Silk Spa Cosmetics in Thailand | SCRIPT Project 2011 by Thai - Italian Chamber of Commerce

The European Unionâ&#x20AC;&#x2122;s TEC II programme for Thailand

Study survey on successful implementation of voluntary and regulated requirements of EU single market available in food, textile, and cosmetics sectors in Thailand This report was written as part of the project: Self Control and third party ceRtIfication; knowledge and application of the key procedure to implement voluntary and regulated requirements of the EU single market and building trust on Thai ProducTs and services with cultural Identity

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This project is funded by the European Union Disclaimer This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of Bioagricoop scrl and can in no way be taken to reflect the views of the European Union.

Study survey on successful implementation of voluntary and regulated requirements of EU single market available in food, textile, and cosmetics sectors in Thailand

Ms. Amalia Rueda Garcia Mr. Giovanni Quaratesi Ms. Kankamon Sincharoen

JUNE 2011

Authors: Ms Amalia Rueda Garcia Mr Giovanni Quaratesi, Thai – Italian Chamber of Commerce Ms. Kankamon Sincharoen, Franco – Thai Chamber of Commerce © June 2011, Rueda Garcia A., Quaratesi G., Sincharoen K.

Acknowledgement: This study is part of the SCRIPT project (Self-Control and third party ceRtIfication; knowledge and application of the key procedure to implement voluntary and regulated requirements of the EU single market and building trust on Thai ProducTs and services with cultural identity; www.script-thai.eu/) funded by the European Union under the “ThailandEC Cooperation Facility- Phase II (TEC II) . The implementation of self-control and third party certification in Thailand inspired by EU approach is the main scope of this project which targets Thai SMEs and local government. Implementation of reliable inspection and certification procedures may play an important role in increasing the Thai export sector’s capacity and open doors to the European single market. The scope of the project covers several sectors including: agro-food, textile and cosmetic. The project implementation is led by Bioagricoop, in cooperation with the Thai-Italian Chamber of Commerce which is the reference partner in charge of the agro-food and textile sectors and the Franco-Thai Chamber of Commerce with direct responsibility for cosmetic products. The project is an extension of the PRo-Gls project (Intellectual Property Right extension & Geographical Indications protection for the benefit of EU-Thailand Trade; http://www.progis.info/). The Pro-GIs project was aiming at contributing to the recognition of Thai GIs products in the EU single market. It was co-implemented by the partnership between the Thai Italian Chamber of Commerce (TICC) and Bioagricoop with the co-operation of the Department of Intellectual Property, Ministry of Commerce, Thailand. Ms. Amalia Rueda Garcia, the main author, would like to thank for the kind cooperation and support of both ThaiItalian Chamber of Commerce and Franco-Thai Chamber of Commerce for gathering primary data and information in Thailand and operators interviews which were conducted in Thai language, Mr. Giuseppe Tomasin, international expert and consultants, for the support given in textile and cosmetic sector and last but not least Mr. Giovanni Galanti, project director, for the important assistance given during this study preparation.

Disclaimer: “This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of Bioagricoop scrl, and can in no way be taken to reflect the views of the European Union

Executive Summary: This study is part of the SCRIPT project (Self-Control and third party ceRtIfication; knowledge and application of the key procedure to implement voluntary and regulated requirements of the EU single market and building trust on Thai ProducTs and services with cultural identity) funded by the EU Under the “Thailand-EC Cooperation Facility- Phase II (TEC II). The scope of the project covers 4 sectors: agro-food as best practices from Pro-Gis, silk, cosmetic products and spa services. The implementation of self-control and third party certification inspired by EU approach in the scope of this project for Thai SMEs and governmental entities can play an important part in increasing the Thai export sector’s capacity and open doors to the European market. The implementation is led by Bioagricoop, in cooperation with the Thai-Italian Chamber of Commerce (TICC) who is in charge of the food and textile sector and the Franco-Thai Chamber of Commerce (FTCC) who is in charge of the cosmetics products and spa services.

The Thai organic sector is one of the fastest growing businesses of the country’s economy. In early 2011, the Ministry of Commerce of Thailand has reaffirmed the country’s commitment to organic agriculture and announced its goal for Thailand to become ASEAN’s Organic Hub within 5 years. The Ministry of Commerce has set the sector’s growth rate at 10% every year and expects the Thai organic sector to achieve 8-9 billion baht of revenue within the next 5 years. The sector receives revenue mainly from the exports of non-processed fresh agricultural products. The use of technology and know-how to add more value to local organic goods is limited. The plan also includes encouraging and supporting the manufacturing sector and groups of farmers to diversify their production towards more food and nonfood such as organic livestock, organic textile, organic resort, hotels and restaurant as well as organic cosmetic and skincare. The aim of this study is to conduct an overview of the most promising regulated and non-regulated voluntary requirements applicable in the EU single market and their adoption experiences in Thailand with the final goal of consolidating the lessons learned and serve as a guide for wider adoption by Thai entrepreneurs. The study covers three sectors: Agro-food, Silk and Cosmetics. For each sector, the study briefly describes the current situation, its contribution to the Thai economy and the trend of its evolution. Moreover each section summarizes the essential information that the researcher retrieved from the interviews regarding the opportunities, challenges and lessons learned through the implementation of voluntary standards. At the end of each sector analysis, a short guideline on how to be certified in one of the major standards has been prepared.

The relevant diffusion among Thai companies of certifications such as GOTS, EU Organic, IFOAM, etc. shows the raising interest of Thai manufacturers in having their goods labeled under international standards. Apart from a few entities that are using the certifications to support the social development of villages where the production takes place, most of the Thai companies choose to apply for European (and Thai) certifications to increase the credibility of their products, to promote the quality of their goods and, most of all, to facilitate the access to export markets.

The group of voluntary standards is very wide and includes voluntary Sanitary and Phyto-sanitary (SPS) standards such as Global Gap, BRC or social standards as Fair trade. However, the present study will focus more on organic/natural and geographical indication standards which are the main target of SCRIPT project. A very quick overview of EU and international standards other than organic /natural and geographical indication and Thai voluntary standards will complete the picture. All the collected information and experiences are intended to serve as a drive force to stimulate further adoption of EU international voluntary standards by showing their applicability in the Thai local context.

Thai companies already holding European Certification and exporting overseas are operating mainly in Agro Food and Textile business. Their recent decision in applying for the respective European certifications is mainly motivated by their will to keep their clients. In Europe, Japan and USA, consumers and businessman are becoming increasingly aware of themes such as pesticides, chemical waste and worker’s rights. For this reason, companies interested in approaching those markets have to carry out recognized certification procedures to ensure adequate standards. The effects of certification on Thai companies are positive with an increase of consumer trust and enquiries resulting, at the end, in an increase of exports and sales. The trend of import of certified products is expected to grow in the midterm as consequence of the requests by the export markets and also the raising awareness over quality issues on the internal market. Although the agro-food companies do not receive direct support under the scope of the SCRIPT project, the study covers this sector in order to make use of the analysis of different levels and types of voluntary international and EU requirements applications in the agro-food sector as leverage to stimulate stakeholders in textile and cosmetic sectors to follow the same approach.

Thai silk represents the country’s history and tradition. The textile sector is approaching all the major international standards such as GOTS for organic textile, EU Ecolabel for environmental responsibility and fair trade standards. The producers see the potential of the market and confirm that the international/ EU standards are important tools to successfully approach the market.

Thai silk, due its unique characteristics and specific manufacturing process makes it very hard to identify on the first place a standard allowing to encompass the various techniques, patterns and decorations of the traditional production centers (often rural villages) around Thailand. Not having many chances to compete on the medium quality market, non-organic mass produced Silk coming from other countries, Thai Silk seems to have a chance to increase its popularity focusing on small, high quality and geographically identified productions. In regards to European certification for the whole traditional Thai silk, producers have first to find the way to include under the same umbrella all the peculiarity of this national product. Certification of Geographical Identity and GOTS may be a potential label to look at to strength the connection between the Thai Silk and the single villages producing it and supporting the idea behind the uniqueness of this product.

The cosmetics sector is another important sector which is growing at a rapid pace in Thailand. Though Thai cosmetic products’ strong point is their natural and herbal base, very few companies (and almost all as subcontractors) are certified as “natural” or “organic” by internationally recognized certification bodies. Bioagricert’s Natural and

Cosmetic is currently the only European label adopted by Thai companies and also the only European certification body present in the country.

Organic Cosmetics have a deep-rooted production tradition in Thailand that presently is hampering to fix a single common standard or procedures able to provide to consumers and international buyers the means to clearly identify products in accordance with quality criteria. The interviewers are companies already producing under organic criteria as subcontractors. At present, all Thai companies are relying on the single certifications of the export destination country. The medium-small size of the Organic Cosmetic companies present in Thailand and the lack of collaboration between them seem to be a limit in the creation of a strong identity for their products, related to the Thai territory. Despite of their generally high quality and good feed-back from consumers, Thai Organic Cosmetics often are commercialized under other brand labels and, as consequence, loose their Thai identity. As well as for the silk, probably the use of Geographical Identity certification, combined with the existing Organic certifications could help this particular product to build a stronger brand, to help consumers to identify Thai products among the worldwide offer and, finally, to support their export to other countries.

All those successful examples suggest that similar processes could be applied to Thai silk and Thai cosmetic. Few pioneer companies hold European Certification in the two above mentioned sectors while none in the SPA services. However, even it is difficult to raise broad conclusions from present state of the art, it is clear that pioneer companies have already recorded positive results from certification.

Contents 1.

Background: The SCRIPT project

Scope

Introduction

Methodology

Agro-food sector

5.1. Development of alternative farming systems

5.2. Regulated and non-regulated voluntary standards in the Agro-food sector

5.2.1. Main EU regulated voluntary standards adopted in Thailand: Organic and GIs standards

5.2.1.1. Organic Agro-Food in Thailand

5.2.1.2. Geographical Indications in Thailand

5.2.2. Non regulated EU and international voluntary standards

5.2.2.1. International Federation of Organic Movements

5.2.2.2. GLOBAL GAP

5.2.2.3. BRC (British Retail Consortium) and IFS (International Food Standard)

5.2.2.4. FAIR TRADE Certifications

5.3. Lessons learned from the interviews to agro-food companies

5.4. Export opportunities in agro food sector

5.4.1. A short guideline of how to export Thai organic products to EU 6.

Textile and Silk sector in Thailand

6.1. New trends towards certified productions

6.2. European and international non-regulated voluntary standards adopted in Thailand

6.2.1. International non-regulated voluntary certifications: GOTS

6.2.2. European non-regulated voluntary certifications: ECOLABEL

6.3. Lessons learned from the interviews to textile companies

6.4. Export opportunities in agro food sector

Cosmetic Sector

7.1. New trends towards certified productions

7.2. Natural and Organic cosmetic in Thailand

7.3. European Standards for Natural and Organic Cosmetic in Thailand

7.4. Lessons learned from the interviews to Cosmetic companies 7.5. Export Opportunities in cosmetic sector

32 33

7.5.1. Opportunities

7.5.2. Constraints

7.5.3. Lessons learned on Thai organic cosmetic

7.6. A short guideline of how to export Thai organic and natural cosmetics to EU in accordance with NATRUE standards 8.

Conclusion

34 35

Annex I | DATA OF INTERVIEWERS

Annex II | LIST OF QUESTIONS FOR INTERVIEWS

Annex III | BIBLIOGRAPHY

List of Tables Table 1. Cosmetic, soap and skincare products sales value (million USD)

Table 2. Composition of Thai Cosmetic Export 2010

1. Background: The SCRIPT project This study is part of the SCRIPT project (Self-Control and third party ceRtIfication; knowledge and application of the key procedure to implement voluntary and regulated requirements of the EU single market and building trust on Thai ProducTs and services with cultural identity) funded by the EU Under the “Thailand-EC Cooperation Facility- Phase II (TEC II), .

