EU 3 2 3
Dicloran 7 10 EU 7 10 7
Ethepon 1 2 1 1 2 1
Fenarimol 0.3 0.1 0.3 0.3 0.1 0.3
Fenbutatin Oxide 5 5 2 5 5 5
Fenhexamid 15 4 5 15 4 15
Inorganic Bromide 20 20 0.05 20 20 20
Malathion 5 8 0.5 5 8 5
Metalaxyl 1 2 2 1 2 1
Methomyl 5 5 0.05 5 5 5Thiophanate Methyl 1 5 0.1 1 5 1
Triadimefon 0.5 1 2 0.5 1 0.5
Trifloxystrobin 3 5 5 3 2 3Source: Author’s compilation from Country websites stricter than CODEX less stringent than CODEX follows Codex standards
Moreover in case of EU it is only in case of 2 pesticides out of 19 in which EU is
following the harmonized standards. Else in 60% cases the stringency levels of EU
standards are much higher than those established by codex. Moreover in most of the
cases these stricter standards are not backed up by sufficient scientific information.
Estimation of Trade impact: Country wise
In order to capture these variations across different countries and across different
markets, divergence indexes6 were estimated through the calculation of the
percentage shift/deviation of the country standard with the corresponding codex
6 Divergence Index of a pesticide/product/country= (Country st. ‐‐‐ Codex st.)/Codex st. *100
162 | P a g e
standard across pesticides for each FFV. The divergence index with negative values
indicating that the country has announced a stricter standard as compared to codex
value; were identified. Frequency analysis was done to understand how many
number of times the country had established a stricter standard vis‐a‐vis Codex
standard. While Annexure 5.2 compiles the estimation of these divergence indexes,
table 5.10 explains the country‐product situation clearly.
Table 5.10: Frequency of Negative values of Divergence Index across export markets
US EU Japan SouthEast Asia Tomato 11 24 4 74 Okra 3 3 1 6 Apple 14 25 5 64 Cucumber 7 32 4 33 Banana 3 8 N.A N.A Potato 8 23 N.A N.A Mango 0 0 0 7 Source: Author’s calculations on the basis of country regulations Note: Product wise breakup of freq. of (ve) Divergence Indexes of individual South East Asian countries
Tomato : Malaysia (7), Thailand(2), Vietnam(7), Indonesia (57), Singapore(1)
Okra : Indonesia(5), Malaysia(1)
Apple : Thailand(3), Singapore(9),Indonesia(52)
Cucumber : Malaysia(1), Singapore (3), Indonesia(29)
Similar to that of grapes as seen in the case above, the country wise trade impact is
visible maximum in case of EU amongst developed markets wherein MRL levels
established by European Food Safety Authority were found much stricter than
codex (highest frequency of –ve divergence index values) in case of almost all the
FFV. MRL levels of Japan were found much relaxed and hence of lower trade concern.
Apart from the developed countries, it was surprising to note that even the
developing country standards were higher than codex. While Middle Eastern
countries and SAARC countries more or less followed codex standards, these
deviations against codex were witnessed maximum in case of South East Asian
countries specially in case of tomatoes (74 times) and apples (64 times). Amongst
the South East Asian countries, Indonesia turned out to be the strictest market for
apples, tomatoes and cucumber.
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It is seen that regulation of these standards differs across different markets
resulting into different level of stringency. In order to capture this variation across
markets, analysis based of secondary literature were substantiated through sample
surveys conducted at firm level wherein firms were asked to rate markets by the
perceived ‘trade restrictiveness’ of food safety standards, taking into account the
level and stringency of standards as well as their experience with the enforcement
methods and compliance costs with (5) as most difficult and (1) as least difficult.
Figure 5.11: Exporter’s responses of the stringency levels of export markets
The assumption that these high frequency of (‐ve) divergence indexes of the export
market resulted into trade restrictions was proven by the fact that European
markets were rated as the most “trade restrictive market” (80.8% of respondents
rating “5” i.e most stringent). The fact that none of the existing export markets for
our FFV completely follow codex standards across all pesticides/all product
categories and thus hampering the export opportunity gets proven by the absence
of rating “1” i.e “least trade restrictive” across 93 respondents dealing in different
products catering to different export markets.(Figure 5.9). Middle Eastern countries
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which have been following the codex standards to a relatively large extent were
considered as least trade restrictive.
Apart from the variations in the Maximum Residue levels for pesticides across
export markets, there were other dimensions which defined the stringency levels of
SPS regulations. These dimensions as identified through review of literature were (i)
phytosanitary certificate (ii) microbial contamination test (iii) traceability
requirement (iv) GAP/environmental plan for farms (v) social welfare and (vi)
packaging specificity.
Phytosanitary certificate is a mandatory requirement almost across all the export
markets. Microbial contamination test is a legal requirement across developed
markets alone. Requirement to follow Good Agricultural Practices (GAP)7 is again
strictly enforced in the developed markets of USA, EU and Japan as compared to
Middle East and South East Asia.
Growing array of private standards has brought forth the emergence of certain
social standards. Consumers in the developed countries are increasingly becoming
aware on issues like ethical treatment, fair trade, involvement of CSR activities by
the company, no discrimination on the grounds of sex, religion, nationality etc.
leading to certain certification processes like “fair trade standards” and “SA‐8000”,
labor standards etc. The details of these standards are described in chapter VI.
Certain other issues that are acting as major consideration for Indian exporters of
FFV are the difference in sampling requirements, identification and marking,
labeling and packaging requirements in most of the developed markets.
7 GAP focus on the best practices to be used for producing agricultural products to ensure the quality and safety of the final product. GAPS are the guidelines, which ensure that all agricultural practices, in particular pest and disease control, are in accordance with Integrated Crop Management (ICM) and Integrated Pest Management (IPM) practices.
Identification and Marking requirement of EU
Decision 97/129/EC establishes the basis for the numbering and abbreviation system and lists the materials that are subject to the identification system. Identification marks may be inserted in the center or below a graphical symbol that identifies the packing as being reusable or recoverable. The numbers to be applied are: 1‐9 (plastic), 20‐39 (paper and cardboard), 40‐49 (metal), 50‐59 (wood), 60‐69(textiles), 70‐79(glass) and 80‐99 (composites).
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In developed countries, regulatory systems increasingly require that safety
assurance actions be documented internally by the company and externally by
government agencies. For example, the European Union has introduced mandatory
traceability for all food products.8
Supermarket have frequently moved faster in the direction of certification and
traceability requirements than government programs, leading to a complex
interaction of public and private requirements for food producers and suppliers.
