Facilitating SME Trade Through Better Understanding of Non-Tariff Measures in the Asia

Facilitating SME Trade through Better Understanding of Non-Tariff Measures in the Asia Pacific Region

Atlanta, United States

Workshop Synthesis

1. Introduction

The workshop on Facilitating SME Trade Through Better Understanding of Non-Tariff Measures in the Asia Pacific Region was one of five workshops making up the APEC Global Value Chain Event for SMEs. It was held at Georgia Tech Hotel and Conference Center in Atlanta, GA, USA. The Philippine and US member economies jointly organized the event.
The workshop was designed to provide the representatives of MSMEs and industry organizations, policy makers, and trade specialists from APEC member economies the opportunity to discuss the opportunities as well as challengesaffecting MSME trade in agricultural and processed food products. Its specific objectives include:

To enhance awareness of MSMEs aboutnon-tariff measures, particularly the rationale behind their application on trade, the problems faced by MSMEs related to the application of NTMs, sources of information about these measures, and possible measuresto address issues faced by MSMEs related to the application of NTMs by member economies.
To identify possible actions for APEC economies to take to facilitate the trade of MSMEs and to promote their participation in global value chains.
To determine how MSMEs may best be assisted by trade promotion offices (TPOs) and business support organizations.

The workshop was held for one and half days and attended by 50 participants.

2. Session 1: Understanding Non-Tariff Measures

NTMs are all measures imposed by governments, other than tariffs, that affect trade for legitimate objectives such as protecting the health and life of an economy’s residents, as well as to prevent the introduction of diseases and pests that can potentially the agriculture sector of the importing economy.

NTMs are classified into those that apply to imports and those to exports. Most of the NTMs on imports are technical measures such as sanitary and phyto-sanitary measures, technical barriers to trade, and pre-shipment inspection. The rest of NTMs on imports are non-technical measures such as contingent trade measures or rules of origin.

The challenge is how to apply them in a way that it does not become a de facto barrier to trade.

Several Articles in GATT 1994 and related agreements legally enable and regulate the use of NTMs in the global market place such as the TBT Agreement or the recently concluded Trade Facilitation Agreement of the WTO. Preferential trade agreements likewise have chapters that authorize and govern the application of preferential NTMs.
WTO maintains I-TIP, which is portal for getting information about NTMs proposed by its members and notified to the WTO in compliance with their transparency obligations in several agreements.
The International Trade Centre offers MacMap, a database of information on NTMs that ITC and UNCTAD collect on a regular basis from 50 countries. The data is a snapshot of NTMs of the economies concerned in a given year.

MacMap is building a database on perceptions of stakeholders about how actual NTMs impede trade or not. Through the perceived concerns of stakeholders about the application of the NTMs, SMEs are fairly given advance information about the expected trade cost they may encounter in selling into a given market.

3. Session 2: Identifying Sanitary and Phytosanitary (SPS) Measues and Technical Barriers to Trade Which May Affect Market Access