The implementation of self-control and third party certification inspired by EU approach in the scope of this project for Thai SMEs and governmental entities can play an important part in increasing the Thai export sector’s capacity and open doors to the European market.

The scope of the project covers 3 sectors: agro-food as best practices from Pro-Gis, silk, and cosmetic products. The implementation is led by Bioagricoop, in cooperation with the Thai-Italian Chamber of Commerce (TICC) who is in charge of the food and textile sector and the Franco-Thai Chamber of Commerce (FTCC) who is in charge of the cosmetics products and spa services.

The project is an extension of the Pro-Gls project or “Intellectual Property extension & Geographical Indications protection for the benefit of EU-Thailand Trade”. The Pro-GIs project was aiming at contributing to the recognition of Thai GIs products in the EU single market. It was co-implemented by the partnership between the Thai-Italian Chamber of Commerce (TICC) and Bioagricoop and the co-operation of the Department of Intellectual Property of Thailand, Ministry of Commerce (DIP).

2. Scope The aim of this study is to conduct an overview of the most promising regulated and non-regulated voluntary requirements applicable in the EU single market and its adoption experiences in Thailand with the aim at consolidating the lesson learned and to guide for wider adoption by Thai entrepreneurs. The group of voluntary standards is very wide and includes voluntary Sanitary and Phyto-sanitary (SPS) standards such as Global Gap, BRC or social standards as Fair trade. However, the present study will focus more on organic/natural and geographical indication standards which are the main target of SCRIPT project. A very quick overview of EU standards other than organic /natural and geographical indication and Thai voluntary standards will complete the picture. All the collected information and experiences are intended to serve as a drive force to stimulate further adoption of EU voluntary standards by showing their applicability in the Thai local context.

3. Introduction The agro-food sector plays an important part in the Thailand’s economy and accounts for up to 44.2 % of the country’s 1

labour force. Export wise, the sector has secured its place in the European market and the most dynamic producers are familiar with the requirements and regulations of the clients’ market. Some exporters have adopted or are on the way to be certified according to some of the most representative EU voluntary regulated requirements such as Council Regulation (EC) no. 834/2007 (on organic production), Council Regulation (EC) no. 510/2006 (on geographical Indications), or other voluntary non-regulated requirement such as Global Gap, BRC and IFS and various fair trade standards. This is creating new opportunities in approaching the EU single market.

The Thai organic sector is one of the fastest growing businesses of the country’s economy. Only at the middle stages of its development, it generates an average of 6 billion baht per year. The Ministry of Commerce has set the sector’s growth rate at 10% every year and expects the Thai organic sector to achieve 8-9 billion baht of revenue within the next 5 years. The sector receives revenue mainly from the exports of non-processed fresh agricultural products. The use of technology and know-how to add more value to local organic goods is still limited.

Since 2005, the National Innovation Agency has been leading the public sector in supporting the development of the organic sector and its expansion beyond the agricultural activity. Around 4.8 billion THB has been budgeted to promote all the components of the sector from upstream to downstream: production technology, support from local 2

communities, readiness to export and the management of the organic sector’s development. The plan also includes encouraging and supporting the manufacturing sector and groups of farmers to diversify their production towards more food and non-food such as organic livestock, organic textile, organic resort, hotels and restaurant as well as organic cosmetic and skincare. In early 2011, the Ministry of Commerce of Thailand has reaffirmed the country’s commitment to organic agriculture and announced its goal for Thailand to become ASEAN’s Organic Hub within 5 years.

Traditional production and typical food are also a growing segment not only in agro-food sector but also for nonagricultural productions. Here exists one of the main discrepancies between EU and Thai regulations on geographical indications: While according to EU regulation, non-agricultural products are not currently eligible, Thailand allows protection of handicrafts and industrial products.

Geographical Indications development in Thailand is living a very intense moment by being supported by the Department of Intellectual Property, Ministry of Commerce, Thailand. The results are tangible: more than 35 products registered in 2010 according to Thai law of which 5 coming from EU countries and most importantly a clear trend to hire international accredited certification bodies to inspect and apply Thai GIs to EU regulation.

1 2 3

ศูนย์สารสนเทศ กรมส่งเสริ มการเกษตร, (2552), “จานวนประชากรภาคเกษตร 2547-2551” http://www.newswit.net/read/571419.html, (2551). http://www.nia.or.th/innolinks/page.php?issue=200912&section=6 – National Innovation Agency, (2552).

The cosmetics sector is another important sector which is growing at a rapid pace in Thailand. Though Thai cosmetic products’ strong point is their natural and herbal base, very few companies are certified as “natural” or “organic” by internationally recognized certification bodies. Bioagricert’s Natural and Cosmetic is currently the only European label adopted by Thai companies and also the only European certification body present in the country.

4. Methodology This study covers 3 sectors: agro-food, silk, and cosmetics. For each sector, the study briefly describes the current situation, its contribution to the Thai economy and the trend of its evolution. The relevant main International, EU and Thai standards are presented per sector. Moreover each section summarizes the essential information that the researcher retrieved from the interviews regarding the opportunities, challenges and lessons-learned through the implementation of voluntary standards. Thai-Italian Chamber of Commerce and Franco-Thai Chamber of Commerce supported the main author by identifying and carrying out the interviews with Thai operators in native language. The Thai interviewers tried to choose the most representative companies of each sector having solid experiences on export and certification application procedures. They have carried out a semi-structured interview. The questions were divided by topic and they were designed to gather information on the background of the person interviewed and his/her company profile. They also aimed to collect their opinion about the agro-food, textile and cosmetics situation in Thailand and finally to obtain a general feedback about the perception and impact of the European Certifications for Thai companies. The most significant experiences concluded from interviews will be highlighted throughout the project and in particular during seminars, thematic workshops, project booths and web site. The implementation of this activity will stimulate the establishment of relations with the previous project implementers and best practice holders. It should be noted that although the agro-food companies do not receive direct support under the scope of the SCRIPT project, the study covers this sector in order to make use of the analysis of different levels and types of voluntary international and EU requirements applications in the agro-food sector as leverage to stimulate stakeholders in textile and cosmetic sectors to follow the same approach. European and International certifications are raising their popularity in the country and several operators are looking to them as an opportunity and, some time, as “necessity” to sustain their export flows.

5. Agro-food sector Agribusiness sector is the backbone of Thailand economy and contributes to 10 % of the countryâ&#x20AC;&#x2122;s GDP Gross Domestic Products (25% in 1990). In accordance with FAO data, Thailand farms 3.38 million hectares of permanent crops out of 51 million hectares of land area. Thailandâ&#x20AC;&#x2122;s agricultural labour force amounts to some 29 million individuals out of 67 million inhabitants (2009). The value of agricultural exports is some 8.5 billion EUR corresponding to 12,41% of total export share of Thailand (some 20% in 1990). Major products (in tons) are Cereals 28 million (Rice is a staple product and also largely exported), Fish 3,8 million (shrimp) and Meat 1,8 million.

5.1. Development of alternative farming systems Agricultural sector is dominated by conventional farming which benefits of subsidized agro-chemical farm inputs. Producers and importers have great interest to support the use of agrochemical as well as the introduction and GMO crop production in Thailand. However, Thai consumers are more and more aware about the risks of pesticide residues in the food chain. In recent years, others production system and practices have been developed for a more sustainable agriculture and are based on qualitative parameters such as typicality, environment protection and superior consumers protection. Those parameters have been often harmonised in common standards in order to group products with similar characteristics and to facilitate the identification of their value. In the next chapters are described in details the voluntary standards that in addition to the compulsory standards, fixed by law by governments, contribute to product characterization.

5.2. Regulated and non-regulated voluntary standards in Agrofood sector The Thai Agribusiness sector is characterized by both product that comply with compulsory regulations only and those that in addition respect voluntary standards and regulations. The main difference between regulated and nonregulated voluntary standards lies on the fact that, the former refers to a voluntary standard defined by law and take the form of a regulation, while the second are standards mostly defined by private entities and are usually private owned (in any case they do not take the form of an official law). Both categories of voluntary requirements are not compulsory, and for this reason are diverse from compulsory ones.

5.2.1. Main EU regulated voluntary standards adopted in Thailand: Organic and GIs standards The main EU voluntary regulated standards on EU single market taken into consideration in this study are:

Council Regulation (EC) No. 834/2007 and Council Regulation (EC) No 889/2008 on Organic production: http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:189:0001:0023:EN:PDF; http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:250:0001:0084:EN:PDF

Organic agriculture is a production system that sustains the health of soils, ecosystems and people. It relies on ecological processes, biodiversity and cycles adapted to local conditions, rather than the use of inputs with adverse effects. Organic agriculture combines tradition, innovation and science to benefit the shared environment and promote fair relationships and a good quality of life for all involved. -

Council Regulation (EC) No. 510/2006 and related regulations on Geographical Indications http://eur-lex.europa.eu/LexUriServ/site/en/consleg/2006/R/02006R0510-20070101-en.pdf

Geographical indications (GIs) are a form of intellectual property. They identify a good as originating in the territory of a particular country, or a region or locality in a country, where a given quality, reputation or other characteristic of the good is essentially attributable to the physical place of origin. In simple terms, GIs are the names given to traditional products produced according to traditional methods in a particular place. For both EU voluntary regulated standards, third party inspection and certification procedures performed by internationally accredited certification bodies (standard ISO 65) are compulsory before placing the product on the market.

5.2.1.1. Organic Agro-Food in Thailand According to Green Net and Earth Net Foundation, the Thai organic market in 2005 was estimated at around 29,415 tons, valued at US$ 23 million per year and at the present time Thai government has allocated 4.8 billion budgets to implement a National Action Plan for the Development of Organic Agriculture for 2008 to 2011.

