SPSBCAR2_ Module2_Theory

UNDERSTANDING SANITARY & PHYTOSANITARY (SPS) AGREEMENT FOR A BETTER AGRIBUSINESS IN CARIBBEAN COUNTRIES. STAGE II

MODULE 2 EQUIVALENCE

COURSE AUTHOR Interamerican Development Bank (IDB) (www.iadb.org), through his Integration and Trade Sector (INT).

COURSE COORDINATOR Interamerican Development Bank (IDB) (www.iadb.org), through his Integration and Trade Sector (INT), the Institute for the Integration of Latin America and the Caribbean (INTAL) (www.iadb.org/es/intal), the Inter-American Institute for Economic and Social Development (INDES) (www.indes.org), the World Customs Organization (WCO) (www.wcoomd.org) and the General Secretariat of Central American Integration (SG-SICA) (http://www.sica.int/).

MODULE AUTHORS Clara Vidal, Lawyer. She is currently a senior analyst at the Office of Multilateral Affairs of the National Agribusiness International Relations, Ministry of Agriculture, Livestock and Fisheries of Argentina. Gustavo Idígoras, General Manager Business Issue Management (BIM).

PEDAGOGICAL AND EDITION COORDINATION The Inter-American Institute for Economic and Social Development (INDES) (www. indes.org), in collaboration with Fundación Centro de Educación a Distancia para el Desarrollo Económico y Tecnológico (CEDDET) (www.ceddet.org).

Copyright ©2016 Inter-American Development Bank. This work is licensed under a Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives (CC-IGO 3.0 BY-NC-ND) (http://creativecommons. org/licenses/by-nc-nd/3.0/igo/legalcode). This document is the intellectual property of the Inter-American Development Bank (IDB). Any partial or total reproduction of this document should be reported to: BIDINDES@iadb.org Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB’s name for any purpose other than for attribution, and the use of IDB’s logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license.

Note that the link provided above includes additional terms and conditions of the license.

The opinions expressed in this publication necessarily reflect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent.

These materials have been revised in light of the ministerial decisions taken in the framework of the 9th World Trade Organization Ministerial Conference held in Bali, Indonesia, in December 2013. The adjustments were made in order to reflect a higher alignment between the course topics and the priorities identified in Bali’s Ministerial Declaration and decisions, where all IDB members participated.

Bali Ministerial Declaration and Decisions

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Table of contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Module Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Learning-Oriented Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 UNIDAD I. EQUIVALENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Learning objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 I.1. Introduction of the Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 I.2. The three sisters´s work on equivalence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 I.2.1. Codex guidelines on equivalence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 I.2.2. OIE provisions on equivalence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 I.2.3. IPPC developments on equivalence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Summary of Unit I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Case study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

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Introduction The SPS Committee define Equivalence as the state wherein sanitary or phytosanitary measures applied in an exporting country, though different from the measures applied in an importing country, achieve the importing country’s appropriate level of sanitary or phytosanitary protection (ALOP). A determination of the recognition of equivalence may be with respect to a specific measure or measures, related to a certain product or categories of products, or on a systems-wide basis.

In this regard, it is important to remember that equivalence must be demonstrated by the exporting country and recognized by the importing country.

Furthermore, provisions on Regionalization, namely Article 6 of the SPS Agreement aims to promote the recognition of pest – or disease – free areas and areas of low prevalence of pest or diseases in order to improve market access possibilities, and avoid unnecessary import bans.

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In this Module, we will provide you with some practical tools to improve comprehension and application of the SPS Agreement provisions on Equivalence and Regionalization. In this regard, we will further develop the Three Sister’s recommended methodologies on these issues and case studies will be explained. To finalize this Module, information on additional training and technical assistance available will be provided, which could be useful in order to enhance countries’ implementation of these provisions.

Now we can start!

Module Objectives Learn about the different provisions developed by the Three Sisters regarding Equivalence and gain insight into the Latin America and the Caribbean cases on this issue.

Learning-Oriented Questions Why is the Three Sisters´ work on Equivalence important?

Which are the main difficulties found when recognizing the Equivalence and what have these organizations recommended on this issue?

How has the recognition been applied in the context of Latin American and the Caribbean countries?

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UNIT I

EQUIVALENCE

Learning Objectives Understand the main concepts of Risk Assessment on Animal Health, Plant Health and Food Safety.

To identify the three parts of the whole process of Risk Assessment.