The SPS measures intend to protect human or animal health from risks arising from additives, contaminants, toxins or disease organisms in food, drink, or feedstuff; human life from plant or animal-carried diseases; animal or plant life from pests, diseases, disease-causing organisms; and the country from other damage caused by entry,, establishment or spread of pests. The measures require product criteria; quarantine measures; processing requirements; certification; inspection; testing; health-felted labeling.
The WTO’s Agreement on SPS recognizes the right of members to protect human, animal or plant life or health. It provides disciplines how to exercise the right so that it does not become an unnecessary trade barrier.
The SPS agreement of the WTO presumes members to be consistent if their exports conform to international standards. SPS standards are set following international standards. There are three institutions in the world, which are mandated to develop standards: Codex Alimentarius Commission for food safety; World Organization for Animal Health (OIE) for animal health; and the International Plant Protection Convention (IPPC) for plant health.
Another provision requires members to base their SPS measures on international standards, guidelines and recommendations. This is the minimum. Members may strengthen their standards if needed by the risks they face. Departures from these standards require risk assessment. The use of the procedure is to justify scientifically if a departure is appropriate for the issue raised by the member.
Members may provisionally impose SPS measures when relevant scientifically information is insufficient and on the basis of available information. However the members imposing these have the obligation to obtain additional information to assess the risk; and review the measure within a reasonable period of time.
Transparency is important. Members imposing new measures shall establish an equity point and designate a notification authority. They shall notify other members of new or changed SPS regulations when no international standard exits, or the new regulation is different than the international standard; and regulation may have significant effect on trade.
The TBT agreement like SPS, allow members to pursue legitimate objectives, such as providing information about the product. The use of these measures ought to be done in a way that avoids unnecessary barriers to international trade. These shall be applied in a non-discriminatory manner between like products. The use of international standards is encouraged. Notification obligations are provided for in the case of new or amended TBT measures.
TBT measures cover technical regulations and standards as these apply to all products (industrial and agricultural). Conformity assessment procedures are spelled out by the agreement.
TBT measures cover standards and technical regulations. The former are voluntary and the latter are mandatory. The measures likewise conformity assessment procedures. TBTs are defined according to the type of measure, e.g. labelling, marking, or processing. SPS measures are defined according to objectives, i.e. to protect animal health.
The resource person walked the participants through on the use of the WTO’s ITIP to find measures concerning the exports of SMEs.

4. Session 3: Hurdling Market Entry Requirements for Agriculture and Food Products

Agriculture and food products are among the key exports of MSMEs in the APEC region. According to the UNCTAD Secretariat, about 43% of all NTMs applied on trade are on agriculture and food. This session looked at the experiences of representatives of MSMEs in navigating through the NTMs that affect their exports of agricultural and processed food products. It also takes up the experiences of those in the public sector tasked to assist SMEs hurdle the trade costs associated with NTMs and their administration.
Mr. Jeff Schwager is the President of Sartori Company since 2009. This family owned and operated company exports specialty cheese to retail, food service and ingredient markets in 30 different countries.
Mr.Schwager talked about one particular NTM, geographical indication (GI). The misuse by a trading partner of this NTM as a trade barrier is adversely affecting his exports. Claiming it is serious, he asked APEC to assemble knowledge on best practices in the world regarding the use of applying GIs. What does a trading partner need to meet before it is conferred intellectual property right to an otherwise “common name”?
Mr. Hendra Utama heads the Standard Division of Majelis Ulama Indonesia (MUI), which is authorized to provide halal certification services in Indonesia. He is a certified Halal trainer and auditor. The institution he works for, the Research Institute for Food, Drugs, and Cosmetics Majelis Ulama Indonesia or MUI, after 23 years has become the acknowledged leader in halal certification and assurance systems not just in Indonesia but internationally as well with other countries adopting the systems that Mr. Utama has helped shaped.
Mr. Utama talked about Halal certification services. He reported that Indonesia has recently come up with a Halal Assurance Act, which is due to be implemented in 5 years. All goods, regardless of whether it is imported or locally produced, would have to be halal certified. His organization provides technical assistance to MSMEs comply with halal regulations.
Mr. Bruce Harsh is the Director of the Distribution and Supply Chain, US Department of Commerce. With more than 29 years of international trade experience at the U.S. Department of Commerce, he currently manages the Supply Chain unit under the Office of Supply Chain, Professional & Business Services.
Mr. Harsh talked about the importance of getting as much information about regulations enforced by a given market in deciding whether to export agriculture and food products to that market. According to him, global losses of US MSMEs reach 750 billion dollars annually. Trade agreements, government websites, and other sources of information need to be studied. He also stressed the importance of SMEs being involved with trade associations. The government is an important source of information and assistance for MSMEs, when they decide to export.
Mr. Kent Shigetomi has worked for the Office of WTO and Multilateral Affairs or WAMA under the Office of the United States Trade Representative (USTR) since July 2014. He is assigned to issues related to technical barriers to trade, rules of origin, and development. Before joining WAMA, he spent 14 years as the Director for Mexico and NAFTA Affairs also under the USTR. Prior to joining USTR, he was a Foreign Service Officer with the Department of State.
Mr.Shigetomi stressed the need for a comprehensive approach to resolve issues such as limited access to information, education, training, technology, capital, and market. Business incubators and public private partnerships can be beneficial. It is important to analyze the regulatory impact on SMEs when creating regulation. Capacity building programs need to take into account the needs of targeted SMEs and should focus on changing behavior.