Thai government in the last years has been investing resources supporting Organic Agriculture, especially for the export, and in 2005, the National Innovation Agency (NIA) initiated a project entitled “Strengthening the Export Capacity of Thailand’s Organic Agriculture”. The project was co-supported by NIA and UNCTAD/WTO’s International Trade Centre and co-funded by the European Commission with an aim to study innovation aspects of organic 4

agriculture in order to strengthen the country’s export capacity to the overseas markets, in particular the EU. The reason behind this can be traced back to the EU’s position as Thailand’s main export market for organic product. Organic farming is seen as a form of sustainable farming practices, together with agro-forestry, mixed farming, and natural farming. Meanwhile, the growth of organic agriculture in the EU and the USA, especially the emergence of market opportunities, has created some interest for agribusiness to initiate organic projects in order to capture the early market niche abroad. European is one of most supporting world areas for organic productions. It has a vast area of dedicated land for organic agriculture as well as an important number of certification bodies and labels for food

http://www.thailandgreenhandbook.thaiembassy.be/

products . Moreover, the great interest and sensibility of European consumers towards low impact, pesticide free, genuine

food

makes

Europe

one

the

biggest

importer

and

consumer

organic.

http://epp.eurostat.ec.europa.eu/portal/page/portal/agriculture/data/database. For this reason, other countries with a strong tradition in farming and a high outflow of food products like Thailand, soon understood the necessity and the advantage of producing and certificating also organic products.

At the end of the 80s a group of farmers and NGOs started to work on sustainable agriculture. The same parties began to develop common sustainable agriculture techniques based on the local ecology principles. This initiative was called Agriculture Network Initiative and started to provide support services for organic conversion and internal control to individual and farmers group. Alternative Agriculture Certification Thailand (ACT) was established in 1995 to develop private non-regulated organic standards and to harmonize the farming system without use of synthetic chemicals and artificial fertilisers. Currently, ACT is the only Thai based certification body internationally accredited (ISO 65) which provides inspection and certification services programme covering crop production, processing, wild products, raw material, aquaculture and smallholder groups. ACT has its own organic standards but offers also certification against the most important voluntary regulated requirement on organic production including the European one (Council Regulation (EC) No. 834/2007). Several foreign certification bodies (mainly European) are operating in Thailand, and few have an office or an agent in Thailand. Only 25% of organic producers are certified by local bodies, the rest by foreign certification bodies, mainly EU-based agencies (Bioagricert (Italy), Soil association (UK), BCS (Germany), Skal (Netherlands). They offer to Thai organic operators certifications according to International schemes in order to export to main international markets (EU, Japan, USA).

Despite the existence of a Thai national regulation on organic farming, the domestic market recognises these certifications and their organic seal as the reference signal of organic guarantee. The National Office of Agricultural and Food Commodity Standards (ACFS) has set up voluntary national standard guidelines for organic agriculture in the attempt to cope with EU standard. So far, no one has shown a strong interest in adopting them for market purpose.

Thai Organic Trade Association (TOTA; http://www.thaiorganictrade.com/) is the biggest Thai association that represents the interests or organic operators including certification bodies, operators and NGO. It is an important reference to anyone who would like to practice organic agriculture in Thailand.

5.2.1.2. Geographical Indications in Thailand Apart from organic farming, the European Union has also another important food quality scheme. Building on concepts and experience which can be dated back to 19th century, since 1992, the European Union adopted the more comprehensive and efficient regulatory system worldwide for GI legal recognition and protection (related to foodstuffs and agricultural products): EC Reg. 2081/1992. It has been recently replaced by EC Reg. 510/2006 and following integrations and modifications.

http://www.organic-world.net/statistics-europe.html

On the other side of the ocean, leaded by the evidence of consumers preferences, new market opportunities and TRIPS Agreement, Thailand developed the concept of GI according to the implementation of Articles 22-24 of the TRIPs Agreement , WTO (Jaovisidha, 2003). Thai government had officially launched the framework law to recognize and protect Geographical Indications in 2003:, ―the Geographical Indication Act of B.E. 2546 (2003)‖ followed by ―Thai Geographical Indication Logo Approval B.E. 2008‖ under the charge of Department of Intellectual Property (DIP), Ministry of Commerce, Thailand.

The EU and Thai regulations are not equivalent and differ in some very important elements:

1- The Thai regulation includes foodstuffs, agriculture products, handicraft and industrial production while the EU includes only foodstuffs and agriculture production as eligible product categories. http://www.thailawonline.com/en/thai-laws/laws-of-thailand/263-act-on-protection-of-geographical-indicationbe2546-2003.html At this regard should be taken into consideration that EU is carefully evaluating and studying the possibility to include non-agriculture products under its Regulation for this scope in 2009 commissioned a study on the protection of GIs for non-agriculture products (http://trade.ec.europa.eu/doclib/docs/2011/may/tradoc_147926.pdf) At the moment, however, an interesting perspective exists for traditional Thai handicraft such as silk, cotton, other fabric and cosmetics made using GI agriculture products. EC Reg. 510/2006 gives the possibility to protect agricultural products which are not foodstuffs under Annex II. While the category essential oil (which could be the base for some typical cosmetic products) are already included in the European list under Annex II, cotton and silk yarn are not yet included but a formal request asking for their inclusion may be taken into serious consideration due to the fact that cotton and silk yarns are agriculture products not unlike wool or scutcher flaw which are included in this list.

2- The Thai GIs legal system does not require external control systems or verification of compliance with specification by accredited bodies, which are crucial elements of the EU regulations (art. 11).

In accordance with EU regulations, external control has to be performed by public or private bodies, which must be accredited in accordance with the European standards EN 45011 or ISO/IEC Guide 65. Despite the fact that Thai regulations do not require subjecting products to third party inspection and certification procedures, there are a considerable number of Thai GIs products under external control by accredited certification bodies (ISO 65): Tung Kula Rong-Hai Thai Hom Mali rice, Chiangrai Phulae pineapple, Phurue Plateau wine, Doi Chaang and Doi Tung coffee, Nakornchaisri pomelo, Surin Hom Mali rice, Phuket pineapple, Phetchabun sweet tamarind and Chinat Khaotangkwa pomelo. Bioagricert Thailand is the leading organization operating in GIs certification. No local certification bodies have experience or accreditation for this scope.

3- According to EU regulations, only producer or processor associations who deal directly with a product may submit an application for its registration (Article 5 of EC Reg. N. 510/2006), or in exceptional circumstances, a single natural or legal person (Article 2 EC Reg. N. 1898/2006). Meanwhile, according to Thai regulations

various actors (government bodies, administrations and public companies, producers, product processors and traders as well as their associations, consumer groups and their associations) can submit an application.

The rationale for this is that normally, local Thai governments play an important role in promotion of regional products and enforce the national policy. In addition, the associations of producers and processors in Thailand play only a very marginal role due to an insufficient level of organization and technical expertise. Consequently, the development and recognition process of GIs in Thailand has a â&#x20AC;&#x153;top downâ&#x20AC;? approach, in contrary with the EU, where the associations of producers and processors of GIs products are highly active, both in the production process and the recognition of designations.

In order to have the possibility to market Thai GI in EU as a protected geographical indication, Thai GI stakeholders should take into serious consideration the points mentioned above: is my product eligible under EU GI regulation?, Do I have an external control and certification in place? Is this control and certification system accredited by EU? Who is the Thai GI lodger? Is it eligible under the EU regulation?

These considerations point out the fact that the EU regulation on GIs in more restrictive then the Thai one. For further information on this issue, it is possible to contact both Bioagricoop (www.bioagricoop.org ) or Thai-Italian Chamber of Commerce (http://www.thaitch.org/?lang=it) or to visit the internet site www.progis.info

5.2.2. Non-regulated EU and international voluntary standards In addition to EU voluntary regulated requirements mentioned above, there are non-regulated voluntary standards applicable exclusively or non-exclusively to agro-food sector that have been developed by private entities and/groups aiming at satisfy additional buyer and market requests. Those standards have been developed at international level and some of them have been adopted by Thailand exporters to increase or diversify their sales in the international markets. Here below major commercial standards are briefly described:

There are some voluntary organic standards that are not regulated by States. They are non-exclusive for agro-food sector and includes for example GOTS for textile and NATRUE for cosmetic (see textile and cosmetic sector later in this study).

5.2.2.1 International Federation of Organic Movements The International Federation of Organic Movements (IFOAM; http://www.ifoam.org/) is one of the European Organic organization most diffused globally. It covers and certifies a wide range of products such as crop production, livestock, wild products, processing, fibre processing, and aquaculture.

IFOAM is a voluntary membership-based organization that counts at the moment more than 750 members, diffused in 116 countries http://www.ifoam.org/about_ifoam/index.html. IFOAM Basic Standards (IBS) and the Accreditation

Criteria – together called “The IFOAM Norms”provide a framework for other certification bodies and organization to develop their own standards that may also consider other criteria in addition to those. The certification of other bodies by the IFOAM standard is carried out by the International Organic Accreditation Service (IOAS) http://www.ioas.org/ which is another independent body that ensures global equivalency of certification programs and attempts to harmonize standards considering different countries of application. It is important to know that being a member of IFOAM does not constitute IOAS accreditation. At the national level, governments or national accreditation bodies accredit certification bodies operating in their country, if their country has organic agriculture legislation. Both private and public bodies adhere to the International Organization for Standardization basic standards

for

accreditation

certifiers

(ISO

65)

addition

their

specific

requirements

affiliated

companies

http://www.ifoam.org/sub/faq.html

Thailand,

the

official

IFOAM

website

reports

http://www.ifoam.org/organic_world/directory/Countries/Thailand-Members.html. The first and currently only independent private Thai-owned certification body to become IFOAM member was Organic Agriculture Certification Thailand (ACT) http://www.ioas.org/act.htm. At present, over 60 Thai producers have been certified ACT-IFOAM. This voluntary non-regulated standard may be added to the regulated one but cannot replace it in EU single market.

5.2.2.2 GLOBAL GAP GLOBAL GAP (Global Good Agriculture Practice) http://www.globalgap.org was initially called EUREP GAP. It has been created in 1997 as a result of the cooperation among a group of retailers members of EUREP (Euro-Retailer Produce Working Group). It was created in response to the growing concerns of European consumers regarding product safety, environmental and labor standards, to the necessity of many producers, selling to several retailers, of having a single standard certification to refer to and also to avoid expensive and time consuming multiple certification processes every year. To fill this grey area, EUREP started working on harmonized standards and procedures for the development of Good Agricultural Practices (G.A.P.) in conventional agriculture including highlighting the importance of Integrated Crop Management and a responsible approach to worker welfare.

After ten years of activity, due the growing number of producers and retailers joining the project, EUREP GAP has become global and changed is name in GLOBAL GAP. At present, some of the most important retail global companies have adopted the GLOBAL GAP standard (Mark & Spencer, Tesco, ASDA, Waitrose, Somerfield, ALDI, Lidl, McDonald’s Europe etc.). The GLOBAL GAP certification covers 3 areas of food products: Crops, Livestock and Aquaculture and 3 areas of operations: Compound Feed Manufacturing, Plant Propagation Material and Chain of Custody.

At the moment, GLOBAL GAP is carried out by more than 130 independent accredited Certification Bodies and diffused in over 100 countries in the world. In Thailand, currently 20 Thai exporters met the GLOBAL GAP standards. The THAI Good Agriculture Practices project, has been launched in 2007 by the Thai Fruit and Vegetable Producer Association. Its main aim is to upgrade the agriculture practices in Thailand. It is not equivalent to GLOBAL GAP and not required outside Thai market.

