The rules governing Jamaica's trade can seriously disadvantage local producers. - File MANY BUSINESSES have tried to export goods or services to foreign markets, only to have those goods restrained at ports of entry on the basis of non-conformity with that market's regulations, incurring unplanned costs and delays.
All too often, Jamaican traders are deterred or restricted from trading in export markets due to barriers of various forms, such as quality standards, labelling requirements or technical regulations.
Standards and technical regulations, for products, labour or for the environment, are generally applied to mitigate against health and environmental risks, to prevent deceptive practices, and to reduce transaction costs by providing common reference points for notions of 'quality', 'safety', 'authenticity', 'good practice' and 'sustainability'.
Often considered to be oppressive and onerous, these regulations can have deleterious effects on a business' ability to compete effectively against its foreign competitors.
This is particularly so for developing countries like Jamaica, which face critical challenges to improve domestic production capacity and maintain quality, which are prerequisites for supplying most foreign markets.
Indeed, their negative effect has been so recognised that it is addressed within the multilateral trading system at the World Trade Organisation (WTO). The WTO addresses the question of restrictive barriers to trade through the Technical Barriers to Trade Agreement (TBT) and the Agreement on Sanitary and Phytosanitary Measures (SPS), which seek to limit the abusive uses of standards for protectionist purposes.
TRADE BARRIER PREVENTION
The TBT Agreement seeks to ensure that technical regulations (including packaging and labelling) and procedures used to assess conformity with such regulations are not formulated or applied so as to create unnecessary barriers to trade.
In this spirit the Agreement focuses on three general areas: information exchange, development of regulations and testing. In the area of information exchange, WTO members are required to notify a national enquiry point (generally within the national standards bureau, in our case the Bureau of Standards Jamaica), where interested parties can obtain information on adopted and proposed standards and enquiry points and standards in other markets.
When developing standards, the agreement requires that they be applied in a non-discriminatory manner (i.e. the same requirements for domestic and imported, like products), and that such technical regulations be based on scientific information and evidence.
The TBT Agreement also sets out a "Code of Good Practice" for developing standards and encourages WTO members to apply, wherever possible, internationally recognised standards such as those developed by the International Organisation for Standardisation (ISO).
With respect to testing or conformity assessment, WTO members are encouraged to establish mutual recognition agreements (MRAs) to allow exporters to certify conformity by authorities in the country of origin.
The primary goal of these MRAs is ease of access to foreign markets for private industry. Mutual Recognition Agreements (MRA) talks have really only been taking place on a large scale between Europe and the US as well as countries such as Australia and New Zealand.
The TBT Agreement is said to benefit the market in that it is designed to ensure that both foreign and domestic businesses have the opportunity to participate in the development of national standards and avoid unnecessary disruptions to trade. Notwithstanding the existence of food safety and animal and the hemisphere, some of the SPS Agreement is to use creative means of imposing what are effectively technical barriers to trade.
CITIZEN PROTECTION
The SPS Agreement also increases the transparency of sanitary and phytosanitary measures by requiring every WTO member country to notify other countries of any new or changed SPS requirements which affect trade. One could argue that SPS measures should be consistent internationally as all Governments should provide the same level of health protection to its citizens.
In the Free Trade Area of the Americas (FTAA), these discussions have addressed technical regulations and standards policy for the Hemisphere and negotiations to eliminate barriers to trade in technical regulations and remove duplicative testing and product certification requirements.
Additionally, states have agreed to provide similar information to that of the WTO arrangement regarding adopted and proposed standards, which will be published on the official FTAA Web site.
This information-sharing mechanism certainly enhances these agreements, as business persons are fully aware that, access to up-to-date information on regulations, tariffs and documentation requirements is critical to facilitating speedy business decisions and streamlining commercial transactions.
Notwithstanding the existence of this system at the WTO level and the proposed framework within the region and the hemisphere, some of our trading partners will undoubtedly continue to use creative means of imposing what are effectively technical barriers to trade (TBT).
However, standards and other technical regulations need not be solely to the detriment of business interests, in fact, businesses can avail themselves of a host of options in making standards work for them and their bottom line. They can be used strategically to enhance the competitive position of countries or individual firms. The cost involved in obtaining certification and promulgating industry standards is often daunting.
However, empirical research has proven that benefits will far exceed investment in standardisation in the long run, particularly in light of the challenges of open markets created by trade liberalisation. Generally, many consumers and purchasers continue to believe that international certification such as ISO9000 is synonymous with quality.
STANDARDS NETWORK
At the national level and working within the regional framework, the Bureau of Standards Jamaica has created the Jamaica Standards Network (JSN) comprised of private sector stakeholders to identify areas of national/sectoral interest where Standards and Technical Regulations would be needed.
This group would also participate in the development of Regional and International Standards for these areas, through involvement in ISO Committees. This is in essence, an adoption of the U.S. and Europe model which largely relies on private industry to develop standards for "essential" product requirements.
This is also possible at a regional level, particularly in light of technical and financial resource constraints faced by small individual countries.
In the rules-based environment of international standardisation, smaller countries are better able to benefit if they participate in this process and take the lead in areas where they display competitive advantage.
These may include tourism, food products or intellectual property rights, especially in the field of music and entertainment. With respect to trade in traditional goods, expanding accredited and mutually recognised testing facilities in the region will allow CARICOM exporters to certify conformance with regulations prior to shipment, thereby reducing costs and potential delays at ports of entry.
This is the intent of the Caribbean Regional Organisation for Standards and Quality (CROSQ) which is mandated to ensure the harmonisation of standards and accreditation throughout the region to facilitate freer trade in the upcoming CARICOM Single Market and Economy (CSME).
Developing countries such as Jamaica will have to push for creative, market-driven ways of using standards to the advantage of our manufacturers and exporters if we are to effectively address the challenges of trade liberalisation.
One way of availing ourselves of the benefits of these agreements is for private sector to lobby for the establishment of MRAs with our major export markets.
* Prepared by the Research & Financial Services Department of the Private Sector Organisation of Jamaica.