5. Session 4:Connecting MSMEs to Global Value Chains

In 2010, global trade in goods and services reached 19 trillion dollars. Eighty percent of that is accounted for by the international production networks of transnational corporations (TNCs). Global value chains (GVCs) are responsible for the massive growth of intra-industry trade in parts and components in the world today. This session explores how howMSMEs may join and upgrade their participation in GVCs?
Mr. Albert K. Shenis the National Deputy Director of the Minority Business Development Agency, (MBDA), an agency under the US Department of Commerce. Before this job, he owned and operated a small business for which he received numerous awards from 2009 to 2012. He co-founded a non-profit group called the Washington State Minority Business Advisory Council (MBAC), of which he is now its advisory board member.
Mr. Shen talked about the usefulness of leveraging the knowledge of minority business enterprises about markets that they are most familiar with, likely because they may have come from those before migrating to the United States.
Ms. Daisy Johanna Uy is the Chemical Engineer of Profood International Corporation, the largest dried fruit producer and standard bearer of world class processed fruit products from the Philippines. From the small company that once catered only to the local market, Profood International Corporation has grown to become the leading producer of various dried fruit, preserves, purees, concentrates, and juices.
Ms. Uy talked about her company’s experience in starting and maintaining export businesses, pointing out the difficulties a small company has to go through at its early stage of internationalization. She stressed the importance of being persistent in the midst of challenges, and importantly of learning from setbacks.
Mr. Craig Wilson is the Vice President and General Merchandising Manager of quality assurance/food safety, non-foods quality assurance, and merchandise services for Costco Wholesale. Prior to joining the company, Mr. Wilson worked as a special projects director for Frigoscandia Equipment Food Safety Systems (JBT) for over 24 years. During his time with Frigoscandia, Craig published numerous research papers in the areas of food safety and food processing. He holds many patents, most notably for the steam pasteurization of food. Craig is the recipient of the Gia/Matek Global Excellence in Food Safety Award and serves on the steering committee for the National Food Safety Consortium, as well as the technical committee of the Global Food Safety Initiative.
Mr. Wilson talked about his company’s experience of conveying to consumers savings in costs by the company arising from improvements in organizing the business. His company, Costco, a membership warehouse club with presence in hundreds of locations all over the world, is dedicated to bringing their clients the best possible prices on quality brand-name merchandise.
Mr. Jaime Garchitorena serves as the President and CEO of the Credit Information Corporation (CIC), a Philippine Government-Owned and Controlled Corporation (GOCC). He received his Master’s Degree in Entrepreneurship from the Asian Institute of Management in 2000 and spent his first five years after graduation as a small and medium scale business consultant. Prior to his appointment as President of the CIC, he spent 10 years working on business and advocacy related projects focused on IT Solutioning, IT Education, and Web Development and Communication, including a role in the Business Development of Nexus Technologies, Inc., a top 400 company and IT Solutions provider in the Philippines.
He talked about how his company being the leading provider of independent, reliable, and accurate credit information in the Philippines particularly of MSMEs.. CIC will create a data-reliant credit environment that is responsive to the needs of MSMEs.

6. Session 5: Action Planning: Challenges and Actions

Challenge 1: The MSMEs have poor access to, and are less able to understand and apply, information related to export requirements.