In recent years the standards are also evolved for packaging materials for fresh and
processed horticultural goods. Some countries have also given much greater
attention to managing food safety and plant health risks by adopting a range of
8 In a guidance document, the Commission explains that the traceability provisions of Regulation EC/178/2002 do not have an extra‐territorial effect outside the European Union. It further explains that the importer is responsible for compliance with article 18 and that “since the EU importer shall be able to identify from whom the product was exported in the third country, the requirement of Article 18 and its objective is deemed to be satisfied” (from the European Union’s legal point of view, the requirement for traceability is limited to ensuring that businesses are at least able to identify the immediate supplier of the product in question and the immediate subsequent recipient) The guidance document recognizes, however, that “it is common practice among some EU food business operators to request trading partners to meet the traceability requirements and even beyond the “one step back‐one step forward” principle.
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measures, including outright banning of products (or suppliers), specifying the
conditions under which products must be produced and/or the characteristics of
the end product, or mandating labeling and other information requirements.
Considering the difference in the regulatory structures of the food safety agencies
across export markets, respondents were asked to rate the markets on the basis of
the identified dimensions defining SPS.
Figure 5.12: Exporter’s responses of the stringency levels of SPS dimensions
Source: Exporter’s responses
Phyto‐sanitary certificate received highest rating in USA (Mean =4.93) followed by
Japan (Mean=.4.81) and SEA (Mean=4.68). This relative importance of phyto
sanitary regulations in USA is clearly brought out by the case evidence stated below.
Case evidence 5.3: Phytosanitary Regulations Shape FFV Trade Patterns in USA
Megan Romberg & Donna Roberts (2008)
Increased trade helps meet U.S. consumers’ growing demand for a variety of fresh
fruit and vegetables throughout the year. ERS calculates that the import share of
0
1
2
3
4
5
6
EU Japan USA Middle East SEA
Phytosanitary certificate
MRL tolerance
Traceability
Microbial Contamination Test
GAP/Environmental plan for farms
Social Welfare
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domestic consumption of fruit and nuts has grown over the past 25 years from 10 to
35 percent for fruit and nuts and from 5 to 15 percent for vegetables.
To reduce the risk of inadvertent entry of pests and diseases that could harm
agriculture, public health, or the environment, imports of these products were
regulated by USDA’s Animal and Plant Health Inspection Service (APHIS).
Phytosanitary Regulation of the Entry of Fresh Fruits and Vegetables into the United
States, a data set on the ERS website, identifies the countries, under USDA
phytosanitary rules, that were eligible to export fresh fruit and vegetables to the
United States. The data set includes data on the absolute and relative importance of
these countries in international production and trade, individually and overall. For
example, the 19 countries eligible to export apples to the United States account for
17 percent of world apple production and 33 percent of exports.
The data set also includes the development status of export‐eligible countries, along
with the ranking of each commodity in U.S. production and disappearance (a proxy
for consumption) data. For instance, 55 countries were eligible to export bananas to
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the United States, 48 of which were low‐ to middle‐income nations. Bananas rank
23rd in U.S. fruit production and 1st in per capita availability.
Having access to information on countries that are currently eligible to export fresh
fruit and vegetables to the United States lays the foundation for better
understanding of trade patterns and can underpin analyses of the market effects of
potential changes in phytosanitary import rules.
Countries Must Petition To Gain Access to the U.S. Market
Agricultural products are imported into the United States only after successfully
completing USDA’s approval process. After a country petitions USDA to allow
importation of a specific commodity, APHIS conducts a risk assessment to identify
the economic and environmental damage pests associated with the commodity
might cause if the pests were to enter the United States. No import is risk free, but
APHIS may recommend that the commodity be allowed to enter if certain steps are
followed to reduce pest risk to acceptable levels. In these cases, APHIS works with
the exporting country to develop a plan outlining the procedures and treatments
required as a condition of commodity entry into the United States.
A recent example of a country that completed this process was India, which received
authorization to export fresh mangoes to the United States. The APHIS risk
assessment examined the potential economic and environmental impact of 20 pests
associated with mangoes from India. APHIS concluded that irradiating mangoes
could reduce the risks to negligible levels, so India is now one of the 17 countries
eligible to export this fruit to the United States. Five of the world’s top 10 mango
producers, including China, are not yet eligible to export to the United States.
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Phytosanitary Standards Limit Exports from Some Developing Countries
A number of developing countries face obstacles in complying with stringent
phytosanitary standards, but many are successful. While all developed countries are
eligible to export both onions and tomatoes to the United States, among developing
countries, 61 percent are eligible to export onions and 25 percent are eligible to
export tomatoes. Other countries do have problems, either with pests, or a lack of
technical capacity to address the pest issues. Various multilateral and national
institutions are seeking to assist these countries in overcoming these obstacles.
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The case evidence from economic research service of USDA clearly brings out the
rationale of phytosanitary regulations as most stringent in case of USA. However in
case of mango exporters, these responses took a lower rating thus bringing down
the mean values to 4.93. MRL tolerance levels which were found most critical as per
the estimated divergence indexes above were substantiated by the exporters
response rating highest criticality in European countries (Mean=4.66) followed by
USA (Mean=4.15) and South East Asia (3.59), Indonesia being responsible to a much
larger extent. (Table 5.11)
One of the striking combinations enhancing the trade impact of these standards was
the fact that the country which had expressed relaxation in one SPS dimension was
found stricter in the other. For instance, Japan on one hand relaxed the MRL levels
as compared to EU and SEA (Mean (Japan, MRL)= 2.23) however it has strictly enforced
the requirement of traceability (Mean=4.1). Thus this results into the loss of trade
opportunity for an Indian exporter in all of these export markets for one reason or
the other.
Table: 5.11: Mean values of exporter’s responses on SPS dimensions
PC MRL tolerance Traceability MCT GAP SW PS
EU 4.18 4.66 3.55 2.6 2.24 3.61 2.83
Japan 4.81 2.23 4.1 2.59 1.93 3.87 3.18
USA 4.93 4.15 3.46 2.67 1.79 4.1 2.73
Middle East 3.96 1.12 2.27 2.02 2.68 0 3.1
SEA 4.68 3.59 1.44 2 2.68 0 1.54 PC : Phyto sanitary certificate MCT : Microbial Contamination Test GAP : Good Agricultural Practices SW : Social Welfare PS : Packaging specificity
Table 5.12 substantiates these responses as per the treatment of these SPS
dimensions in country regulations. The treatment was divided into five major
categories (A) countries where these dimensions were legally mandated and strictly
enforced (B) legally mandated and spot/sample enforcement (C) legally mandated
yet minimal enforcement (D) not legally mandated and (E) not applicable.
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The enforcement of these standards was found most strict in European markets
(highest frequency of respondents marking “A”), followed by USA and Japan. While
consumer awareness on social standards was seen gearing up in developed markets
although not mandatory, exporters witnessed a complete absence of these
standards in the Middle East and South East Asian markets.
