Implementing SPS Measures to Facilitate Safe Trade

May 1998 the Agreement on the Application of Sanitary and Phytosanitary Measures the ("SPS Agreement") entered into force with the establishment of the World Trade Organization on 1st January 1995. It concerns the application of food safety and animal and plant health regulations. The increasing attention on trade facilitation as a means to stimulate economic growth and competitiveness has generated a renewed focus on SPS measures, how they are applied to imports, exports and transit goods, and the extent to which, if any, these measures unnecessarily increase the costs of doing business.

Problem: How do you ensure that your country’s consumers are being supplied with food that is safe to eat "safe" by the standards you consider appropriate? And at the same time, how can you ensure that strict health and safety regulations are not being used as an excuse for protecting domestic producers?

The Agreement on the Application of Sanitary and Phytosanitary Measures sets out the basic rules for food safety and animal and plant health standards. It allows countries to set their own standards. But it also says regulations must be based on science. They should be applied only to the extent necessary to protect human, animal or plant life or health. And they should not arbitrarily or unjustifiably discriminate between countries where identical or similar conditions prevail.

Member countries are encouraged to use international standards, guidelines and recommendations where they exist. However, members may use measures which result in higher standards if there is scientific justification. They can also set higher standards based on appropriate assessment of risks so long as the approach is consistent, not arbitrary. The agreement still allows countries to use different standards and different methods of inspecting products.

All countries maintain measures to ensure that food is safe for consumers, and to prevent the spread of pests or diseases among animals and plants. These sanitary and phytosanitary measures can take many forms, such as requiring products to come from a disease-free area, inspection of products, specific treatment or processing of products, setting of allowable maximum levels of pesticide residues or permitted use of only certain additives in food. Sanitary (human and animal health) and phytosanitary (plant health) measures apply to domestically produced food or local animal and plant diseases, as well as to products coming from other countries.

Protection or Protectionism?

Sanitary and phytosanitary measures, by their very nature, may result in restrictions on trade. All governments accept the fact that some trade restrictions may be necessary to ensure food safety and animal and plant health protection. However, governments are sometimes pressured to go beyond what is needed for health protection and to use sanitary and phytosanitary restrictions to shield domestic producers from economic competition. Such pressure is likely to increase as other trade barriers are reduced as a result of the Uruguay Round agreements. A sanitary or phytosanitary restriction which is not actually required for health reasons can be a very effective protectionist device, and because of its technical complexity, a particularly deceptive and difficult barrier to challenge.

The Agreement on Sanitary and Phytosanitary Measures builds on previous GATT rules to restrict the use of unjustified sanitary and phytosanitary measures for the purpose of trade protection. The basic aim of the SPS Agreement is to maintain the sovereign right of any government to provide the level of health protection it deems appropriate, but to ensure that these sovereign rights are not misused for protectionist purposes and do not result in unnecessary barriers to international trade.

The SPS Agreement, while permitting governments to maintain appropriate sanitary and phytosanitary protection, reduces possible arbitrariness of decisions and encourages consistent decision-making. It requires that sanitary and phytosanitary measures be applied for no other purpose than that of ensuring food safety and animal and plant health. In particular, the agreement clarifies which factors should be taken into account in the assessment of the risk involved. Measures to ensure food safety and to protect the health of animals and plants should be based as far as possible on the analysis and assessment of objective and accurate scientific data.

International Standards

The SPS Agreement encourages governments to establish national SPS measures consistent with international standards, guidelines and recommendations. This process is often referred to as "harmonization". The WTO itself does not and will not develop such standards. However, most of the WTO’s member governments (132 at the date of drafting) participate in the development of these standards in other international bodies. The standards are developed by leading scientists in the field and governmental experts on health protection and are subject to international scrutiny and review.

International standards are often higher than the national requirements of many countries, including developed countries, but the SPS Agreement explicitly permits governments to choose not to use the international standards. However, if the national requirement results in a greater restriction of trade, a country may be asked to provide scientific justification, demonstrating that the relevant international standard would not result in the level of health protection the country considered appropriate.

Governments and the Public Participation

The transparency provisions of the SPS Agreement are designed to ensure that measures taken to protect human, animal and plant health are made known to the interested public and to trading partners. The agreement requires governments to promptly publish all sanitary and phytosanitary regulations, and, upon request from another government, to provide an explanation of the reasons for any particular food safety or animal or plant health requirement.