5.2.2.3 BRC (British Retail Consortium) and IFS (International Food Standard) http://www.brc.org.uk/brc_home.asp; http://www.ifs-certification.com/ These two food quality and safety standards have been published by retail trade groups in Europe and they quickly become a diffused standard. It covers the entire food chain comprising primary producers, food producers and transporters. At present, any company wishing to supply its products to this group of retailers must meet the required standards. The approval of the quality and food safety system of the supplier is usually requested, by the retailers, to be conducted by an independent third party. 6

The British Retail Consortium (BRC) was published by the union of British supermarket chains, the BRC in 1998 but has quickly become a global standard. At the present time, various UK, North American and many European retailers and brand owners consider business uniquely with suppliers who have gained certification in accordance with the BRC Global Standard. http://www.brcglobalstandards.com/. BRC, as other consortiums, does not certify directly but manages the certification scheme by licensing the use of the Standards to a number of approved third party Certification Bodies that must both be accredited by their national Accreditation Body and abide BRC strict requirements. The BRC Global Standards, does not provide a label on final product, it is a “Business to Business” certification and gives specific criteria for production, packaging, storage and distribution requirements to guarantee safe food and consumer products.

The International Food Standard (IFS) is a quality and safety standard published in 2003 by the union of German supermarket chains, HDE (Hauptverband des Deutschen Einzelhandels) and its French counterpart (Fédération des Entreprises du Commerce et de la Distribution-FCD). As well as the BRC it has been developed with the aim of giving a uniform approach to food safety and quality system for suppliers and retailers of food products and applies to all type of retailers (all sizes of companies and shops, independent or not) and for wholesalers with similar activities (e.g. cash and carry). http://www.ifs-certification.com

The IFS contains under his umbrella 5 different categories of certification, each of them with further specific areas. IFS Food: is dedicated to companies that pack loose food products, where the food is processed or handled or there is a danger of contamination during the primary packaging. IFS Cash & Carry/Wholesale covers all handling activities of loose naked products in Cash & Carry-markets or wholesale companies. It includes also a production process in a small amount of products like minced meat. IFS HPC is the standard to ensure product safety, to reduce costs and to ensure transparency concerning the entire production chain of household and personal care products. IFS Logistics is applicable to both food and non-food products and covers all logistics activities, such as loading, unloading and transportation. The standard can be applied to all sorts of transportation; heavy goods vehicles, trains, ships, airplanes and every other type of transport (temperature controlled or at room temperature).Same as BRC it counts on

authorized certification bodies (62 in the world) and being a â&#x20AC;&#x153;Business to Businessâ&#x20AC;? certification does not provide a label on final product.

5.2.2.4 FAIR TRADE Certifications Fair-trade is a global organized social movement and market-based approach that aims to help producers in developing countries to improve their trading conditions and promote sustainability. Exporting products, carrying social and environmental standards, from developing countries to developed countries should help the economical grown of the second ones and supporting small communities producing with traditional methodologies. The Fair-trade certification system covers a growing range of products, including bananas, honey, coffee, oranges, cocoa, cotton, dried and fresh fruits and vegetables, juices, nuts and oil seeds, quinoa, rice, spices, sugar, tea, wine and even gold.

Companies offering products that meet the Fair-trade standards can apply for licenses to use one of the Fair-trade Certification Marks for those products. Globally there are various Fair Trade organizations that are members or certified by one of the many national or international Fair Trade federations. The two most popular and diffused federations are the Fair-trade Labeling Organizations International (FLO) founded in the 1997 and the World Fair Trade Organization (International Fair Trade Association), created in the 1989.

Fair-trade Labeling Organizations International (FLO) is an association of 3 producer networks and 21 national labeling initiatives

that

promote

labeling organizations

can

and be

market found

the Fair-trade in

Certification

15 European countries

Mark in well

their as

countries. Fair-trade

in Canada,

the United

States, Japan, Australia and New Zealand.

The World Fair Trade Organization http://www.wfto.com (WFTO) represents over 400 organizations committed to the Fair Trade. WFTO operates in 73 countries across 5 regions; Africa, Asia, Europe, Latin America, and North American and the Pacific Rim, with elected global and regional boards, to create market access through policy, advocacy, campaigning, marketing and monitoring. It is the only global network whose members represent the Fair Trade chain from production to sale.

At the moment, FLO lists 10 products made in Thailand that are certified and they all from the agro-food: Rice, Coffee and Honey www.fairtrade.net. There are no single Textile products being certified Fair Trade. However, two organizations

Thailand,

Thai

Tribal

Craft

Fair

Trade

http://www.ttcrafts.co.th/

and

ThaiCraft

http://www.thaicraft.org, are very active in the promotion of the Fair trade in Thailand and both carry the WTFO certification mark. Among the wide range of products that they source in remote villages in Thailand, traditional Thai silk is also included.

The growing popularity of Fair-Trade products among consumers, especially in developed regions of the world, such as Europe, Canada and United States, have contributed to the creation of numerous Fair-Trade organization and relative labels. However, only two globally recognized Fair Trade logos stands out, the WFTO Mark and the Fair-trade label.

Though

they

serve

similar

markets

and

both

basically

respond

similar

standards

http://www.wfto.com/index.php?option=com_content&task=view&id=2&Itemid=14, they represent two different approaches to Fair Trade monitoring and certification. The WFTO with their mark aims to certificate associations operating in the Fair-Trade, the FLO system, instead, labels products.

WTFO brand: The certification of one single product of certain types, such as handicraft, requires complex monitoring which complicate the certification process. WFTO launched in 2004 a new mark to cover the whole organizations operating under Fair Trade standards (Wages, working conditions, environment and child labor) to certify not only the final products but the whole system behind. The WFTO is also recently developing the SFTMS (Sustainable Fair Trade Management System) http://www.wfto.com/sftms .

FTO label: In order to ensure the transparency and the independence of the Fair-trade certification and labeling system, Fair-trade Labeling Organizations International was divided in January 2004 into two independent organizations: - FLO-CERT an independent body with around 100 inspectors ensures that both producers and traders comply with the FLO International Fair-trade Standards and that producers invest the benefits received through Fair-trade in their development. All FLO-CERT inspections and certification follow the international ISO standards www.iso.org for product certification bodies (ISO 65). - FLO International develops and reviews Fair-trade standards and assists producers in gaining and maintaining certification and in capitalizing on market opportunities on the Fair-trade market. To ensure the transparency of the system, the standards are developed and reviewed by the FLO Standards and Policy Committee, in which FLO members, producer organizations, traders and external experts participate www.fairtrade.net.

5.3. Lessons learned from the interviews to agro-food companies The study aims at contributing to identify the reasons of entrepreneurs of agro-food sector that successfully adopted regulated and non-regulated voluntary standards for sustainable productions. These operators have been selected thanks to their good export performance combined with their particular interest to be certified in several accreditations. Through the interviews, we tried to individuate the main reasons why Thai companies have applied in particular for a European certification and their general feedback on the application process itself; and finally some of the results obtained by the companies after the certification. The companies interviewed were mostly of mediumsmall size export-oriented companies all already certified under some of the European criteria mentioned in this research. A short identification fiche of each interviewer is shown in Annex I.

Interviewees have shown a solid tradition in exporting their products to other markets but in the last two-three years they experienced a higher request, particularly from European importers, of certified products especially organic.

More buyers were contacting them and finding their company name on the certification bodies’ public lists. The added value to their product also permitted them to increase their prices.

Organic certification has had a positive influence on companies but some constraints have been highlighted. The process before obtaining the certifications often is not easy and requests a consistent commitment in terms of time, costs increasing related to the monitoring and modification of manufacturing process but it does give some long term advantage to the company.

Interviewers have highlighted the following benefits generated being EU certificated.

General results reported by companies after certification: 

Maintain and consolidate existing flow of export in Europe by answering to the demand of certified products.



Open new export channels to other countries (EU, Canada, America, Japan etc.)



Increase product quality standards



Official Recognition of their effort to produce under Fair Trade principles and support Thai rural economy



Build consumer trust on their brand



Contacts from buyers looking at specific certified products



No effect on national sales



End products price increasing and higher mark-up.

General Constraints Thai consumers do not have adequate information about GI or Organic and the benefits to be certified are less relevant than for export markets. Constraints about certification process: 

Time and resources consuming



Increasing cost on quality control in order to maintain the standard



Difficult application process



Certification is a must to continue to deliver to commercial networks

5.4. Export opportunities in agro-food sector The results of interviews have shown that approaching certification process is still an issue for entrepreneurs. Here below are described, as an example and in synthetic form, the main steps required to be Organic certified and to access to EU market. For further information on the practical application of GI standards and certification awarding, it is possible to contact both Bioagricoop (www.bioagricoop.org ) or Thai-Italian Chamber of Commerce (http://www.thaitch.org/?lang=it), or to visit the internet site www.progis.info

5.4.1. A short guideline of how to export Thai organic products to EU General considerations: The main opportunity for the organic agriculture in Thailand seems to be in the export towards other countries, the growing request of certified organic products by Europe, Japan and US could justify an increase of investments by single companies or government campaigns in this field. Also Thailand, due to its recent history in intensive agriculture and use of chemicals, can still count on a traditional approach to farming in many areas, with selfsustainable principles and limited use of chemicals. Many farms are still of medium-small size and this situation, seen as a weakness in prospective to approach the global market and complex certification processes, could be actually turn in a positive value once they will decide to approach organic farming principles. Statistics show that Thailand exports most of its organic agricultural products to European countries followed by Japan and the USA. Rice is the biggest export crop followed by vegetables, fruits, corn, herbs and spices. Jasmine rice is most significant organic agriculture product certified for export to EU. The Council Regulation (EC) No 834/2007 and Council Regulation (EC) No 889/2008 establish the legal framework for all production levels including: processing, distribution, control, and labeling of organics products which can be traded and imported in the EU. Specific implementation rules regarding import requirements and procedures are described in Council Regulation (EC) No 1235/2008, this regulation deal with import system actually present in the EU. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:334:0025:0052:EN:PDF There are several different cases and procedures to import organic products in EU: below is described the case that is currently applicable for organic products proceeding from Thailand. First of all, Thailand has not been (yet) included in the Commission list of recognized equivalent third countries in accordance with Article 33 of Council Regulation (EC) No 834/2007. For each recognized country the list contains the categories of products that are considered equivalent and the certification bodies or competent authorities authorized to make controls in the third country. Products coming from equivalents third countries could be imported by a European importer registered in one of the European countries. The products must be accompanied by the “certificate of inspection for import organic production into the European Community” issued by authorized certification body. These organic products can be exported any time without waiting for an official specific import authorization.