Table 5.12: Country regulations on SPS dimensions
Compliance Requirement EU Japan USA Middle East South East AsiaPhytosanitary certificate A A A A A MRL Tolerance A A A C C Traceability D D D E E Microbial contamination test B B B D D GAP/Environmental plans for farms A A A D D Social Welfare D D D E E Packaging Specificity A B B C C
A: Legally mandated and strict enforcement B: Legally mandated and spot/sample enforcement C: Legally mandated yet minimal enforcement D: Not legally mandated E: Not applicable
Thus this case evidences highlight the trade impact for an Indian exporter in three
different ways (i)firstly, the variation in standards across the export market adds to
the cost of compliance to individual country standards (ii) secondly, considering the
poor awareness level and lack of government support towards dissemination of
such information, the possibility of import detention in the export markets increases
and lastly (iii)thirdly, variation in stringency levels across markets results into the
loss of trade opportunities in almost all of these markets on account of one reason
or the other.
Estimation of Trade impact: product wise
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In order to estimate the trade restrictiveness caused due to SPS measures across
various product categories, the co‐efficient of variation for each pesticide across all
export markets was calculated. It was assumed that higher is the variation in these
standards across the export markets, more challenging it became for the exporter
both in terms of awareness as well as cost incurred towards compliance. Once these
cv values for each pesticides for each individual product categories were calculated
a frequency distribution of Co‐efficient of Variation for each fruit and vegetable was
done as shown in figure 5.10 below.
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Figure 5.13: Frequency distribution of Coefficient of Variation for FFV
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The trade impact on the basis of this calculation was considered highest in those
FFV where the range of these CV values were found to be high indicative of high
variations in accepted limits (MRL levels) across markets and the mode of the
estimated CV values. As can be seen in figure 5.13 above, the range of CV values for
tomatoes were highest (Range=0‐6, Mode=1), followed by apples (Range=0‐5,
Mode=1). In case of grapes, although the range was lesser (Range =0‐1) the mode
value of 0.8 was attributed to the chemical named “Chlormequat chloride” (CCC)
indicating highest sensitivity of this chemical for exports of grapes.
This high mode value attributed to CCC indicated highest sensitivity for this
pesticide across various export markets thus required enough notice period in case
the countries changed their standards. This falls under transparency norms of WTO
SPS agreement. Violation of these norms by any of the export markets results into
huge trade loss by the partner countries not only in the form of export bans in the
country of violation but also as a loss of credibility in other export markets as
happened in case of Indian grapes explained through the case evidences stated
below.
Case 5.4: Violation of WTO SPS agreement on Transparency: case of rejections of Indian grapes
“Articles 7 and Annex B, Also G/SPS/7 on Transparency: notification and access to
documentation, further elaborates the commitment from member countries on
identification of authority responsible for making notifications to the WTO and ensuring
transparency obligations are met on an ongoing basis under (a) Annex B.5.(b) and Annex
B.10”.The transparency timelines as decided by WTO SPS agreements are given in
figure 5.14. However, it has often been observed that there is absence of information
and lack of transparency on the procedural norms and regulations of various
countries regarding specifications as well as methods of sampling, inspection and
testing. New Regulations are brought out and implemented without even giving the
producers in the exporting country a chance to get familiar with these.
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Grape exports from India suffers loss of Rs 250 crore
Grape exporters from India faced a loss of an estimated Rs. 273 crore as European
authorities had rejected consignments from India over the use of a chemical to
preserve the fruit. According to exporters, as many as 2,600 containers worth
around Rs 273 crore were stuck at ports in Europe. Grape exporters from
Maharashtra, especially from Nashik, Pune and Sangli, which are major grape
growing and exporting districts in the state, suffered the losses. States like
Maharashtra, Andhra Pradesh and Karnataka are the major exporters of grapes and
in order to keep the grapes fresh, chlormequat chemical was used as a preservative.
The CCC is not a banned growth hormone and hence was in use since ages by the
grape farmers in India. A list of 97 preservatives to be used was given by the grape
buyers in European countries. The European Union countries revised these import
norms for chemical residue in grapes in December last year. As per the new norms,
0.05 milligram per kilogram is the new permissible residue level for farmers
exporting to EU countries as against the earlier limit of 1.6 mg per kg.
In December, 2009, these countries had warned farmers not to use chloromacvat,
but till then, the preservative was used and the fruit had nearly ripened. Some
farmers came to know about the changed norms only when their containers were
stopped at various ports in Europe. The state exported 46,628.46 tonnes of grapes
in 3,750 containers. The first 700 to 800 containers were accepted by the UK and
Russia and received better prices. The Netherlands and Germany had refused to
accept the fruit after the chemical was detected. The consignment sent to Europe
was rejected and it had been lying there for the last two‐and‐a‐‐half months
Therefore, the remaining grapes were sold at an average price of four euro per kilo.
The importers chose to sell grapes at such lower prices to control the damage. The
stock was also being disposed of by burying the grapes in big pits and the cost was
borne by the exporters. Grape producers have now asked the Centre to intervene
and ensure they at least get the production and carting charges.
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Case 5.5: After effects of loss of credibility
The export rejections of grapes from India in the European market took place in the
month of December 2009. However the after effects were carried forward for the
year 2010. As depicted in the chart below Indian exporters of grapes have faced the
RASFF notifications from EU markets almost every day during the month of May ‐
July 2010. Countries which had raised these alarms were Hungary (twice), Lithania
(5 times), and Slovenia (twice), Chez republic (twice) followed by Germany and
Austria.
Product to be withdrawn from the market 1
Distribution restricted to notifying country 2
Possible withdrawal from the market 3
Product to be re dispatched 4
Product on the market. Reinforced checking 5
No stock left 6
Product already consumed 7
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The exporters amongst the respondents who had faced these issues were:
Sl. no Name of Exporter/organization Region 1 Namdhari’s Fresh Bangalore 266 Mahagrapes (65 export consignment of it’s members) Pune 6782 Grapes Exporters Association of India (15 consignments) Nasik 83 R.A. Impex Mumbai 84 Ashvina Trading (sister concern of R.A.Impex) Mumbai 85 CK Exports Mumbai 86 Glory Trade Wing Mumbai Source: Author’s compilation on the basis of interaction with exporters
Case 5.6 Discrepancies in the action taken across same EU country and also across different EU markets leading trade loss
for Indian exporters
Table 5.13 describes the type of control/ action recommended in various EU
countries for the case of pesticide named chlormequat chloride found in Indian
consignments of grapes. The countries and the respective actions taken have been
arranged in the ascending order of the pesticide content found in the export
consignment of Indian grapes.