Actions:

Short Term:

Through outreach to MSMEs, economies can identify the biggest gaps in knowledge on NTMs and related export requirements.
Economies can encourage MSME participation in relevant Food Supply Chain Forum (FSCF) activities (e.g., export certification, trade association capacity building).

Midterm:

Economies can develop and disseminate easy to understand information materials on NTMs and export requirements.
In implementing the multilateral and/or preferential trade facilitation agreements, economies can take the situation of MSMEs into account.
Economies can facilitate access of MSMEs to information by centralizing it through a single and accountable inquiry point.

Challenge 2: The MSMEs face difficulties complying with regulations associated with exporting.

Actions:

Short Term:

Economies can identify strategies from successful MSMEs to share with new-to-export MSMEs.

Midterm:

As part of good regulatory practice, economies can consider the effect of proposed regulatory actions on MSMEs to facilitate compliance and lower trade costs.

Challenge 3: The MSMEs have poor access to information on opportunities of and specific requirements to doing business inside GVCs.

Actions:

Short Term:

Economies can develop and disseminate information materials on GVC business opportunities and requirements of joining GVCs; as well as on factors of successful integration of MSMEs.

Challenge 4: The MSMEs are less capable of meeting the requirements for joining GVCs.

Actions:

Short Term:

Economies in cooperation with appropriate associations of MSMEs conduct training and mentoring programs on understanding and applying specific requirements for joining GVCs, e.g. agriculture and food safety standards.

Midterm:

Economies can ensure a business environment conducive for joining GVCs, e.g. MSMES getting better access to improved infrastructure and logistics services and financing, as well as policy and regulatory environment.
Economies in association with trade associations create feedback/action forums for regulators to know how existing regulations and the way these are implemented affect MSMEs.
Economies can improve coordination of their agencies mandated to regulate as well as promote exports to quickly address problems faced by MSMEs.

6. Session 6: Best Trade Promotion Assistance

A key objective of this workshop is to find ways how MSMEs may best be assisted in their respective export businesses particularly in making these firms understand better NTMs and improve their capacities to comply with them. Panelists coming from the public sector tasked to assist SMEs and another group from the SMEs which have proven to be successful in their respective export businesses were selected to talk about their respective experiences. This session looked at ways of improving their capacity to export, finding out what their common gaps are and how they can be assisted.
Ms. Agnes Perpetua Legaspi is the Assistant Director of the Export Marketing Bureau (EMB) of the Philippine Department of Trade and Industry (DTI). She has extensive experience in the area of trade negotiations including the Philippine-Japan Economic Partnership Agreement (PJEPA), ASEAN-Korea, and ASEAN-Australia-New Zealand Trade in Goods agreements, and the ASEAN-China Working Group on Economic Cooperation- Business Portal Project. Likewise, she has a vast knowledge on and involvement in small and medium enterprise (SME) development, trade facilitation and ICT matters.
Ms. Legaspi focused on information gaps. She talked about her agency’s programs including (a) Doing Business with Free Trade Agreements which tells MSMEs about the benefits as well as challenges in using PTAs, challenges such as compliance with NTMs; (b) Philippine export competitiveness program which promotes the use of information technology in administration of NTMs, e.g. single window; and engages commodity agencies to streamline procedures in administering NTMs and promote transparency.
Since 2013, Ms. Judy Rising Reinke has been the Deputy Director General of the United States and Foreign Commercial Service under the United States Department of Commerce. She serves as the Chief Operating Officer of the U.S. government’s premier export promotion agency managing its domestic and overseas trade offices. Her previous job at the Department of Commerce was the Minister Counselor for Commercial Affairs in new Delhi, India. In this capacity, she was the senior representative of the U.S. Department of Commerce responsible for the operations of the US&FCS in India, supervising the strategic program of seven trade promotion offices and four related agencies.

Speakers