Transitional rules on equivalent import of products from non-equivalent third countries, (Council Regulation (EC) No 1235/2008 Article 19) are currently applicable to Thai organic exports. The Commission may authorize importers in any Member State, where the EU importer has notified its activity in accordance with the EU Regulation. Thai Organic products can be exported in EU only when an Authorization of import has been issued by a Member State authority. Once the authorization of import has been issued to the EU importer, products may be exported accompanied by “certificate of inspection for import organic production into the European Community” issued by an accredited certification body. Presently, the Commission is working according to Council Regulation No. 834/2007 Article 33, on a direct recognition of Control Bodies in non-equivalent Third countries as Thailand. Authorized control bodies will be contained in an official list. This will allow Thai exporters to sell organic products without waiting for a specific authorization released by Member States and entailed to the EU importer. Certificate of inspection for import organic

production into the European Community will necessarily accompanied the products. This list was expected for the beginning of 2011 but it is not yet published.

Certification bodies operating in Thailand Most of Thai organic products for EU market are certified by European Certification bodies. The most renowned operating in Thailand are Bioagricert (Italian) www.bioagricert.org/english/index.php; Soil Association (UK) www.soilassociation.org,

BCS

(Germany)

www.bcs-certification.com

www.ebsbulk.com/index.php/safety-amp-environment/skal-certification.html;

;

SKAL

and

Ecocert

(Netherlands) (France)

www.ecocert.com. All of them are able to give guarantees to Thai organic operators that their product should be imported in Europe and certified according (EC) No. 834/2007. In general terms, Bioagricert is the leading EU certification body in Thailand for organic and GIs products. It has a local agency and local inspectors that may guaranty competitive fees for the service compared to other EU certification bodies. There are also local Certification bodies but the only one that provides qualified certification to export in Europe is ATC (Organic Agriculture Certification Thailand). ATC is accredited to certify according to Council Regulation as (EC) No 834/2007 as well as other nonprivate organic standards.

Product categories which may be certified All Organics operators who produce organic product that fall into the categories described in the application field of the Council Regulation (EC) No 834/2007, and respect technical and control system requirements. In general, products categories that can be exported are: Fresh agricultural products, livestock products, wild harvest products, processed agricultural, livestock products, wild harvest and aquaculture products.

How to be certified? It is necessary to apply to one of the certification body operating in Thailand that is able to issue a valid certificate for export to EU. The first step is to send the application together with the Organic System Plan in which Thai operator will describe the production process to obtain organic products, what kind of inputs and ingredients are used, additives or adjuvant utilized during processing, etc. Additionally, Thai operators will have to describe which kind of internal control, quality measure etc, has been implemented to assure the organic status of the products. On the base of this information the selected certification body will decide whether to accept or refuse the operator into the control system. If accepted the certification body will schedule on-site inspection to make an onsite inspection. After this the certification body will be in charge to evaluate all paper documents submitted by the company and by the inspector (on-site inspection report) and deliberate whether or not issue the organic certificate.

Certification timing The timing normally depends on the certification body whose action can take from 1 to 3 months) and on the corrective actions that operator should implement to obtain the certification. For agricultural product, there is a conversion period of two years plus a crop cycle to become organic if lands where cultivated as conventional before. Certification bodies accept some official statements if conditions exist to reduce the conversion period. For handling operators is faster to obtain certification. They should qualify organic suppliers of ingredients and implement

separation measure to avoid contamination of organic products with conventional during processing and storing phases.

Certification Cost Certification costs depend on the main operator activities. A big difference exists between farmers and processors/exporters. While processors/exporters are usually the certificate licensee, farmers are sub-license and their inspection and certification costs are often charged to the licensee. Processor/exporter pays a fix fee plus a variable fee that is normally calculated e on the basis of organic annual turnover (around 0.05 % on turnover). Sublicenses fees are calculated according to several parameters including: number of sublicenses (around 2000 baht per farm), production area (around 100 baht per Rai per year) and onsite inspection (around 12.000 baht/day plus expenses).

Export procedures A Thai company that intends to export organic products to Europe should at first contact a European importer. It must supply its master certificate in order to give the evidence of which products are already certified according to the EU organic standards. Once the importer decides which and how much product would like to buy, it will fulfill the “Application for import organics products from thirds countries” (that is a different template for each country of European community) and submit it to certification body hired by the Thai exporter. The certification body will complete the “Application for import organics products from thirds countries” by giving data concerning the entire export project (number of farmers involved, inspection dates, etc.) and showing that all controls from third parts have been completed. This complete “Application” is then submitted to the competent authority in the Member State that will examine it. The Authorization to import to the EU Importer (for a period not longer than 24 months) will be issued if application results compliant. This authorization gives details concerning products quantities, types and importing period. Since now Thai operator is authorized to export to EU. Each container of organic product that arrives to Europe must be accompanied by the “certificate of inspection for import organic production into the European Community” as explained above. Finally Customs authorities will make a control to check that the authorization of import has been granted to EU importer.

6. Textile and silk sectors Thai modern textile and garment industry originated in 1936, when the Ministry of Defense imported textile machinery to produce textiles for military applications. From that date the production of Cotton, Silk and other fiber and their related product have always been holding an important position in Thai Economy. Textile, fiber, and clothing productivity indexes in 2010 have increased by 6.1, 7.9, and 5.5 respectively as Thailand is being considered as ASEAN's hub of raw materials and other resources for textile production in the region. As of 2010, the estimated export value of Thai textile industry was 7536.1 million USD, a 17% increase from 2009 which was estimated at 6442.3 million USD. The main export markets for Thai textile are the United States, European Union, Japan, and ASEAN. Specifically for Europe, the export value is at 1385.7 million USD, an increase of 9.8% from the previous year, equals to 18.4% of total textile export. The main exported products are clothes (finished products), textile (raw material), inner 7

wears, and other fabrics. The high volume of textile raw and manufactured products exported by Thai companies has a solid position in the world market and is still growing. Export of textile and clothing in Thailand during 2007 â&#x20AC;&#x201C; 2009 showed a reduction of 4.28 percent, due the economic crisis in Europe and America, some of the major markets. However, in 2010 the trend seems to have been increasing again with 17.3 percent of growth in the first half of the 8

year. Thanks to the increasing demand of Textile products from European, ASEAN (Free trade Area) and Japanese markets, Silk production in Thailand covers small portions of the national market. In 2010; just $10.31 million worth of silk was exported from Thailand. The predominant markets for Thai Silk are U.S.A., U.K. and France. Thai Silk production contribution to the global silk trade is limited; China, India and Brazil remain the leading world producers and exporters. Silk: Due the unique characteristics of Thai silk is not easy, if not impossible, to compare it with other Silk (and Cotton of course) manufacture in other countries, such as China or the South American area. The produce of the native Thai silkworm is heavier, presents many irregularities in the thickness of the yarn, and consequently, after the colouring, the silk presents different colour graduations. Also Thai traditional methods of manufacturing the woven differ depending on the area of origin, are very small in quantities and rarely match with the standards of size and decorations requested by the industries. All those characteristic make hard to define a single standard for the Thai silk and consequently find a suitable certification. At the moment Thai silk has a very privileged market overseas, being used in the interior decorations and high priced clothing fields, products that are produced and distributed in very limited quantities and with a upper market final price. For the characteristic just mentioned Thai silk could hardly compete on the same level of Chinese or South America products, which are less expensive, easier to manipulate due its standard thickness and size, and manufactured in higher volumes.

Thai industry overview 2010-2011, page 101, The office of industrial economics, www.oie.go.th

The textile statistics, 2009/2010. Thailand Textile Institute

6.1 New trends towards certified productions Thai export was not impacted by the recent economic crisis of many areas of the world. However, most of the countries importing Thai products are constantly increasing their requirement on certified quality standards, due to the recent trends among end-users. In Thailand, there are no regulated voluntary European standards as in the food sector. Both European and International voluntary non-regulated standards are adopted in the country. The European voluntary non-regulated standards are ECOLABEL and Private Standards of European Certification bodies as BIOAGRICERT, CCPN, ECOCERT, etc. The international non-regulated voluntary standards are GOTS (Global Organic Textile Standard) and FAIR TRADE. Some standards mainly Fair trade standards have a cross-cutting characteristic and may be applied to several sectors (e.g. food, textile) and have been already described (see A.4.1.3 Fair Trade Certifications). At the moment, most of textile companies holding EU certification are producing or manufacturing cotton; international certifications for silk are still in a developing phase. In the next chapters are described in details the voluntary standards that in addition to the compulsory standards, fixed by law by governments, contribute to product characterization.

6.2. European and international non-regulated voluntary standards adopted in Thailand The growing awareness of customers towards chemicals is raising the requests of certified goods from producers, for this reason many European, Japanese, US and Canadian importers are no more accepting products that are not carrying certifications matching their countries standards. Some special lines of products, such as garments for Children, require often very high quality guarantees but there are still buyers that do not request particular quality standards.

6.2.1. International non-regulated voluntary certifications: GOTS The International Working Group on GOTS is an independent, non-governmental, not-for-profit organization which promotes textile processing for organic fibers. It is comprised of four member organizations: OTA (USA), IVN (Germany), Soil Association (UK) and JOCA (Japan). Those four organizations, together with other approved international stakeholder organizations and experts, contributed to the diffusion of organic farming and environmentally and socially responsible textile processing in more than 2800 companies over more than 50 countries in the world. GOTS provides a public database (http://www.global-standard.org/public-database.html) where users can easily access information such as: approved certifiers that are entitled to offer related inspection and certification services worldwide and companies already certified present in each county. At the present time GOTS reports 14

approved certification bodies9 most of them are already active in Asia and 8 Thai textile companies have already been certified10. The organization has recently released GOTS 3.0 on their website, with updated certification requirements where free online support to applicants is also provided. GOTS certification covers several aspects: processing, manufacturing, packaging, labeling, export, import and distribution of products such as fiber, yarns, fabrics and clothes. All chemicals used during the production have to meet strict environmental and toxicological criteria. The choice of accessories is limited under ecological aspects and waste treatment plants are mandatory if there is any wet-processing unit involved. GOTS certification does not apply to leather products and does not set standards for the organic fiber cultivation itself. For this reason, the farmers producing organic fiber have to hold an international organic farming certification accepted in the country where the final product will be merchandised (e.g. EEC 834/2007, USDA NOP).

GOTS label provides 2 grades: 

Label-grade 1 “Organic” that requires a minimum of 95% of certified organic fibers



Label-grade 2 “Made with organic” that requires a minimum of 70% of certified organic fibers, but with a maximum of 10% synthetic fibers (up to 25% for socks, leggings and sportswear).

6.2.2. European non-regulated voluntary certifications: ECOLABEL The European Ecolabel is a voluntary scheme, established in 1992 to encourage businesses to market products and services that are kinder to the environment. Products and services awarded the Ecolabel carry the flower logo, allowing consumers - including public and private purchasers- to identify them easily www.ecolabel.eu. The EU Ecolabel is part of a broader EU Action Plan on Sustainable Consumption and Production and Sustainable Industrial Policy adopted by the European Commission on 16 July 2008, which also links the Flower to other EU policies such as Green Public Procurement (GPP). As part of the European Community project, it has been recognized throughout all the EU Member States as well as Norway, Liechtenstein, Iceland. The EU Ecolabel is a rapidly growing brand: many producers in the world understood that this certification can bring benefits to their marketing strategies, increasing the positive feedback from the European final customers. At the present time, 48 competent bodies are allowed to give out the certification, most of them are located in countries member of the European Union http://ec.europa.eu/environment/ecolabel/contacts/competent_bodies_en.htm.