Table 5.13: Cross country comparison of type of control: case of Chlormequat chloride (mg/kg) in grapes (details in Annexure 5.3)
Sr. No
RASFF Date
Country Reason for RASFF
Type of control by EU
1 08/06/2010 Austria 0.124 Distribution restricted to notifying country 2 21/05/2010 Slovak Republic 0.174 Product to be re dispatched 3 01/06/2010 Slovenia 0.19 Product on the market. Reinforced checking4 25/05/2010 Lithuania 0.20 Withdrawal from the market 5 08/06/2010 Lithuania 0.21 No stock left 6 01/06/2010 Slovenia 0.24 Product on the market. Reinforced checking7 07/07/2010 Czech Republic 0.24 Product already consumed 8 07/07/2010 Czech Republic 0.249 18/05/2010 Lithuania 0.24 Distribution restricted to notifying country 10 12/07/2010 Czech Republic 0.25 Product already consumed 11 20/05/2010 Lithuania 0.35 Possible withdrawal from the market 12 11/05/2010 Lithuania 0.37 Product to be withdrawn from the market13 27/05/2010 Hungry 0.97 14 10/05/2010 Hungry 1.00 15 19/05/2010 Germany 1.28 Distribution restricted to notifying country
Source: Author’s compilation as per RASFF notifications, 2011
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An analysis of the type of control brings out the following discrepancy:
i. In case of Slovak Republic, where this pesticide level was found to be
0.174mg/kg, the action suggested was “product to be re‐dispatched”,
however for a higher content of 0.19mg/kg, the product was allowed to be
placed on the market.
ii. In case of Lithania, rapid alerts were raised five times during the span of
three months. The RASFF notification raised on 20th May 2010 wherein the
pesticide content was found to be 0.35 mg/kg, the action taken by the
country was “withdrawal from the market”. This was followed by the alert
raised five days later on 25th May 2010, where in the level in Indian grapes
was found to be 0.20mg/kg. Despite such major difference between the
pesticide levels, this consignment also was placed asked to be withdrawn
from the market. However, one surprising feature was that on the alert
raised almost one month later on 8th June 2010 where in this level was much
lower than 0.35 i.e 0.21mg/kg, the product was consumed and no stock was
left.
iii. A cross country analysis of the same issue highlighted the fact that, when this
level was 0.24 for Slovenia higher than 0.21mg/kg; the product was asked to
be sent for reinforced checking. Further while levels of 0.20 in Lithania
initiated a withdrawal, the product was consumed in Czech Republic despite
a higher content on 0.24.
iv. Even with same levels of 0.24 mg/kg, product has reinforced checking in
Slovenia while it is consumed in Czech Republic.
v. Germany depicts a higher value of tolerance wherein the distribution
restricted to notifying country is maintained at the level of 1.28 while this
level is just 0.24 in case of Lithuania.
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Case 5.7 Importance of reputation and the risks of disguised
trade protection
Reputation in the observation and compliance with the regulations and standards is
extremely important. If the importers discover deficiencies in a product originating
from a specific country in their random inspection, they may put ban on imports of
that product from that country. While the SPS measures are meant to protect health
and life of human, animals and plant, the experience shows that the discovery of a
case of deficiency in compliance may be used as an excuse for banning imports from
a country. This has been the case with okra exports wherein repeated rejections in
the markets including Middle East may lead to ban of okra exports from India to
these markets in near future. (APEDA)
Case 5.8: Violation of Article 6: Disease free areas … adaptation of SPS measures to regional conditions,
Article 6 of WTO SPS agreement demands the adaptation of SPS measures to the 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 has to demonstrate (reasonable access to be given for inspection/testing)
Most of the exporters had witnessed the violation of this article. SreeNanda exports
having its branch in Azadpur Mandi, New Delhi as well as J&K has traditionally been
an apple exporter to Australia. In 2008, Bio security Australia (BA) banned imports
of apples from countries where firelight was present. SreeNanda exports contended
that firstly commercially packed apples were not the pathway for fire blight.
Secondly, in November 2003, Australia had lost the case with Japan on the same
issue due to the absence of scientific justification. Thirdly, while fireblight was
present in some cases from apples originating from Himanchal Pradesh in India, the
presence of fireblight in regions like J&K with low temperatures was not possible.
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Hence the import bans, if applied should be region specific instead of banning the
country altogether leading to a financial burden to the exporters.
Case 5.9: Loss of trade due to strict country regulations: case of strict packaging requirements in EU
Case 10: Lucre International, Mumbai has been exporting oranges to Malaysia and
Seychelles until 2009. After attending ANUGA trade fair in Oct 2009 in Germany,
company decided to expand its business into orange juice in European market as
well. However the company was unable to do so due to the strict packaging norms
laid by EU. (Table below)
Articles Lead (Pb) Cadmium Cd)
Articles which cannot be filled and articles which can be filled of which the internal depth does not exceed 25 mm
0.8 mg/ dm2 0.07 mg/ dm2
All other articles which can be filled 4.0 mg/l 0.3 mg/l Storage vessels having a capacity of more than three liters 1.5 mg/l 0.1 mg/l
Source: Centre for promotion of imports from developing countries [www.cbi.eu]
Case 5.10: Strict Conformity Assessment Issues: case of Desai fruits, Gujarat
Several conformity assessment issues have the effect of restricting trade as
can be seen in the case of Desai fruits above. These included:
Excessive costs levied for testing ‐ for small developing country exporters these are a significant barriers;
Moreover the foreign importer in Germany warned the Lucre international which used Biosphenol A in coatings for food contact materials (inner linings of can). On the basis of Annex II of Directive 2002/72/EC, Bisphenol A is allowed to be used provided that the migration limits are respected since use of Bisphenol A is perceived as sensitive issue in EU.
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Location of testing facilities including testing being done only at single/limited centre(s) (Mechanical grading done only in three states in India)
Limited validity of certificates, requiring re‐testing with the attendant costs; Procedures involving site/ factory visits by the certifying authorities – both the
time taken and costs involved act as hindrances
Case 5.11: Loss due to unjustified rejection & destruction
of consignments
Health Authorities in certain importing countries have recently started destroying
the contaminated/ damaged consignments instead of returning them to the
exporting countries as requested by the exporters/importers. The decision
regarding destruction of a consignment is often not a correct decision and is also not
justified. It is necessary to involve the exporting country in such decisions of
destruction for the following reasons:
(i) The consignments found contaminated in the importing country may
need to be brought back to enable the competent authority to re‐test
them and ascertain whether the consignments were contaminated or not
as certified. And if contaminated examine the cause and take immediate
corrective measures to control/eliminate its recurrence.
(ii) Destruction of a consignment leads to wastage of a large amount of
money as some cases of contamination can be taken care of through
reprocessing.
(iii) Sometimes the importing country adopts different methods for sampling
and testing and also testing for parameters/contaminants, which are not
notified in their standards, which at times become reasons for rejections.
(iv) In certain cases the importing country may have higher standards than
those followed by the country of export. The returned consignments
could be utilised in domestic trade/ purposes. It may be pointed out that
a country can fix standards lower than, say Codex.
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(v) Sometimes a product is rejected in one port and accepted in another port
of the same market.
(vi) Sometimes a product is rejected based on a national standard by a buyer,
and it is accepted after price discounts; this shows that at times standards
are used primarily to depress prices by the buyer.