I.1. Introduction of the Unit This issue has been discussed in the SPS Committee meetings as a regular topic in the agenda. However Member’s notifications on recognition of Equivalence has been limited as only two notifications have been submitted to the WTO on this issue: (i) one from Panama, under the signature G/SPS/N/EQV/PAN/1, and (ii) an other from the Dominican Republic, under the signature G/SPS/N/EQV/DOM/1.

Additionally, it is important to bear in mind that Equivalence has been a topic also addressed by the Three Sisters, who have developed under their specific scope, guidelines to further enhance recognition of equivalent measures between their Members.

In this regard, we will start this section by introducing these guidelines, which can serve as a useful tool for WTO Member’s recognition of the Equivalence.

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IMPORTANT NOTE Codex has developed the “Guidelines for the Development of Equivalence Agreements Regarding Food Import and Export Inspection and Certification Systems” (CAC/GL 34/1999), and additionally, it has adopted the “Guidelines on the Judgement of Equivalence of Sanitary Measures Associated with Food Inspection and Certification Systems” (CAC-GL 53/2003).

Regarding the OIE activities on this issue, the Guidelines on Equivalence were incorporated in the Terrestrial Animal Health Code.

Finally, at the seventh session of the Interim Commission on Phytosanitary Measures held in Rome, Italy, in 2005, the IPPC adopted “Guidelines for the Determination and Recognition of Equivalence of Phytosanitary Measures”, ISPM 24 (2005). Furthermore, the IPPC is currently working in the development of a Review on this issue.

I.2. The three sisters´s work on equivalence I.2.1. Codex guidelines on equivalence

6 I.2.1.1. Guidelines for the Development of Equivalence Agreements regarding Food Import and Export Inspection and Certification Systems These Guidelines (CAC/GL 34/1999) aim at providing practical guidance for governments desiring to enter into bilateral or multilateral equivalence agreements concerning food import and export inspection and certification systems.

Among the recommendations set out in them we can mention the importance that the country initiating discussions towards an equivalence agreement identifies: (i) the type of equivalence agreement proposed; (ii) the product(s) to be covered; (iii) the competent authority or authorities for each product; and (iv) the scope of requirements to be addressed by the agreement (e.g., health and safety, quality assurance systems, labelling, consumer fraud, etc.).

In this regard, a country which receives such an approach should respond in a timely manner and, in the event it has difficulty in responding positively to the approach, the Guidelines encourage to provide a statement of reasons and any relevant recommendations to facilitate the future development of equivalence agreements.

It is also recommended that, as a first step in the consultative process to an equivalence agreement, the importing country should make readily available the texts of its relevant control measures and identify the objectives of these measures.

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Lastly the Guidelines encourage the use of Codex standards, recommendations and guidelines, when developing an equivalence agreement.

I.2.1.2. Guidelines on the Judgement of Equivalence of Sanitary Measures Associated with Food Inspection and Certification Systems In 2003 the Codex Alimentarius Commission adopted the “Guidelines on the Judgement of Equivalence of Sanitary Measures Associated with Food Inspection and Certification Systems” (CAC-GL 53/2003).

These Guidelines recognized that usually importing and exporting countries operate different food inspection and certification systems and, bearing this in mind, an exporting and an importing country may work together to consider the effectiveness of sanitary measures of the exporting country in achieving the appropriate level of sanitary protection of the importing country.

In this regard, these Guidelines provide that the determination of the equivalence of sanitary measures associated with food inspection and certification systems should be based on application of the following principles: a. The importing country has the right to set the level of sanitary protection it deems appropriate in relation to the protection of human life and health. As we have previously learnt this is called the Appropriate Level of Protection, or ALOP. b. The sanitary measure applied in an importing country should in practice achieve the ALOP and the importing country should describe how its own sanitary measure achieves its ALOP. c. An importing country should recognize that sanitary measures different from its own may be capable of achieving its ALOP, and can therefore be found to be equivalent. d. The sanitary measure that the exporting country proposes as equivalent must be capable of achieving the importing country’s ALOP. e. An importing country should, upon request by an exporting country, promptly enter into consultations with the aim of determining the equivalence of specified sanitary measures within a reasonable period of time. f. It is the responsibility of the exporting country to objectively demonstrate that its sanitary measure can achieve the importing country’s ALOP. g. The comparison of countries’ sanitary measures should be carried out in an objective manner. In this regard, the importing country should specify as precisely as possible an objective basis for comparison of the sanitary measures proposed by the exporting country and its own measures. h. Where risk assessment is used in the demonstration of equivalence, countries should strive to achieve consistency in the techniques applied, using internationally accepted methodology where available and taking into account relevant Codex texts.