At present, the EU Ecolabel includes 26 products and services such as cleaning products, appliances, paper products, textile and home and garden products, lubricant and tourist accommodation. The two countries that are holding the most certified products are Italy and France, with 359 and 244 licenses on a total of 1150 licenses released. Tourist Accommodation Services represent 37%, leads the group of certifications, followed by All-Purpose and Sanitary Cleaners 13.5% and Indoor and Outdoor Paints and Varnishes representing 8% of licenses. Textile is a growing sector that holds at the moment 91 licenses, the 7.9% of the total.

http://www.global-standard.org/certification/approved-certification-bodies.html http://www.global-standard.org/public-database/search.html

Four Thai Textile companies are certified with the EU Ecolabel certification. Among which, 3 are producing organic cotton (Thong Thai Textile Co. Ltd., Rama Textile Industry, Asia Fiber Public) and just one recently obtained the certification for Silk production (Green Ville Trading Co. Ltd.) http://www.eco-label.com/.

6.3. Lessons learned from the interviews to textile companies The study aims at contributing to identify the reasons of entrepreneurs of textile sector that successfully adopted nonregulated voluntary standards. These operators have been selected thanks to their good export performance combined with their particular interest to be certified in several accreditations. As already mentioned, at the present time, very few companies have been certified with European labels, most of them producing cotton and just one producing Silk labeled Thai Silk with a European Certification. The latter was, however, not available to participate in the SCRIPT project activities. For this reason, we looked at textile companies holding EU Certifications and producing cotton, fiber yarn, trying to understand if the effects of EU Certification in the cotton production could be replicated for the Thai silk. Through the interviews we tried to individuate the main reasons why Thai companies have applied in particular for a European certification and their general feedback on the application process itself; and finally some of the results obtained by the companies after the certification. The companies interviewed were mostly of mediumsmall size export-oriented companies. All of them are already certified under some of the European criteria mentioned in this research. If cotton producers can count on bigger companies, modern infrastructures and major volumes of sales, the difficulty to source for Organic certified raw cotton (required by European standards such as GOTS) is a hindrance for them in obtaining certification for their final products. Cotton is in fact a very delicate plant and often heavily treated with pesticides. Silk producers, mostly small size companies run by family group and with a very limited market and incomes respect the cotton ones, have the advantage that silk worms already require almost organic environment to grow. The only chemicals that are involved are fertilizer for mulberry leaves and chemical for the final coloring process. For this reason, if small Silk producers could just cease the use of industrial fertilizer and start using only natural color (which are numerous in the Thai traditional silk manufacturing), they probably cover most of the criteria required by international certification such as GOTS. Challenges for those companies would be to find the economic resources and knowledge to start an application process for a certification. A short identification fiche of each interviewer is shown in Annex I.

Interviewees have shown a solid tradition in exporting their products to other markets but after the raising number of requests from some of their overseas buyers they decided to apply to be Organic certified. As we know, GOTS carries organic and social criteria that cover not just the final product but also the whole production process, for this reason Thai companies of cotton sector had to go through a renovation of some of his structures and several visits by the certification body, before achieving it. The added value to their product also permitted them to increase their prices.

Organic certification has had a positive influence on companies but some constraints have been highlighted.

The process before obtaining the certifications is often not easy and requests a consistent commitment in terms of time, costs increasing related to the monitoring and modification of manufacturing process but it does give some long term advantage to the company.

Is it more likely that Thai silk producers will gain more popularity in the global market by investing even more on the uniqueness of their products and looking for instruments for certifying them. The Thai government has already received some of those inputs creating the Royal Peacock label and Thai Gi certifications but registering silk with Geographical Identity instruments and eventually Fair Trade organizations, being recognised overseas, ahead with marketing campaigns, has good chances to help the Thai silk to increase even more his distribution in other countries. Main reasons why Thai companies applied for EU certifications: -

Maintain and consolidate their existing flow of export in Europe

Distinguish their companies from other Asian producers who are seen as using chemical products intensively.

Open new export channels to other countries (EU, US, Japan etc.)

Support Thai rural economy and small communities producing under Fair Trade principles

Constraints about certification process: -

Time and resources consuming

Increasing cost on quality control in order to maintain the standard

Complicate process, necessity to modify factory organization

Certification is a must to continue to deliver to commercial networks

General results reported by companies after certification: -

Contacts from buyers looking at specific certified products, such as Organic Cotton for infant garments

No direct results on internal market sales

Possibility to promote their products using the certification bodies channels

Maintain existing sales toward international buyers asking for higher quality standards

6.4. Export opportunities in textile sector; how to get information to export Thai organic textile products to EU in accordance with GOTS standards The results of interviews have shown that approaching certification process is still an issue for Thai entrepreneurs. For further and practical information on GOTS standard application, please refer to Bioagricoop (www.bioagricoop.org), Thai-Italian Chamber of Commerce (http://www.thaitch.org/?lang=it), or visit the internet site www.script-thai.eu.

7. COSMETIC SECTOR Cosmetic is a fast growing industry with a promising future for the Thai economy. In 2010, the industry brought around 2,156.44 million USD to the country, representing 36.43 % growth from the previous year. The Department of Export Promotion (DEP) of Thailand has predicted a 25 % growth in 2011 which will increase the industry export value up to 2,695 million USD. Graph 1: Cosmetic, soap and skincare products sales value (million USD)

2005

2006

2007

2008

2009

2010

2011

Source: DEP The top 3 cosmetics and spa products are facial and skin care products, soap and raw materials for cosmetics (Graph 2). Graph 2: Composition of Thai Cosmetic Export 2010

Source: DEP

Thailand is the main cosmetic subcontracting base in ASEAN. Most factories mainly commercialize under their clientsâ&#x20AC;&#x2122; brand. The industry includes 762 companies and employs 220,000 people. Japan, Indonesia, Malaysia, the Philippines, and Australia are the primary market for Thailandâ&#x20AC;&#x2122;s cosmetic and spa products representing 53.77 % of cosmetic products export value. Japan is leading the group with an exceptional demand growth of 99.23 % (549.22 million

dollar in 2010) especially for cosmetic with herbal ingredients and natural products such as herbal soap, herbal products for hair and herbal deodorant.

7.1. New trends towards certified productions The constant increasing of the demand for natural and organic cosmetics is driving the Thai producers towards certified productions. As EU regulated standard for organic and natural cosmetic does not exist, it is only visible the application of both EU non-regulated voluntary standards such as European-wide ones and single certification body owned standards. The European- wide voluntary non-regulated most significant standards are NATRUE and COSMOS. Besides some other private standards set up and owned by single European Certification bodies, are ECOCERT and COSMEBIO for France; Bioagricert or ICEA, for Italy, etc. Label of natural and organic cosmetic has yet to be created in Thailand. For the time being, Thai companies must rely on foreign standards and certified bodies. However, according to the National Innovation Agency, the Organic Agriculture Certification Thailand (ACT) is considering drafting a certification for cosmetic products. After the discussion with the ACT, the researchers were informed that no specific deadline for application has been set at the moment.

7.2. Natural and Organic cosmetic in Thailand According to the DEP, the popularity of Thai herbal and natural products in an economic power such as Japan accentuates the potential and reputation of Thai herbal cosmetic at international level.

The Thai government is

aiming at turning Thailand into the Organic Hub of ASEAN within 5 years, and sees the herbal and natural cosmetic industry as one of the most promising sectors. The country can combine its plentiful natural resources with diversified plants and herbs, which can be used as active ingredients in making cosmetics products with its long-time renowned reputation for traditional drugs and alternative medicines. Many organizations in cosmetic, agricultural, research and development and policy planning in Thailand have publicized their support.

13 14 15

The Ministry of Commerce has accompanied Thai companies to organic trade fairs abroad and organized meetings with potential buyers for them. During visits, they have noted that Thai coconut oil and soap for spa services attracted customers’ attention. The Ministry believes Thai organic products can have great opportunities in the main organic market such as USA, Europe, France, UK, Germany and Spain. 16 The rapid growth of the herbal and natural cosmetic is

National Innovation Agency, (2552)

Department of Export Promotion, (2553), “Fact sheet สินค้ าเครืืองสาอาง/สบู่ และผลิตภัณฑ์รักษาผิว”.

Kwanchai Rungfapaisarn, March 26, 2011, “Bright future awaits Thai cosmetics industry”, The Nation, http://www.nationmultimedia.com/2011/03/26/business/Bright-future-awaits-Thai-cosmetics-industry-30151799.html. 14

http://www.biothai.net/news/7155 - BioThai Foundation, (2553).

http://www.nia.or.th/innolinks/page.php?issue=200912&section=6 – National Innovation Agency, (2552).

ASTV ผุ้จดั การออนไลน์, ดันไทยเป็ นฮับเกษตรอินทรี ย์ในอาเซียนอีก 5 ปี โกยรายได้ กว่า 8 พันล้ าน/ปี ,

20 เมษายน 2554,

http://www.manager.co.th/Local/ViewNews.aspx?NewsID=9540000048492.

also another factor that encourages the Thai government to support the local industry. The total value of natural and organic cosmetic has reached 7 billion USD in 2009, with 15-20 % growth each year. Main markets are USA with market value of 4,500 million USD, followed by the European Union at 1,000 million USD with Germany at the lead.

From the statistic of the herbal Club of the Federation of Thai Industries, about 70% of exported cosmetic products are herbal and natural based. Their value is registered at approximately 4,333 million USD growing by 33% from the previous year. However, only a small number of companies are in fact certified as natural and organic products. Only 7 cosmetic companies are listed on the Organic Directory of the Ministry of Commerce.

Although the EU natural and cosmetic market is the second most important after the US, it remains a small market that has yet to develop for Thai Exporters. In 2010, the total value of cosmetic products exported from Thailand to 27 European countries was registered at around 59 million USD growing around 38 % from 2009. European countries such as France and UK are the main competitors to the Thai cosmetic Industry. Only Belgium and Ukraine, among all European countries market have seen a remarkable growth in the import of Thai cosmetic products, 324.92 % and 170.37 % respectively.

According to the Thai Diplomatic Delegation in Brussels, the increasing stringency for

consumer goods control in EU is also another factor that refrains Thai companies from acquiring further market shares.