All WTO Member governments must maintain an Enquiry Point, an office designated to receive and respond to any requests for information regarding that country’s sanitary and phytosanitary measures. Such requests may be for copies of new or existing regulations, information on relevant agreements between two countries, or information about risk assessment decisions. Whenever a government is proposing a new regulation (or modifying an existing one) which differs from an international standard and may affect trade, they must notify the WTO Secretariat, who then circulates the notification to other WTO Member governments (over 700 such notifications were circulated during the first three years of implementation of the SPS Agreement). Alternatively, notifications can be requested from the Enquiry Point of the country which is proposing the measure.

Governments are required to submit the notification in advance of the implementation of a proposed new regulation, so as to provide trading partners an opportunity to comment. The SPS Committee has developed recommendations on how the comments must be dealt with. In cases of emergency, governments may act without delay, but must immediately notify other Members, through the WTO Secretariat, and also still consider any comments submitted by other WTO Member governments.

Strengthen collaboration between SPS and other Border Management agencies, within and across Borders

Encouraging strong dialogue and coordination between SPS authorities and with other border agencies (including customs) helps to ensure that all the agencies involved in facilitating trade, at or behind the border, understand the complementarities in their respective roles. Improving communication and trust is an important first step to identify collaborative opportunities to facilitate safe trade. For instance, there may be potential to harmonize information requirements, link SPS authorities into IT solutions to improve border management, implement joint inspections or, in cases where SPS authorities are unable to be physically present at all border points, enable other border agencies to check SPS documents and follow-up as appropriate with the relevant SPS authorities. Enhancing dialogue among SPS and border management agencies in neighbouring countries is also recommended to identify additional opportunities to share information, speed up trade and ultimately lower costs, without reducing health protection.

Promote greater use of equivalence and Unilateral/ Mutual recognition

Increased use of equivalence and unilateral/mutual recognition is encouraged to harmonize SPS measures, requirements and procedures with trading partners, and reduce duplicative SPS controls in exporting and importing countries, wherever possible. For instance, if the safety of imported food products is confirmed by test results issued by accredited foreign laboratories (public and/or private), the value added of requiring importers to have the same tests performed by a laboratory (accredited or not) in their own country is questionable.

Prioritizing SPS Investments for Market Access

Developing countries face considerable demands to enhance their SPS capacity in the context of broader domestic economic and social policy objectives, including the desire to boost agri-food exports. In most cases, the resources available to governments from national budgets, donors and/or private businesses are insufficient to meet all of the identified needs, especially when prevailing export-oriented SPS capacity is weak. This requires hard choices to be made between competing investments that may all be likely to bring appreciable benefits, for example in terms of export performance, agricultural productivity and/or health protection. The Standards and Trade Development Facility (STDF) has developed a framework to help inform and improve SPS planning and decision-making processes. The framework known as “Prioritizing SPS Investments for Market Access” (P-IMA) aims to inform decisions on where to invest in SPS capacity building.

Promoting Trade for Development in Least Developed Countries (LDCs)

Food and agricultural exports (primarily in unprocessed form) often trigger SPS compliance challenges. Adequate capacity to control SPS risks is crucial for the LDCs to gain and maintain access to foreign markets. Repeated rejections of shipments for non‑compliance with SPS requirements result in stricter scrutiny by importing countries, increased transaction costs, damaged reputation and a loss of confidence in the exporting country’s competent authority. A strong SPS control system is also an essential asset to protect a country’s productive capacity, biodiversity and ecosystem services from the entry, spread and establishment of invasive alien species. Increased incidences of pests and diseases negatively impact agricultural production, the effects of which can sometimes be long-lasting on the country’s ability to export.

Building the capacity of veterinary services, plant health services and food safety agencies normally requires substantial investments. In addition to facilitating trade and boosting economic growth, enhancing SPS capacity is likely to have a number of other positive domestic spin-offs, including on agricultural productivity, environmental health, public health and food security. For instance, the consequence of disease can be difficult to bear, especially in developing countries, not only in terms of social impacts, but also in terms of the economic burden resulting from straining health care systems and lost working days. The starting point for capacity‑building efforts should be to enable SPS authorities to effectively implement international standards. Making use of international standards increases the cost-effectiveness of SPS measures by reducing the need for costly risk assessments. Enhancing SPS capacity is also a global public good, since food safety and animal and plant health risks, as well as the benefits of risk control are increasingly interconnected across national boundaries.