It may also be noted that Codex has brought out a guideline for the exchange of
information between countries on rejection of imported foods (CAC/GL‐25‐97)
wherein the standard provides for destruction of the consignment, retesting of the
consignment, re‐export of the consignment to countries which state in advance that
they are prepared to accept the consignment knowing that it has been refused entry
elsewhere
5.3 Trade diversion effect of SPS standards
Various implementation issues in SPS agreement and deliberate attempts by the
developed countries towards violation of these agreements results into trade
diversion effect wherein an exporting firm due to its inability to comply to the
frequently changing regulations is forced either to shift to a newer market or
diverse into the exports of newer products.
Figure 5.15: Export diversification matrix during inability towards SPS compliance
OPND: Old Product New Destination NPOD: New Product Old Destination NPND: New Product New Destination
OPOD: Old Product Old Destination
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This trade diversion effect has been quite visible in case of banana exports from
India wherein during the initial years of WTO SPS implementation, India was able to
export to Russia and Germany. However, due to increased regulations in Germany
during 1998 and 1999, there has been a complete absence of these markets as
trading partners for India. (Table 5.14)
The banana trade in these markets was thereafter dominated by high quality
bananas originating from countries like Ecuador, Costa Rica, Columbia and
Guatemala.
Table 5.14: Shift in export markets for Indian banana (19952010)
1995 1997 1999 2001 2005 2007 2009 2010 Russia Germany UAE UAE UAE UAE UAE UAE Netherlands USA Saudi Saudi Nepal Saudi Saudi Saudi Qatar Qatar Qatar Kuwait Saudi Kuwait Bahrain Kuwait Nepal UAE Bahrain Netherlands Qatar Nepal Kuwait Iran Bahrain Nepal Oman Oman Bahrain Bahrain Qatar Bahrain
This high probability of shift into newer markets due to loss of export opportunities
in the existing markets on account of strict food safety regulations has also been
substantiated through the results of the frequency analysis conducted to understand
the percentage of respondents not been able to comply with the changed standard
and used exit strategy through either product diversification or market
diversification. Out of 93 respondents interviewed across various states, almost
60% of the respondents have shifted into newer markets instead of investing
towards compliance to remain in the existing market thus evaluating their
preference to use exit strategy over compliance.
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However, even if the exporting firms wanted to diversify into newer markets, the
variations in the standards across markets made this shift unprofitable forcing
many small and medium firms run out of export business.
Case 5.12: Variation in labeling and packaging requirements
across markets
A Ganapati” trader Pvt. Ltd was trying to explore other rich markets of China and
Japan. The company planned to minimize the risk by dividing its exports to both
these markets simultaneously. However this was not found possible and profitable
considering the difference in labeling requirements between EU, Japan and China.
Japanese labeling law demands labeling to be strictly mentioned in Japanese
language and in font size of minimum 8 point. These strictness of Japanese labeling
and packing specificity is apparently proven by the fact that mean of exporters
responses for packaging specificity (Mean=3.18) has been highest in case of Japan
(Table 5.11). The current stock of the company as of now has the labeling in English
and may or may not be 8 point. Also targeting parallel to both Japan and China did
not seem viable considering the requirements from China demanding a tamper‐
resistant, bilingual label should be on the outside of each carton involving the
additional cost of changing the entire labeling investing on translation and re‐
printing. For similar reasons the company did not find it viable to explore even
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neighboring markets of Pakistan since Pakistan regulation demands that the
packing must not contain any word or inscription of a religious connotation that
may offend religious sentiments of any community in Pakistan. Considering the
name of the company as “Ganapati” traders Pvt. Ltd, the company loses the
possibility of venturing into Pakistan market as well until the time it reregisters
itself with a different non religious name adding to the cost.
Table 5.15 further elaborates the differences in the labeling requirements across the
export markets increasing the financial burden of cost of complying and also
reducing the possibilities of shift between the markets at times of SPS emergencies.
Table 5.15: Comparative analysis of labeling requirements across various export markets Developed export
markets Developing Countries as export markets
Spain Japan Middle East (Oman & Kuwait) South East Asia (Vietnam)
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Imported products with tag in English will be allowed subject to the addition of a tag or sticker in Spanish before the product is offered in the market. This additional tag must atleast contain expiration date, lot number, sanitary registration code, list of ingredients and the name of the importer reading “Importado por…” ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ Labels containing words, pictures or graphic representations are not allowed. The solid waste management regulation determines that every label must promote recycling, recuperation or resuse of the package or container.
Japanese labeling law demands the labeling to be mentioned in Japanese language and in font size of minimum 8 point.
OS 58/1995 and Oman Ministerial Decree No 74/2000 define Oman’s labeling requirements. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ Oman requires Arabic language in labeling. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐Products shipped in bulk should be accompanied with small easy to handle samples for possible laboratory verification. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐Dates must be engraved, embossed, printed or stamped directly onto the original labeling at the time of primary packaging using indelible ink. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ Stickers with date stamps imprinted are not acceptable. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ Bar coding is not permitted in lieu of P/E dates. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐The declaration of the shelf life should comply with OS 246/1993.
As per the decision no 178/1999/QD‐TTg of August 30, 1999 of Prime minister, Vietnam. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ The labeling would mandatorily require Vietnamese language. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ The names of the goods shall be inscribed in letters or a height not shorter than the half (1/2) of the highest letter on the goods label. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐Measuring units used to denote the quantity of goods are lawful measuring units of Vietnam. If another system of measuring units is applied, the co‐efficients for converting such system into the S.I system of measuring units must be inscribed. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐The quantity shall be inscribed on the position below the PDP with an area to 30% of that of the PDP and the height equal to about 1/3 (one third) of that of the PDP. The letters and numeral used to inscribe the quantity shall be lined up in parallel with the packing’s bottom.
Source: Author’s compilation
It is surprising to note that there is a huge variation in these standards not only in
the developed countries but also across developing country markets. As can be seen
in table above there is a huge difference between the labeling standards across
Unique specifications even in developing countries reduces the export opportunities In case of Vietnam, measuring units used to denote the quantity of goods are lawful measuring units of Vietnam. If another system of measuring units is applied, the co‐efficients for converting such system into the S.I system of measuring units must be inscribed. The quantity shall be inscribed on the position below the PDP with an area to 30% of that of the PDP and the height equal to about 1/3 (one third) of that of the PDP. The letters and numeral used to inscribe the quantity shall be lined up in parallel with the packing’s bottom.
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markets. It becomes mandatory for the Indian exporter of FFV to develop country
specific labels in their respective official languages (Spanish in Spain. Japanese in
Japan, Arabic in Middle East and Vietnamese in Vietnam)
Apart from the difference in the language, the difference also persists in the style of
representation in the labels. In Oman the labeling of ingredients should be in
descending order of proportion, while in Japan it is in descending order of weight
percentage. Labeling of food additives are allowed in descending order of weight on
a separate line in Japan while no such specifications mentioned in Middle East.