7.3. European Standards for Natural and Organic Cosmetic in Thailand The EU has not yet introduced official requirements to regulate natural and organic cosmetic. Some manufacturers and certification bodies have elaborated voluntary standards of natural and organic cosmetics to guarantee consumers that the products there are buying have been produced in accordance with a specific protocol and to certify the percentage of natural and organic substances contained in that cosmetic product. Each certification body has set its own standard that has different rules and requirements from the others in terms of percentage of organic ingredients in the recipe. Therefore … “the high numbers of certifications has increased the confusion of consumers and also appears to be a hindrance to the producers. This situation has led to a harmonization among various certifications in the formation of COSMOS standard and NATRUE standard; through which it is expected that these standards will reduce the confusion and enhance the competitiveness of the products. The most important elements for natural/organics cosmetics are: ‘having no chemicals or synthetic ingredients’, ‘quality’, and ‘good quality – price ratio’. ‘Traceability’ is used to ensure that there are no ingredients that are illegal in Europe. ‘Good marketing strategy of suppliers’ is crucial as well. The French market requires additional features as follows: ‘Fair Trade origin’, ‘no testing on animals’, and ‘organic certified ingredients’. ‘Paraben and Phenoxyethanol free’ is added value as well”.

Office of Permanent Secretary, Ministry of Commerce, “Organic Directory”. DEP, (2010). 19 Thai Europe.net, (2009), “สรุ ปข้ อมูลเศรษฐกิจสหภาพยุโรป และความสัมพันธ์ ทางเศรษฐกิจกับไทย ”, http://news.thaieurope.net/content/view/3141/222/. 18

The Perception of European operators toward Thai natural skin care products. SCRIPT project

NATRUE is an association of cosmetics producers that have developed their own standards. A number of selected external independent certification bodies have to certify the products of companies willing to be certified under NATRUE standards: Alphachem (Germany), Bioagricert (Italy) Hygade /Denmark) IBD (Brazil). For additional details see Cosmetic Study Script 2011, http://issuu.com/thaitch/docs/script_cosmetics_study_2011, page 26. The reasons behind private standards is to legitimize pure natural & organic cosmetics from competing products that contain low levels of natural ingredients and high levels of synthetic chemicals. The industry, realizing that standards and logos are important to build consumer trust, is however divided in terms of developing these very standards. Thus, consumers still remain confused, and are not sure which one they can actually rely on

(Organic

Monitoring, 2008). For producers, various certifications may be a hinder for export products in global trade since different countries prefer different national and regional standards. The researcher have explored this list of European cosmetics certification and found that no Thai companies has been or is being currently certified by one of them. Only Bioagricert, a well-known certification body from Italy is present in the country with an operational unit and is able to certify cosmetics processes and products in accordance with EU standards. Bioagricert has introduced Bio & Natural Cosmetics certification to the Thai market which is adopted by 5 companies in Thailand. 4 of them are private label manufacturers (subcontractors not trading with their own brand name) and one is exporting their own brand. Unfortunately, the latter was not available for an interview.

7.4. Lessons learned from the interviews to Cosmetic companies The study is based on personal in-depth interviews with experienced operators of cosmetic sector. The companies interviewed were export-oriented subcontractors of foreign companies. All interviewers are already certified under natural and organic EU criteria. A short identification fiche of each interviewer is shown in Annex I. The information collected from the interviews is summarised all together here below in an attempt to assess the common reasons why Thai companies have applied in particular for a European certification. Image of Thai products ď&#x201A;ˇ

Thai have a good image for herbal products. Thai style packaging make the products stand out. Moreover, the traditional image of the products can benefit from Fair Trade supporters. However, they find that Thai companies in general do not have a clear stand point. They usually follow trends and jeopardize the whole market. When every company is doing the same things the problem of price dumping usually follows. The quality is then compromised.

Government Support ď&#x201A;ˇ

They also found the government support Insufficient. The current support includes only participation in trade fair but the company would like to see more concrete action.

http://www.organicmonitor.com/r0803.htm - Organic Monitoring (2011)

Company’s activities 

All companies interviewed are subcontractors. Their products range includes coconut oil, soap and cosmetic. Three companies have explained that the reason why they do not market their own brand is due to the excessive budget that follows. In this sense, it is difficult for Thai companies to compete with internationally recognized foreign brands. Subcontracting is, therefore, a safer choice for Thai companies.



Two companies expressed that the reason behind their decision to launch themselves in the organic sector is influenced by their concerns for the environment while the rest did not mention.

Thai natural and organic cosmetic in the world market 

All of them find the organic sector a promising market and that Thailand could find a place in the market by highlighting on the country’s traditional medicine reputation and its variety of herbs.



One subcontractor added that Thai companies should create a clear image of its own and not follow producers from other countries and their compatriots. Thai culture can be good marketing tools in the design of products and packaging.



The same subcontractor also added that the Thai Government should provide more support to Thai companies, especially to exporters’ participation in trade fairs abroad. Thai producers should also build solidarity and avoid intra-competition.



Some companies are using recycled material and organic ink in their packaging.

The importance of certification 

Every company believes that, in order to engage itself seriously in this sector, certification is essential.



The application process can be difficult in some cases, however, it will help them gain credibility in front of their clients and consumers and open doors to more opportunities.



Though Europe remains a small market for Thai companies, they choose Bioagricert because it is the only European certification body present in Thailand and it gives them an international image.



The difficulties of being certified include the obligation to use only certified ingredients which are not always easy to find in Thailand. Some companies shared with the researcher that, in order to receive the certification, they have to import some ingredients from other countries.

7.5. Export Opportunities in cosmetic sector 7.5.1. Opportunities 

The organic market abroad is growing very rapidly, especially in Japan, USA and Europe.



The trend of health consciousness in foreign markets already results stricter regulations for consumer goods, especially in major markets. Turning the company toward a chemical-free direction is staying ahead of this trend.



The current perception of Thai products among foreign customers is in favor of natural and organic cosmetic.



Thai government’s position is in favor of the development of organic cosmetic products.



The expansion of Thai hotels and spas in Thailand and abroad is positive and it can be a market for cosmetic producers

7.5.2. Constraints 

The insufficient local supply of organic certified ingredients which obliges Thai companies to import their ingredients.



The time-consuming application process. One company that was interviewed has lost some clients because they could not react fast enough to the customers’ requirements due to the stringency of some process.



The heavy budget burden of brand marketing which refrains Thai companies from developing their own brand



The intra price competition among Thai companies



The insufficient immediate concrete and financial supports from the Thai government i.e. participation in trade fairs

7.5.3. Lessons learned on Thai organic cosmetic 

The Thai cosmetic sector has a future in organic production. However, the development of Thai organic cosmetic depends on the upstream production of organic agriculture who supplies ingredients for cosmetic manufacturers. Today, the organic agriculture might still need to be developed. However, considering the government support and the local and international organic trend, the sector might not have to wait for too long.



The consumers in the major developed countries are becoming more and more conscious on personal health and the environment. Regulations that controlled the level of chemical used in consumer products are becoming increasingly strict especially for cosmetic. Although the European market remain a small source of revenue for Thai companies today, European organic certification can served as a tool to open doors to other countries where no local standards has been developed and where European standards are recognized.

7.6. A short guideline of how to export Thai organic and natural cosmetics to EU in accordance with NATRUE standards The legal framework for Thai companies who are interested in selling cosmetic products to EU, is represented by compulsory sector regulations which includes Council Directive 76/768 where are described the control of chemical used in products circulating in the European market, EU Cosmetics Regulation (EC) No 1223/2009 and the EU regulation ‘REACH’ for the registration, evaluation, authorization and restriction of chemicals.

Thai operators that want in addition EU organic or natural certification for their products, may refer to Bioagricoop (www.bioagricoop.org), Franco-Thai Chamber of Commerce (www.francothaicc.com), or visit the internet site www.script-thai.eu.

8. Conclusions Thai companies are becoming increasingly aware of the benefit of having their goods labeled regulated and voluntary EU and international certifications. The world organic market is growing at rapid pace especially in the developed country such as the European Union, USA and Japan where consumers are becoming increasingly aware of themes such as pesticides, chemical waste and workerâ&#x20AC;&#x2122;s rights. Thailand, as one of the main agro-food exporters of the world, sees this opportunity as a chance to differentiate itself from other competitors and set a goal to become the ASEAN Organic Hub within the next 5 years. Further to the agro-food sector, the country is also aiming at developing other non-food sectors, including textile and cosmetic, to support the production from the organic agricultural sector as well as diversify the product range. In order to be accepted in the organic market, the producers must comply with 2 set of standards: regulated and voluntary. The first set represents mandatory rules set by the government of the client countries and the latter is usually agree among operators to represent a reassurance to the end-consumers and differentiate themselves from non-organic producers. Companies interested in approaching any market have to carry out certification procedures that are recognized by the buyers and consumers in the market to ensure adequate standards. Thai companies already holding European certifications and exporting overseas are operating mainly in Agro-Food and Textile business and a few others in cosmetic. From the study, it can be concluded that the application of theses certification, whether for agro-food, textile and cosmetic, is mainly market-driven. Most of the Thai companies that were interviewed had chosen to apply for European certifications to facilitate the market access while very few are using the certifications to support the social development of villages where the production takes place. According to the interviewees, certifications help increase the credibility and accentuate the quality of their products towards buyers and end-users. Though some constraints still represent a hindrance, notably the contingency of the process, the investment that entailed the certification process or the lack of local certified raw material (fiber and essential oil), the effects of certification on Thai companies are still perceived as positive and measured by the increase of trust and enquiries resulting at the end in an increase of exports and sales. Successful stories visible in food sector could be an encouragement to the Thai textile and cosmetic sectors that are holding significantly less hold European Certifications. However, even it is difficult to raise broad conclusions from present state of the art, it is clear that pioneer companies have already recorded positive results from certification. Thai Silk seems to have a chance to increase its popularity focusing on small, high quality and geographically identified productions. In regards to European and international certification, Thai silk producers should first have to design a strategy to certify the link between territory, tradition and product given the constraints presently existing at international level.

Additionally, eco-friendly production, such as certification under GOTS standard, could generate an additional value For Thai Silk product Organic Cosmetics still need a single common standard or procedures able to provide to consumers and international buyers the means to clearly identify products in accordance with quality criteria. At present, Thai companies are relying on the certifications of the export destination country or internationally recognized standards. Despite their generally high quality and good reputation, Thai Organic Cosmetics are mostly commercialized under other brand labels and, as consequence, loose their Thai identity. The sector in itself still needs to improve the collaboration among operators to preserve and enhance the products identity. In addition, the governmental support for the cosmetic sector is needed in the in the upstream production (raw material) and the promotion of the products to the foreign consumers. In the same way as for Silk, the use of Geographical Identity certification, combined with the existing Organic certifications could probably help this particular product to build a stronger brand, to help consumers to identify Thai products from the worldwide offer and, finally, to support their export to other countries.