Consumers in all countries benefit. The SPS Agreement helps ensure, and in many cases enhances, the safety of their food as it encourages the systematic use of scientific information in this regard, thus reducing the scope for arbitrary and unjustified decisions. More information will increasingly become available to consumers as a result of greater transparency in governmental procedures and on the basis for their food safety, animal and plant health decisions. The elimination of unnecessary trade barriers allows consumers to benefit from a greater choice of safe foods and from healthy international competition among producers.

Specific sanitary and phytosanitary requirements are most frequently applied on a bilateral basis between trading countries. Developing countries benefit from the SPS Agreement as it provides an international framework for sanitary and phytosanitary arrangements among countries, irrespective of their political and economic strength or technological capacity. Without such an agreement, developing countries could be at a disadvantage when challenging unjustified trade restrictions. Furthermore, under the SPS Agreement, governments must accept imported products that meet their safety requirements, whether these products are the result of simpler, less sophisticated methods or the most modern technology. Increased technical assistance to help developing countries in the area of food safety and animal and plant health, whether bilateral or through international organizations, is also an element of the SPS Agreement.

Exporters of agricultural products in all countries benefit from the elimination of unjustified barriers to their products. The SPS Agreement reduces uncertainty about the conditions for selling to a specific market. Efforts to produce safe food for another market should not be thwarted by regulations imposed for protectionist purposes under the guise of health measures. 

Importers of food and other agricultural products also benefit from the greater certainty regarding border measures. The basis for sanitary and phytosanitary measures which restrict trade are made clearer by the SPS Agreement, as well as the basis for challenging requirements which may be unjustified. This also benefits the many processors and commercial users of imported food, animal or plant products.

Many developing countries have already adopted international standards (including those of Codex, OIE and the IPPC) as the basis for their national requirements, thus avoiding the need to devote their scarce resources to duplicate work already done by international experts. The SPS Agreement encourages them to participate as actively as possible in these organizations, in order to contribute to and ensure the development of further international standards which address their needs.

One provision of the SPS Agreement is the commitment by members to facilitate the provision of technical assistance to developing countries, either through the relevant international organizations or bilaterally. FAO, OIE and WHO have considerable programmes to assist developing countries with regard to food safety, animal and plant health concerns. A number of countries also have extensive bilateral programmes with other WTO Members in these areas. The WTO Secretariat has undertaken a programme of regional seminars to provide developing countries (and those of Central and Eastern Europe) with detailed information regarding their rights and obligations stemming from this agreement. These seminars are provided in cooperation with the Codex, OIE and IPPC, to ensure that governments are fully aware of the role these organizations can play in assisting countries to meet their requirements and fully enjoy the benefits resulting from the SPS Agreement. The seminars are open to participation by interested private business associations and consumer organizations. The WTO Secretariat also provides technical assistance through national workshops and to governments through their representatives in Geneva.

What next?

Enhancing capacities to effectively implement SPS controls and adopting the safe trade solutions outlined above provides an opportunity to reduce trade costs and, importantly, to improve health protection. Authorities responsible for food safety, phytosanitary and veterinary controls are encouraged to reflect further on how they could apply these practices in their own countries. Consulting traders, who need to comply with SPS measures, as well as other border agencies, is strongly recommended. The new WTO Trade Facilitation Agreement has raised awareness about the benefits of facilitating trade, and SPS authorities are encouraged to take advantage of this momentum to promote increased support for SPS capacity building and drive domestic reform efforts.

Implementing SPS measures and facilitating safe trade depends on adequate capacity and resources. Development partners and donors can provide support to enhance SPS capacity in developing countries. Opportunities also exist to leverage additional funds from larger programmes focused on trade facilitation. Many of the services delivered by SPS authorities are global public goods. So while it may be possible to recover some of the costs associated with the provision of SPS services from the private sector, it is essential to ensure sufficient public funding for SPS systems.