TRADE BRIEF. Upgrading of Quality Infrastructure in Africa Project. Abrie du Plessis. June 2017 JUNE 2017
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1 TRADE BRIEF JUNE 2017 The Sanitary and Phytosanitary (SPS) policies of the African Regional Economic Communities (RECs), and the way forward for the Continental Free Trade Area (CFTA) Upgrading of Quality Infrastructure in Africa Project Abrie du Plessis June 2017 Copyright tralac, Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged.
2 ABSTRACT tralac, with the support of the Development Assistance section of the German Government through the Physikalisch Technische Bundesanstalt (PTB), recently completed a study comparing the Sanitary and Phytosanitary (SPS) policies of the African RECs. The study focuses on the Southern African Development Community (SADC), the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA) and the Economic Community of West African States (ECOWAS). In addition, the manner in which SPS matters are dealt with in the Tripartite Free Trade Area (TFTA) was studied along with brief comparisons to Mercosur and EU practices. This trade brief provides an introduction to the Continental Free Trade Area (CFTA) and an overview of the WTO SPS Agreement, together with a brief list of general observations, identified issues and some recommendations on the way forward for the CFTA. About the Author ABRIE DU PLESSIS is an Independent Expert and trade law consultant. He currently serves as a tralac Associate. Citation du Plessis, A The Sanitary and Phytosanitary (SPS) policies of the African Regional Economic Communities (RECs), and the way forward for the Continental Free Trade Area (CFTA). Trade Brief. Stellenbosch: tralac. Published by the Trade Law Centre (tralac) P.O. Box 224, Stellenbosch, South Africa, 7599 Copyright tralac, 2017 Acknowledgements This project was supported by the Physikalisch-Technische Bundesanstalt (PTB): Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the author and do not purport to reflect the views of the Physikalisch-Technische Bundesanstalt or the Trade Law Centre NPC. info@tralac.org Please consider the environment before printing this publication.
3 Trade Brief, June 2017 The Sanitary and Phytosanitary (SPS) policies of the African Regional Economic Communities (RECs), and the way forward for the Continental Free Trade Area (CFTA) by Abrie du Plessis 1. Introduction tralac, with the support of the Development Assistance section of the German Government through the Physikalisch Technische Bundesanstalt (PTB), recently completed a comparison of the SPS policies of the African RECs. The study focuses on the Southern African Development Community (SADC), the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA) and the Economic Community of West African States (ECOWAS). To this was added the manner in which SPS matters are dealt with in the Tripartite Free Trade Area (TFTA) and brief comparisons are made to Mercosur and EU practices. The full study will be made available under the auspices of the Pan-African Quality Infrastructure (PAQI). What follows is a brief introduction to the CFTA and an overview of the WTO SPS Agreement, together with a brief list of general observations, identified issues and some recommendations on the way forward for the CFTA. 2. A brief introduction to the Continental Free Trade Area (CFTA) At the 18th Ordinary session of the Assembly of Heads of State and Governments of the African Union held in Addis Ababa, Ethiopia in January 2012 under the theme Boosting Intra-African Trade (BIAT), African Union leaders endorsed an action plan for boosting intra-african trade and agreed on a road map for the establishment of a Continental Free Trade Area (CFTA); to be operationalized by an indicative date of At the 23rd Ordinary Session of the Assembly held in June 2014 African Heads of State and Governments directed the AU Commission to prepare objectives and guiding principles for the CFTA 1
4 negotiations. These had to be considered by AU Ministers of Trade with a view to submit them to the AU Summit for final endorsement and in order to launch the CFTA negotiations. This was duly done and incorporated into the CFTA Framework adopted at the AU Summit held in Johannesburg, South Africa, in June The objective behind the CFTA is to achieve a comprehensive and mutually beneficial trade arrangement among the 55 Member States of the African Union. This is premised, in addition, on the aim to advance the goals of the 1991 Abuja Treaty 1, in particular to eventually create the African Economic Community (AEC). The overall objectives of the CFTA are as follows: To enhance competitiveness at all levels and more specifically at the industry and enterprise level through exploiting opportunities for scale economies, reducing business costs, continental/global market access and better reallocation of resources including through the development of trade-related infrastructure; To overcome dependence on exportation of primary products and promote social and economic transformation for inclusive growth, industrialization and sustainable development in line with Agenda 2063; 2 To realize the potential to expand and accelerate the growing diversification and dynamism of intra-african trade including the aim to increase by 50 % trade among African countries by 2022 through better harmonization, coordination and implementation of trade liberalization and facilitation regimes and instruments across RECs and across Africa in general; In the context of boosting intra-africa trade and realizing the transformational potential of increased trade among African countries, to create a freer market for goods and services, building upon the trade agreements within the regional economic communities and associated commitments and thus pave the way for accelerating the establishment of the Continental Customs Union; and to Resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes. 1 It entered into force in Agenda 2063 is the AU Vision and an Action Plan adopted at the organization s 50th Anniversary. The Heads of State and Government adopted certain ideals about continental development and unity which Agenda 2063 should translate into concrete objectives. 2