ANNEX I - DATA OF INTERVIEWERS

ANNEX I.1 - Agro-Food Sector Company Name: Southeast Asia Organic th Address: 333/109-110 Moo 4, 9 Floor, Laksi Plaza Building Chaengwattana Road, Talad Bangkhen, Laksi, Bangkok, 10210, Thailand Tel.: +66 2 576 0925 Fax: +66 2 576 0928 Contact name: Chatchaphon Pittayathikhun Position: Owner Web: www.cpp.co.th Mail address: chatchaphon@cpp.co.th Company Background: Southeast Asia Organic has been operating in the Agro Food production since 28 years. The company is a medium small export-oriented enterprise. The great amount of fruit and vegetables that Thailand produces every year requires, for the South East Asia Organic, a very active marketing campaign in other countries, to keep their export flow constant and avoid overproduction. SEA Organic often participates to Exhibitions in other countries but mainly relies on their sole distributors for each market they export to. Products Main organic products are: Tapioca, Sugar cane and natural sweeteners Certification: EU Organic, IFOAM

Company Name: Exoriens Co., Ltd. Address: 317 Kamol Sukosol Building, 16th Floor, Unit E Silom Road, Silom, Bangrak, 10500, Thailand Tel.: + 66 2 6312811 Fax: + 66 2 6312812 Contact name: Peyton A. Enloe IV Position: Export Manager Web: www.exoriens.com Mail address: peyton@exoriens.com Company Background: Exoriens has been founded in Thailand 8 years ago and has been involved in the agro food production since its inception. Mostly producing fresh fruit and vegetables (also frozen products and processed fruit) they are practicing contract farming. For this reason, their volumes of production vary by product and season, depending on the demand of buyers. Most of their goods are distributed to other countries through large importers and wholesalers for redistribution but they also directly supply some of the major retail chains overseas (Australia mainly but also North America, EU, UK and New Zealand) and some smaller volume to Middle-East. Products: Mainly fresh fruit and vegetables with some quantities of frozen and processed fruit and vegetables.. Certifications: GLOBAL Gap; BRC; Thai GI

Company Name: Doi Tung Coffee Address: 1875/1 Rama IV Rd., Lumpini, Pathumwan, Bangkok 10330 Tel.: +66 2 252 7114 Fax: +66 2 254 1665 Contact name: Thanawat Srikhirin Position: Chief Operating Officer (Social Enterprise) Web: www.doitung.org Mail address: thanawat@doitung.org Company Background: Doi Tung Coffee project started 10 years ago as part of a major project promoted by the Mae Fah Luang Foundation under Royal Patronage (MFLF), a Thai non-for-profit development organization established by the late Princess Mother of the King of Thailand, Princess Srinagarindra and founded to carry out development activities to improve the quality of life of Thailand's ethnic minorities in the Doi Tung area (Chiang Rai Province). From his start, 40 years ago, the project reached many important results, recognized internationally, by applying social

entrepreneurship to solve the problems of poverty, deforestation and opium production in a part of the once notorious “Golden Triangle”. At the present time the MFLF program includes not just the Doi Tung coffee but also production of macadamia nuts, handicrafts (cotton clothing, accessories, ceramic, paper etc.), museums, promotion of tourism in the Chiang Rai province and much more. Doi Tung Development Project program, the Doi Tung coffee project is more focused into supporting the communities involved in the production, constantly improving their quality of life, than into making economical profit selling their products. MFLF main marketing goal is now to strengthen the Doi Tung brand image: emphasizing their social mission, identifying each project with the area of origin and promoting the high quality of their productions. Products: Coffee Certifications: Thai GI certification; EU GI (in progress)

ANNEX I.2 – Textile Sector Company Name: Bangkok Weaving Mills. Address: 879 Bangkok-Nonburi road, Bangsue, Bangkok, 10800, Thailand Tel.: +66 2 586 0909 Fax: +66 2 587 2338 Contact name: Phongsak Assakul Position: Managing Director Web: www.bwm-group.com Mail address: bwm@bwm-group.com Company Background Established in 1950, Bangkok Weaving Mills Group consists in a group of 5 companies located in Thailand, covering spinning, weaving, dyeing and finishing as well as cutting & sewing operations. Products: organic cotton Certification: GOTS

Company Name: ThaiCraft Fair Trade Co., Ltd. Address: 242 Soi Akharn Songkroh Akharn Songkroh Sai 15 Road, Thung Wat Don, Sathorn, Bangkok 10120, Thailand Tel.: +66 2 6760636-8 Fax: +66 2 2860675 Contact name: Stephen Salmon Position: Consultant Web: www.thaicraft.org Mail address: stephen@thaicraft.org Company Background: The company is one of the few Fair Trade organizations WTO certificated operating in Thailand. Its operating with more than 70 communities can count on many years of presence on this territory and has a good visibility in Bangkok, where it’s having market fairs almost every month. A number of communities deal with traditional Thai methods for silk production and using only Thai native Silk bugs and are certified Fair Trade. Certifications such at WTO and FTO are now well known worldwide and appreciated by many consumers, attracted by the idea of buying something with an added social value. Products: Silk Certifications: Fair Trade

ANNEX I.3 – Cosmetic Sector Company Name: Earth Born Address: 37/1 Sukhumvit 67, Sukhumvit Road, North-Phra Khanong, Vadhana, Bangkok 10110, Thailand Tel.: +66-02 714 1167, +66-02 658 3877 Fax: +66-02 658 3846, +66-02 391 9328 Contact name: Mr. Pisit Veravaidhya Position: Owner Web www.earthborn.co.th Mail address: info@earthborn.co.th Company Background: Earth born is a producer of organic coconut oil and organic cosmetics. They have been exporting for 6 years. Their main markets are the USA (main market) and EU (Germany and Belgium). Their coconut oil is exported under the brand of their clients. They have a cosmetics line but subcontract to another company by using their own coconut oil. Their competitors in the coconut oil market are Philippines and Indonesia. Quality is what distinct Thai coconut oil from products from other countries. Products: Natural and Organic Cosmetics Certification: EU Natural and Organic Cosmetics (BIOAGRICERT) Company Name: Mind Blender th Address: 333/109-110 Moo 4, 9 Floor, Laksi Plaza Building Chaengwattana Road, Talad Bangkhen, Laksi, Bangkok, 10210, Thailand Tel.: +66 2 576 0925 Fax: +66 2 576 0928 Contact name: Chatchaphon Pittayathikhun Position: Owner Web: www.cpp.co.th Mail address: chatchaphon@cpp.co.th Company Background: The company started their activity 6 years ago bearing in mind one objective, to help and support Thai farmers and small agricultural community. They started with food products and later launched themselves in the cosmetics sector. At first, they only supply for their own spa and hotel. Nowadays, they work with hotels, hospital and private label. Their own brand “body satisfied” is only a sample for clients; they do not promote their own brand. Today, their main market remains local. They have only some clients in Italy and just start discussing with potential clients in France. They do not want to take in charge the export market on their own feeling that it is not their specialty. They are planning to apply for more certificates (GI) for products from 4 regions of Thailand. They believe in Thai organic products for its variety, quality and ethnicity image Products: Natural and Organic Cosmetics Certification: Fair Trade, EU Natural and Organic Cosmetics (BIOAGRICERT)

Company Name: Chiangmai Organic & Spa Address: 179 Moo 9 Nongkaew Hangdong Chiangmai 50230 Tel.: 053-443069 053-443070 Fax: 053-434760 Contact name: Ms. Tong Employees: Marketing Manager Web www.chiangmaiorganic.com Mail address: archinya@chiangmaiorganic.com Company Background: Chiangmai Organic & Spa is a manufacturer of natural and organic cosmetics products and soap for OEM. The factory was created around 10 years ago. In the early years, they produce natural products and launched their organic line 5 years ago to show their support to the environment and Thai agricultural products. Since there are limited numbers of certified products from Thailand, some ingredients have to be imported though they try to use base oil from Thailand as much as possible. The USA is their main market where they have opened a sales office (San Francisco). For export they usually go to fair in USA and Germany. One client in France just contacted them. Benefit from standard: it leads to new opportunity at international level especially the organic market which is very important and growing. The customers in this sector prioritize quality over other things. Products: Natural and Organic Cosmetics Certification: EU Natural and Organic Cosmetics (BIOAGRICERT)

ANNEX II: LIST OF QUESTIONS FOR INTERVIEWS Topic of Interest 1. Company Background (Size, Type, Type of productions, Target of distributions)

Thailand Industry’s overview (Strength, Weakness)

Questions Could you please give us some information about your company?  How long have you been in the cosmetics production?  What’s your position in the cosmetics market? (Size of production, Target) Which are your products typologies? Where are your main markets ? Please provide percentage. (Internal market, Export) If export, where? (Asia, Europe etc.) How do you distribute those products? (Direct Sales, Network, Other distributors chain) What is your opinion about the quality of Thai cosmetics production?  (Strength, Weakness) What is your opinion about the marketing and distributions strategy of Thai cosmetics production?  (Strength, Weakness )

Certifications (Reasons for applying, Benefits)

Your company holds natural/organic cosmetics certifications  Which one did you apply for?  How did you find out about those certifications?  Which products did you certified?  How did you choose the one to apply for?  Why did you apply?  What is your opinion on the application process? Did your business receive any benefits from applying to those certifications?  Did the certification add more visibility to your product? How?  Did it increase positive feedback from customers? (Quality, Trust)  Did it increase your sales?  Did it allowed you to increase product prices?  If not, why do you think they didn’t give you benefits?

ANNEX III: BIBLIOGRAPHY Online data sources and materials: http://www.thailandgreenhandbook.thaiembassy.be/ - Thai Embassy http://www.organic-world.net/ - Global Organic Statistic and Farming http://epp.eurostat.ec.europa.eu/ - European Commission Statistics http://eur-lex.europa.eu/ - Access to European Union law http://www.organicstandard.com/ - The Organic Standard is an international monthly journal http://ec.europa.eu/ - European Commission http://www.ioas.org/ - International Organic Accreditation Service http://www.globalgap.org/ - Global Gap http://www.ifoam.org/ - Ifoam http://www.brcglobalstandards.com/ - British Retail Consortium http://www.ifs-certification.com/ - International Featured Standards http://www.global-standard.org/ - Global Organic Textile Standard http://www.eco-label.com/ - European Eco Label http://www.wfto.com/ - World Fair Trade Organization http://www.fairtrade.net/ - Fair trade International http://www.ttcrafts.co.th/ - Thai Tribal Craft http://www.thaicraft.org/ - Thai Craft http://www.iso.org/ - International Standards for Business, Government and Society http://www.newswit.net/read/571419.html, http://www.nia.or.th/ – National Innovation Agency, http://www.nationmultimedia.com - The Nation, http://www.biothai.net/news/7155 - BioThai Foundation, http://www.manager.co.th/ - ASTV ผุจ้ ดั การออนไลน์ http:// thaieurope.net - Thai Europe.net http://www.naturalcosmeticnews.com/ http://www.organicmonitor.com – Organic Monitor Printed publications: กรมสงเสริ มการสงออก, กระทรวงพาณิชย์, (2553), “Fact sheet สิ นค้าเคร่ องสาอาง/สบู และผลิตภัณฑ์รักษาผิว”. ศูนย์สารสนเทศ กรมสงเสริ มการเกษตร, (2552), “จานวนประชากรภาคเกษตร 2547-2551” Best Practices for Organic Policy - United Nations - New York and Geneva, 2008 Office of Permanent Secretary, Ministry of Commerce, “Organic Directory”. Thai industry overview 2010-2011, page 101, the office of industrial economics The textile statistics, 2009/2010. Thailand Textile Institute