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i. The importing country should take into account any knowledge and past experience it has of the food inspection and certification systems in the exporting country to make the determination as efficiently and quickly as possible. j. The exporting country should provide access to enable the inspection and certification systems which are the subject of the equivalence determination to be examined and evaluated upon request of the food control authorities of the importing country. k. All judgments of equivalence should consider the means by which that equivalence will be maintained. l. Countries should ensure transparency in both the demonstration and judgment of equivalence, consulting all interested parties to the extent practicable and reasonable. m. An importing country should give positive consideration to a request by an exporting developing country for appropriate technical assistance that would facilitate the successful completion of an equivalency determination.

Apart from these principles, the Guidelines recognize that to facilitate judgement of equivalence between countries and promote harmonization of food safety standards, Codex members should base their sanitary measures on Codex standards and related texts.

8 RECALL Remember that Codex has developed several databases with useful information: (i) The Codex standards Database, (ii) The Codex General Standard for Food Additives (GSFA) Online Database; (iii) The Codex Veterinary Drug Residue in Food Online Database; and (iv) The Codex Pesticides Residues in Food Online Database

I.2.2. OIE provisions on equivalence OIE provisions on Equivalence can be found in Chapter 5.3 of the Terrestrial Code. In this regard, Article 5.3.2 recognizes that the importation of animals and animal products involves a degree of risk to the animal health status of an importing country and thus, a set of recommendations have been developed to assist Member countries to determine whether sanitary measures arising from different animal health and production systems may provide the same level of animal and human health protection.

As the Codex Guidelines explained above, the OIE Terrestrial Code include in its Article 5.3.5, some Principles for the judgement of Equivalence as well.

Moreover, Article 5.3.6 describes the sequence of steps recommended when judging the equivalence. Although the OIE recognizes that there is no single sequence

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of steps which must be followed and that they will generally depend on the circumstances and trading experience, it is recommended that: a. The exporting country identifies the measure(s) for which it wishes to propose an alternative measure(s), and requests from the importing country a reason for its sanitary measure in terms of the level of protection intended to be achieved. b. The importing country explains the reason for the measure(s), in terms which would facilitate comparison with an alternative sanitary measure(s) and consistent with the principles set out in these provisions. c. The exporting country demonstrates the case for equivalence of an alternative sanitary measure(s) in a form which facilitates analysis by an importing country. d. The exporting country responds to any technical concerns raised by the importing country by providing relevant further information. e. Judgement of equivalence by the importing country. f. The importing country notifies the exporting country of its judgement. g. An attempt should be made to resolve any differences of opinion over judgement. h. Depending on the category of measures involved, the importing country and the exporting country may enter into a formal equivalence agreement giving effect to the judgement or a less formal acknowledgement of the equivalence of a specific measure(s) may suffice.

I.2.3. IPPC developments on equivalence I.2.3.1. Guidelines for the Determination and Recognition of Equivalence of Phytosanitary measures In 2005, the IPPC adopted the Guidelines for the Determination and Recognition of Equivalence of Phytosanitary measures (ISPM 24), which describes the principles and requirements that apply for the determination and recognition of equivalence.

In this regard, the standard recognizes some general principles guiding this process: a. IPPC´s contracting parties have sovereign authority to apply phytosanitary measures to protect plant health within their territories and to determine their appropriate level of protection to plant health. Therefore a contracting party has the right to make decisions relating to determinations of equivalence. b. In equivalence evaluations, contracting parties should take into account other relevant principles of the IPPC. c. Assessments of equivalence should be risk-based, using an evaluation of available scientific information, either through a Pest Risk Analysis (PRA) or by eva-

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luation of the existing measures and the proposed measures. In this regard, although the alternative measures need to be examined, a new complete pest risk assessment may not necessarily be required since, as trade in the commodity or commodity class is already regulated, the importing country should have at least some PRA-related data. d. When equivalence of phytosanitary measures is granted for one exporting contracting party, this should also apply to contracting parties with the same phytosanitary status and similar conditions for the same commodity or commodity class and/or pest. It should be recognized that equivalence of phytosanitary measures does not, however, mean that when a specific measure is granted equivalence for one exporting contracting party, this applies automatically to another contracting party for the same commodity or commodity class or pest. e. Contracting parties have obligations under the IPPC to provide and exchange information, which should be made available for equivalence determinations. f. Contracting parties are encouraged to consider providing technical assistance for the development of measures based on equivalence if requested by another contracting party. g. Contracting parties should endeavor to determine the equivalence of phytosanitary measures and to resolve any differences without undue delays.