While in case of Vietnam, measuring units used to denote the quantity of goods are
lawful measuring units of Vietnam.
Labels containing words, pictures or graphic representations are not allowed in
Spain while no such requirements are specified under JAS law in Japan. Spanish
regulations further specifies that when the product is small in size and it is not
possible to show all the information required, such information must be presented
in a larger package that contains several units of products. This shift from smaller
package to larger size enhances the cost burden to the exporter. The solid waste
management regulation determines that every label must promote recycling,
recuperation or resuse of the package or container.
OS 58/1995 and Oman Ministerial Decree No 74/2000 defines Oman’s labeling
requirements. Oman requires Arabic language in labeling. Products shipped in bulk
should be accompanied with small easy to handle samples for possible laboratory
verification. Dates must be engraved, embossed, printed or stamped directly onto
the original labeling at the time of primary packaging using indelible ink. Stickers
with date stamps imprinted are not acceptable. Bar coding is not permitted in lieu of
P/E dates. The declaration of the shelf life should comply with OS 246/1993. These
specifications are extremely peculiar to the Middle Eastern markets.
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Various requirements for marketing a product in different markets prove to be
cumbersome and onerous to developing country exporters. These requirements
include detailed labeling requirements with extensive product/ content description.
Such labeling requirements become a hindrance especially if the product is being
exported to different countries each with different regulations.
Case 5.13: Frequent changes in labeling requirements
Moreover frequent change in the labeling regulations in the target market further
enhances the cost burden for an exporter. An analysis of frequency of change in the
labeling regulations in EU on “authorization of certain health claims made on foods
and referring to the reduction of disease risk and to children’s development and health”
depicts that this regulation have been changed four times within the duration of two
months. Out of the four changes made, three of them fell into the same category of
health claim.
Commission regulation (EU) Effective from Category
Commission regulation (EU) NO 957/2010 of 22nd Oct 2010 3rd Nov 2010 Iron, Iodine, bifid bacteria
Commission regulation (EU) NO 958/2010 of 22nd Oct 2010 3rd Nov 2010 Health Claim Commission regulation (EU) NO 1162/2010 of 9th Dec 2010 30th Dec 2010
Commission regulation (EU) NO 1161/2010 of 9th Dec 2010 30th Dec 2010 Commission regulation (EU) NO 1161/2010 of 13th Dec 2010 31st Dec 2010 Source: EU commission directives on Labeling, 2010
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The above analysis thus elaborates the extent of impact of frequently changing
regulations across various export markets on trade patterns, directions of trade and
profitability of the exporting firms compelling them to run out of export business
during the time of SPS emergency. Chapter VI further explains the actual cost
incurred by the government at the macro level as well as exporters at individual
level towards complying with the SPS measures emerging in both developed as well
as developing markets. The chapter also explains the implementation issues in SPS
agreement which further enhances the cost thus a cause of concern for the future
prospects of exports of fresh fruits and vegetables from India.
New EU food labelling laws will cost food firms (By Anne Bruce, 08Jul2011)
New Food Information Regulation (FIR) is expected to be published in the EU official journal in October 2011. Food firms will have three years thereafter to adopt the new rules. The European Commission (EC) will also submit a report within two years to examine the possibility of extending mandatory countryoforigin (COOL) labelling to FFV used as a composite ingredient in processed food. Labels on packaged food across Europe will have to give energy, fat, saturated fat, carbohydrate, sugar, protein and salt levels in a tabular form, expressed on a per 100g or 100ml basis. The new rules state that information on allergens must also be given for nonpackaged foods. The estimation of the price for changed packaging comes out to around £7,000 per product, in addition to training costs for staff. This would create extra costs for food manufacturers in developing countries, without delivering additional food safety benefit for consumers.
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Details of the Respondents towards Primary Data collection
Tariff lines affected by the growing array of food safety standards in the
international market as identified in chapter 4 includes following tariff lines under
fruits and vegetables.
This analysis based on the secondary literature has thereafter been substantiated by
the results of the primary survey wherein the in‐depth interviews with exporters
dealing into these fruits and vegetables have been conducted. Based on the
production potential of these FFV, the regions were shortlisted.
For instance, almost 77% apples come from Jammu & Kashmir followed by
Himanchal Pradesh (16%); similarly 33% of mangoes produce in the country are
produced in Andhra Pradesh followed by 29% from Uttar Pradesh and 13% from
Karnataka. Maharashtra is the highest grower of Banana and Grapes in the country
contributing approx. 28% and 53% respectively followed by Gujarat for Banana and
Karnataka for grapes. Therefore across all fruits under consideration, major states
which are common across are Maharashtra, Gujarat, Karnataka and Andhra Pradesh.
Similar is the case for okra, onion, tomato and potato. Therefore respective states on
the basis of their production strength were taken.
080300 Bananas
080430 Pineapples fresh
080720 Papaws (papayas) fresh
080450 Mangoes and mangosteens
080810 Apples fresh
080610 Grapes fresh
080510 Oranges fresh or dried
080440 Avocados fresh or dried
080540 Grapefruit fresh or dried
Fruits
070200 Tomatoes fresh or chilled
070700 Cucumbers & gherkins fresh
070190 Potatoes fresh or chilled other than seeds
071220 Onions dried
070320 Garlic fresh or chilled
Okra
Curry Leaves
Vegetables
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Major Fruit producing states in India (2010)
Major Vegetable producing states in India (2010)
Source: Source: Horticulture Database 2010, National Horticulture Board [www.nhb.gov.in]
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Therefore the states taken into consideration for the in‐depth interviews and
surveys in select fruits and vegetables category were on the basis of the figure above.
These states has been divided into four major regions (i) North: Delhi & NCR,
Himachal Pradesh, J&K, UP (ii) South: Kerala, Karnataka, Andhra Pradesh and Tamil
Nadu (iii) East: West Bengal and Assam (iv) West: Gujarat& Maharashtra. Breakup
of the respondents across these four regions was as follows:
Maximum number of respondents was from the port cities of Mumbai and Kandla
giving highest percentage to Western zone. Due to close proximity from the place of
study, the next zone covered under the study was Himachal and Delhi/NCR.
Exporters in Delhi were located at Asia’s biggest fruit mandi of Azadpur. Close
interviews were conducted for respondents of Delhi and Himachal. However,
telephonic interviews were conducted with respondents from locations other than
north. This dominance of the respondents from the western region had increased
the frequency of exporters dealing in mango (31%) followed by grapes (19%),
pomegranate (14%) and apples(11%) in case of fruits and okra (21%) and curry
leaves (17%) and gherkins (10%) in case of vegetables.