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Furthermore, this IPPC Guidelines recognize that in some circumstances, where trade is already established between contracting parties, this provides knowledge about and experience with the exporting contracting party’s phytosanitary regulatory systems (e.g. legal, surveillance, inspection, certification). This knowledge and experience should strengthen confidence between parties and assist, if necessary, with the evaluation of an equivalence proposal.

Lastly, it is recalled that the final acceptance of a proposed measure may depend on practical considerations such as availability/approval of the technology, unintended effects of the proposed measure (e.g. phytotoxicity), and operational and economic feasibility.

TIP The IPPC Guidelines also describes in Annex 1 an interactive procedure recommended for assessing phytosanitary measures in order to make a determination as to their equivalence.

I.2.3.2. Ongoing developments at IPPC The IIPC is currently developing further resources on this issue through the elaboration of a Manual named “A Review of the Application of Equivalence between Pest Risk Management Measures”. In it, the issue on Equivalence is broadly discussed, addressing among other aspects: (i) what is and what is not Equivalence, (ii) the impor-

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tance of these kind of agreements, (iii) IPPC related work, and (iv) common practices in plant health.

Moreover, examples on recent developments in agreements on this topic are described, including on the evolution of the MERCOSUR´s process towards recognition of Equivalence. In this regard, it is highlighted that whilst national authorities and systems still exist in MERCOSUR, the plant health systems have essentially been recognised as equivalent, even when the pest status may not be. However, these agreements are based on international standards whenever possible and on mutual understanding of international concepts.

This Review also mention those ISPMs which include reference to pest risk management measures which would be considered to be equivalent. For example, ISPM 28 laid out an international mechanism for the IPPC’s Technical Panel on Phytosanitary Treatments to review proposed treatments. The purpose of the ISPM is for “mutual recognition of treatment efficacy” so that Contracting Parties might “accept equivalent treatments where possible”, without using national or regional resources for each review.

Furthermore, it is highlighted that another listing of equivalent measures appears in ISPM 15, Regulation of wood packaging material in international trade. (FAO, 2009; original version 2002). In this case, individual or groups of measures are considered to be effective against several species of pests, or classes of pests.

Moreover, the IPPC Review also highlights those issues identified on which further clarification or support is needed: (a) Relationship between the level of the risk and the target market country’s ALOP: If alternative measures are proposed, they must close that gap between the estimated level of risk and the ALOP. So, the Review stressed that when analyzing the impact of management measures on pest risk it is important to consider: (i) the level of threat (e.g. pest population or infestation), (ii) the efficacy of the measure(s) as designed (i.e. as it performs under laboratory conditions), (iii) the efficacy of the measure(s) operationally and (iv) the performance of the measure(s) based on implementation or application (how the measure will be implemented, monitored and verified).

In this regard, it is added that the European Food Safety Authority, using the term effectiveness rather than efficacy, also considers (v) how the implementation of the measure will be monitored and verified. (b) Sources of information: Regarding the sources of information of data for evaluation of equivalence, the IPPC Review highlights that the WTO SPS Committee concluded that historic trade and confidence in a trading partners systems are a good basis for judgments on equivalence.

However, the Review highlights that the use of historic trade data for efficacy estimates was questioned by the Technical Panel on Phytosanitary Treatments of the IPPC (TPPT), being identified five difficulties with the use of historic trade figures: The condition of the target regulated article may vary of time; The life stage of the target pest may change over time;

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Environmental conditions critical to treatment efficacy may vary over time; The number of live target organisms infesting the regulated article was unknown at the time; The number of surviving target organisms post-treatment was not determined (with any degree of accuracy). (c) Information requirements: The IPPC Review also stresses that one remaining challenge for National Plant Protection Organizations (NPPOs) requesting recognition of equivalence has been the lack of transparency at to what kind of information will be requested. The guidance included in ISPM 24 and that from ISPM 28 are the first efforts to define exact requirements. In this sense, it is recalled that the costs of obtaining all necessary data may prove prohibitive for the value of the outcome, particularly in the case noted by NPPOs where industry does not take up the alternative measures after negotiations are complete.