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Considering that there was the probability of the fact that the ability of the firm to
comply to the changing food safety requirements in the global markets would in
some way depend on the age and size of the firm. Hence, the respondents were
divided on the basis of their age as well as the size. Since fruit and vegetable sector
in India is majorly dominated by the unorganized sector depicted by the
predominance of respondents in the category of 5‐10 years. Most of the fruits and
vegetable exporters across the country run in the capacity of small, medium and
semi medium. This is substantiated by only 7% of the total respondents as large
firms.
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After capturing the responses from the Indian FFV exporters, series of buyer studies,
involving representative importers, brokers, retailers, and consumers of selected
fresh fruits and vegetables in the United States, European Union, Japan, Middle East
and South East Asian countries have been undertaken. Responses have been
collected initially through email correspondence followed by telephonic interviews
with few selected respondents in each country. The distribution of the respondents
is divided into three group of countries (i) Developed countries: USA, EU, Japan and
Australia (ii) Developing countries: Middle East and South Asia and (iii) Least
Developing countries (Bangladesh and Lao PDR). Distribution of respondents in
these three categories is as follows:
Developing countries group includes two groups Middle East (UAE, Egypt, Australia
and Hungary) and South East Asia (Vietnam, Thailand, Malaysia, Cambodia,
Philippines, Singapore)
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Group of Least developed countries included respondents from Bangladesh and Lao
PDR.
Finally in India multiple regulations for food have enacted at different points of time
to supplement each other. This incremental approach has led to incoherence and
inconsistency in the food sector regulatory scenario. The food sector in India has
been governed by a multiplicity of laws under different ministries. It is assumed that
the perceptions across these policy makers vary resulting into poor effectiveness of
governmental actions taken towards assisting exporters in this regard. In this
regard in‐depth interactions were undertaken with almost 25 governmental officials
from various facets right from FSSAI to Ministries to Industry Associations and also
NGOs and academicians and researchers contributing towards policy making.
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Annexure 5.1: RASFF notifications for Indian Fruits and vegetables (Jan to April 2011)
Fruit/Vegetable Chemical Quantity Gherkins (1) Triazophos Fresh curry leaves (20) Triazophos and oxydemeton‐methy
Carbendazim and Triazophos Dichlorvos 0.3 ppmTriazophos 9.4 ppm
2.051.4 mg/kg
Bifenthrin 0.24 ppmMonocrotophos 0.164Chlorpyrifos 0.68
0.16Endosulfan 0.276Bifenthrin 0.136Carbendazim 0.156Ethion 0.31Hexanconazole 0.10Tebuconazole 2.2 Profenofos 2.3
Egg plant(1) Triazophos Grapes (12)
Chlormequat chloride 1.00 mg/kg0.37 mg/kg0.24 mg/kg1.28 mg/kg0.35 mg/kg0.174 mg/kg0.20 mg/kg0.97 mg/kg0.19 mg/kg0.21 mg/kg0.124 mg/kg0.25 mg/kg
Thompson seedless grapes (2) Carbendazim 0.4 mg/kgMethomyl 0.28 mg/kg
Okra(7)
Monochrotophos 1.1 0.7 mg/kg0.13 mg/kg
Triazophos 0.35Acephate 0.11
0.13Thiamethoxam 0.16 mg/k
Pomegranates (1) Phenthoate 0.60 mg/kgChili pepper (1) Triazophos 7.03, 8.10
ppm Drumsticks (1) Monocrotophos 1.02 mg/kg
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RASFF notifications for Indian Fruits and vegetables (20082010)
Commodity Notifying country
RASFF Date Reason for Rapid Alert Type of control by EU
Almond kernels
Italy 30.09.2008 Aflatoxin B1 21.6, 4,1 total 25.7, 4, 1ppb
Border rejection product to be destroyed
Egg Plant 10/2/2010 Triazophos in Ashoka mixed Aubergines (egg plant)
Product to be withdrawn
Cucumber Netherlands
6/1/2010 Triazophos in parval Consignment released no stock left no action taken
Curry leaves 27/04/2009 Pesticide residues in curry leaves Triazofos 10 mg/kg
No stock left of the product
12/5/2009 Chlorpyriphos 1.7 mg/kg triazophos 40.7 mg/kg acetamiprid 2.6 mg/kg, thiamethoxam 0.25 mg/kg and clothianidin 0.48 mg/kg
No stock of product left
29/05/2009 Methamidophos 0.4 mg/kg, acephate 1.6 mg/kg, triazophos 55 mg/kg, thiamethoxam 1.8 mg/kg, clothianidin 1.6 mg/kg and propargite 3.1 mg/kg
Product to be destroyed
10/6/2009 Chlorpyriphos 0.82 mg/kg and triazophos 38 mg/kg
Product to be destroyed
10/6/2009 Chlorpyriphos 0.59 mg/kg and triazophos 41 mg/kg
Product to be destroyed
6/1/2010 Triazophos and oxydemeton‐methyl
Consignment released no stock left no action taken
Germany 23/12/2009 Triazophos Consignment released ‐product already consumed ‐ informing recipient(s)
14/01/2010 Border rejection product to be destroyed
22/01/2010 Border rejection product to be destroyed
10/3/2010 Product to consumed
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Commodity Notifying country
RASFF Date Reason for Rapid Alert Type of control by EU
Curry paste 30.7.2008 Migration of DEHP‐di 2‐ethylhex phthalate 1082mg/kg from lid of glass jars containing vindaloo
Distribution on the market possible/ Product to be withdrawn
30.7.2008 Migration of DEHP‐di 2‐ethylhex phthalate 477mg/kg from lid of glass jars containing tikka
Distribution on the market possible/ product to be withdrawn
Dried raisins Czech Republic
10/2/2010 Unsuitable organoleptic characteristics of dried raisins with raw material from India
Product to be withdrawn
Czech Republic
30/03/2010 Undeclared sulphite Product to be withdrawn
Czech Republic
29/04/2010 Undeclared sulphur dioxide 42.2 mg/kg
Product to be withdrawn
Grapes Slovenia 1/6/2010 Chlormequat chloride 0.19 mg/kg
Product on the market. Reinforced checking
1/6/2010 Chlormequat chloride 0.24 mg/kg
Product on the market. Reinforced checking
Slovak Republic
21/05/2010 Chlormequat chloride 0.174 mg/kg
Product to be re dispatched
Netherlands
16.5.2008 Methomyl 1.4 mg/kg Prophenophos 1.4 mg/kg
Consumer complaint/ product consumed, no action taken
21/05/2010 Methomyl 0.28 mg/kg No stock left. Product consumed
Lithuania 11/5/2010 Chlormequat chloride 0.37 mg/kg
Product to be withdrawn
18/05/2010 Chlormequat chloride 0.24 mg/kg
Distribution restricted to notifying country
20/05/2010 Chlormequat chloride 0.35 mg/kg