Lastly, this Report recognizes that since the endorsement of ISPM 24 in 2005, it is noted a rise in the requests for recognition of equivalence, being the possible drivers for seeking equivalence be related to: loss of pesticides; impact on market quality; and situations in which the existing measure(s) is not reaching compliance levels for some reason that can be addressed by switching approaches.

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SUMMARY OF UNIT I It is important to bear in mind that Equivalence has been a topic also addressed by the Three Sisters, who have developed under their specific scope, guidelines to further enhance recognition of equivalent measures between their Members.

In this regard, these guidelines can serve as a useful tool for WTO Member’s recognition of the Equivalence.

Codex has developed the “Guidelines for the Development of Equivalence Agreements Regarding Food Import and Export Inspection and Certification Systems” (CAC/GL 34/1999), and additionally, it has adopted the “Guidelines on the Judgement of Equivalence of Sanitary Measures Associated with Food Inspection and Certification Systems” (CAC-GL 53/2003).

Regarding the OIE activities on this issue, the Guidelines on Equivalence were incorporated in the Terrestrial Animal Health Code.

Finally, at the seventh session of the Interim Commission on Phytosanitary Measures held in Rome, Italy, in 2005, the IPPC adopted “Guidelines for the Determination and Recognition of Equivalence of Phytosanitary Measures”, ISPM 24 (2005). Furthermore, the IPPC is currently working in the development of a Review on this issue.

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Case study Examples of equivalence – Notifications to the WTO The cases of Panama and the Dominican Republic (regional cases) As we have learnt in the introduction to this Module, only two notifications have been submitted to the WTO on recognition of the Equivalence: (i) one from Panama, under the signature G/SPS/N/EQV/PAN/1, and (ii) an other from the Dominican Republic under signature G/SPS/N/EQV/DOM/1. These two agreements are detailed below, as they can provide useful examples for the recognition of the equivalence. a. The Panamanian case In 2006 Panama and the United States signed an agreement on the recognition of equivalent SPS measures for meat (including but not restricted to meat of bovine animals and swine), poultry and poultry products, and all other processed products (including but not restricted to milk products) for human or animal consumption.

In this regard, the agreement highlights that the United States had provided Panama with technical and scientific information on its sanitary, phytosanitary, and related regulatory systems and that Panama’s Technical Scientific Commission had concluded that the United States sanitary system was equivalent to that of its country.

In the Agreement it is mentioned that recognition was based on, among other elements: (i) information on the United States sanitary system derived from years of accumulated history and experience with United States agricultural imports, (ii) the information on the United States sanitary system already available to Panama, and (iii) the findings after visiting several United States’s agencies responsible for sanitary and phytosanitary matters.

Thus, and as a result of the recognition achieved, both countries agreed that Panama will not require certification of individual shipments nor any product registration, as a condition for the importation from the United States of any processed products.

As mentioned above, this agreement was notified to the WTO under signature G/ SPS/N/EQV/PAN/1. b. The Dominican Republic case The Dominican Republic and the United States signed an agreement on the recognition of the equivalence in 2006. As mentioned in the notification submitted to the WTO (G/SPS/N/EQV/DOM/1) this agreement recognizes that, with regard to the importation into the Dominican Republic of products and by-products of bovine animals, swine and poultry, the Ministry of Agriculture of the Dominican Republic recognizes the inspection system of the Food Safety Inspection Service (FSIS) of the United States Department of Agriculture as equivalent to that of the Dominican Republic.

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Bibliography Legal Texts Agreement on the Application on Sanitary and Phytosanitary Measures (SPS), at http://www.wto.org/english/docs_e/legal_e/15sps_01_e.htm Main documents for consultation Codex’s Guidelines for the Development of Equivalence Agreements Regarding Food Import and Export Inspection and Certification Systems (CAC/GL 34/1999), at http://www.codexalimentarius.net/download/standards/362/CXG_034e.pdf Codex’s Guidelines on the Judgement of Equivalence of Sanitary Measures Associated with Food Inspection and Certification Systems (CAC-GL 53/2003), at http://www.codexalimentarius.net/input/download/standards/10047/CXG_053e.pdf OIE Guidelines on Equivalence, at http://www.oie.int/en/international-standard-setting/terrestrial-code/access-online/?htmfile=chapitre_1.5.3.htm

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The IPPC´s Guidelines for the Determination and Recognition of Equivalence of Phytosanitary Measures (ISPM 24), at https://www.ippc.int/sites/default/files/documents/1323946244_ISPM_24_2005_ En_2011-11-29_Refor.pdf