Possible withdrawal from the market
25/05/2010 Chlormequat chloride 0.20 mg/kg
Withdrawal from the market
8/6/2010 Chlormequat chloride 0.21 mg/kg
No stock left
Hungry 10/5/2010 Chlormequat chloride 1.00 mg/kg
Product to be withdrawn
27/05/2010 Chlormequat chloride 0.97 mg/kg
Product to be withdrawn
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Germany 19/05/2010 Chlormequat chloride 1.28 mg/kg
Distribution restricted to notifying country
Czech Republic
7/7/2010 Chlormequat chloride 0.24 mg/kg
Product already consumed 7/7/2010 Product already consumed 12/7/2010 Chlormequat chloride
0.25 mg/kg Product already consumed
Belgium 22.4.2008 Methomyl 0.94 mg/kg Consumer complaint/ products already consumed/reinforced checking
Austria 19.6.2008 Prophenophos 2.8 ppm/kg in Seedless
Consumer complaint, product already consumed, no stock left in market
8/6/2010 Chlormequat chloride 0.124 mg/kg
Distribution restricted to notifying country
Labeling UK 28/09/2009 Illegal import, non compliant labeling, labeling absent/incomplete/incorrect
Product to be withdrawn
Okra 25/03/2009 Pesticide residue monocrotophos 2.39 mg/kg
Product to be detained
30/04/2009 Endosulfan 0.09 mg/kg and monocrotophos 0.02 mg/kg
Product consumed recipients to be informed
30/04/2009 Endosulfan 0.1 mg/kg ‐ and monocrotophos 0.24 mg/kg
Product consumed recipients to be informed
2/7/2009 Pesticide residues in okra monocrotophos 0.6 mg/kg (also cypermethrin 0.04 mg/kg; endosulfan 0.3 mg/kg; profenofos 0.01 mg/kg; propargite 0.07 mg/kg detected)
Distribution restricted to notifying country no stock left
2/7/2009 Pesticide residues in okra Monocrotophos 2.1 mg/kg (also cypermethrin 0.04 mg/kg; endosulfan 0.3 mg/kg; profenofos 0.01 mg/kg; propargite 0.07 mg/kg detected)
Distribution restricted to notifying country no stock left
Italy 17/02/2009 High residues of Triazofos
Border rejection. Product to be re‐despatched
Germany 13.5.2008 Triazophos 0.39 mg/kg Border Rejection
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19.5.2008 Methamodiphos 00.021 mg/kg acephate 0.11 mg/kg triazophos 0.087 mg/kg
Border control random sample. Distribution possible
30.7.2008 Methamodiphos 0.044 mg/kg acephate 0.81mg/kg triazophos 0.26 mg/kg
Product distributed to Poland
7/7/2009 Pesticide residues in okra triazophos 0.18 mg/kg
Border rejection product detained
25/11/2009 Triazophos in fresh Product already consumed Okra 10/12/2009 Triazophos Product already consumed
‐ no stock left reinforced checking
8/7/2010 Monochrotophos 1.1 in Distribution restricted Onion powder Germany 18/11/2009 Salmonella enterica Distribution on the market
possible Orange drink UK 9.1.2008 Too high content of
colour E 110 sunset yellow FCF 67 mg/L in
No distribution product destroyed
Pomegranates Lithuania 14.5.2008 Ethion 0.14 mg/kg Border RejectionSource: RASFF notifications 2008‐11
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Annexure 5.2: Comparison of CODEX standards on Maximum Residue Levels of pesticides visàvis other countries
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Annexure 5.3
RASFF Notifications against Indian grapes during May to June 2010
Sr. No
RASFF Date
RASFF No. Country Reason for RASFF Type of control by EU Action
1 10/05/2010 2010.0566 Hungry Chlormequat chloride 1.00 mg/kg in grapes
Product to bewithdrawn from the market
RASFF advised action by Slovak authorities as distributed by them to Hungry.
2 11/05/2010 2010.0577 Lithuania Chlormequat chloride 0.37 mg/kg in grapes
Product to bewithdrawn from the market
RASFF advised action by the Netherlands authorities as distributed by them to Hungry.
3 18/05/2010 2010.0609 Chlormequat chloride 0.24 mg/kg in grapes
Distribution restricted to notifying country
Contact point in the Netherlands was requested by Lithuania to provide details of the product origin. Trader Frankart & King Netherlands.
4 19/05/2010 2010.0615 Germany Chlormequat chloride 1.28 mg/kg in grapes
Distribution restricted to notifying country
Contact point in UK was requested by Germany to provide outcome of the investigation. The producer Purkar Agro Farm and trader JO Sims Ltd. UK.
5 20/05/2010 2010.0618 Lithuania Chlormequat chloride 0.35 mg/kg in grapes
Possible withdrawal from the market
Contact point in the Netherlands was requested by Lithuania to provide details of the product origin. Trader Lehman & Troost BV Netherlands.
6 21/05/2010 2010.0625 Slovak Republic
Chlormequat chloride 0.174 mg/kg in grapes
Product to be re dispatched
Contact point in the Netherlands was requested by Slovak Republic to provide details of the product. Trader Lehman & Troost BV Netherlands.
7 25/05/2010 2010.0644 Lithuania Chlormequat chloride 0.20 mg/kg in grapes
Withdrawal from the market
Contact point in the Netherlands was requested by Hungary to provide details of the product origin. Trader Jaguar, the fresh company BV Netherlands.
8 27/05/2010 2010.0667 Hungry Chlormequat chloride 0.97 mg/kg in grapes
Product to bewithdrawn from the market
Contact point in the Netherlands was requested by Hungary to provide details of the product origin. Trader AJB
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Fruitbox Netherlands9 01/06/2010 2010.0691 Slovenia Chlormequat chloride
0.19 mg/kg in grapes Product on the market. Reinforced checking
Product distributed to wholesaler Hofer, d.o.o. Slovenia by Austrian trader/broker Melchart GmbH
10 01/06/2010 2010.0693 Chlormequat chloride 0.24 mg/kg in grapes
Product on the market. Reinforced checking
Product distributed to Slovenia by the Netherlands trader/broker Hoofdman‐Roodzant B.V.
11 08/06/2010 2010. 0731 Lithuania Chlormequat chloride 0.21 mg/kg in grapes
No stock left M/s. Ezee Fruits India produce trader by the Netherlands to the Lithuania
12 08/06/2010 2010. 0733 Austria Chlormequat chloride 0.124 mg/kg in grapes
Distribution restricted to notifying country
M/s. Vilas Vishnu Sinde produce. Products distributed to Austria.
13 07/07/2010 2010.0909 Czech Republic
Chlormequat chloride 0.24 mg/kg in grapes
Product already consumed
Information disseminated to recipients.
14 07/07/2010 2010.0910 Chlormequat chloride 0.24 mg/kg in grapes
Product already consumed
Information disseminated to recipients.
15 12/07/2010 2010.0943 Chlormequat chloride 0.25 mg/kg in grapes
Product already consumed
Information disseminated to recipients.
Source: RASFF notifications, European Food Safety Authority (EUFSA)