5 One of the lessons from the TFTA process is that TBT and SPS issues, which are of a more technical nature, can be prioritized, as agreement should be easier to reach. Early results can serve as an indication of progress during the CFTA negotiations. The best practices Guideline adopted for negotiating the CFTA means that a comparative analysis of SPS and TBT instruments and practices of the RECs as well as the WTO should be carried out in order to assist the relevant CFTA TWGs. 3. A brief history of the WTO SPS Agreement In contrast to the WTO TBT Agreement, the SPS Agreement does not have a clear predecessor in GATT law or practice, but evolved as an entirely new agreement. Initial negotiations focused primarily on amendments to and clarifications of Article XX(b) of the GATT, the GATT s General Exceptions provision, which states that nothing in the GATT shall be construed to prevent the adoption by any contracting party of measures which are necessary to protect human, animal or plant life or health, subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade. The 1986 Punta del Este Declaration which launched the Uruguay Round called for increased disciplines on sanitary and phytosanitary measures. The Working Group on Sanitary and Phytosanitary Regulation reached substantial agreement on a draft text in November 1990 and the final agreement was reached in The WTO Agreement on the Application of Sanitary and Phytosanitary Measures entered into force on January 1, 1995, when the WTO came into existence. 3.1 The definition of SPS measures in the WTO SPS Agreement SPS measures are defined by their purpose, which is to protect animal or plant life or health within a territory from risks arising from the entry of pests and diseases, disease-carrying organisms; or disease-causing organisms, to protect human or animal life or health from risks arising from food additives, contaminants, toxins; or disease-causing organisms in foods, beverages, or feedstuffs, or to protect human life or health from diseases carried by animals, plants, animal or plant products, or from the entry, establishment or spread of pests. The term SPS measure is much wider than the term product requirement. It includes any 3
6 legislative, administrative, procedural or technical requirement implemented in any field for the purposes set out above. SPS measures are also generally applied to a narrower range of products, mostly agricultural in origin, than TBT measures. The nature of a contested measure ultimately determines whether is falls under the TBT or SPS Agreement, as at the international level no measure is covered by both Agreements. 3.2 The basic rights and obligations under the WTO SPS Agreement Members have the right to take sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or health, provided that such measures are not inconsistent with the provisions of the SPS Agreement. Members shall ensure that any sanitary or phytosanitary measure is (a) applied only to the extent necessary to protect human, animal or plant life or health, is (b) based on scientific principles and (c) is not maintained without sufficient scientific evidence, except as provided for in paragraph 7 of Article 5 (provisional application). Members shall ensure that their sanitary and phytosanitary measures do not arbitrarily or unjustifiably discriminate between Members where identical or similar conditions prevail, including between their own territory and that of other Members. Sanitary and phytosanitary measures shall not be applied in a manner which would constitute a disguised restriction on international trade. Sanitary or phytosanitary measures which conform to the relevant provisions of this Agreement shall be presumed to be in accordance with the obligations of the Members under the provisions of GATT 1994 which relate to the use of sanitary or phytosanitary measures, in particular the provisions of Article XX(b). 3.3 The key disciplines applicable to SPS measures Harmonisation: To harmonize sanitary and phytosanitary measures on as wide a basis as possible, Members shall base their sanitary or phytosanitary measures on international standards, guidelines or recommendations, where they exist, except as otherwise provided for in the SPS Agreement. Assessment of risk: Members shall ensure that their sanitary or phytosanitary measures are based on an assessment, as appropriate to the circumstances, of the risks to human, animal or plant life or 4
7 health, taking into account risk assessment techniques developed by the relevant international organizations and all the factors listed in the SPS Agreement. Determination of the appropriate level of sanitary of phytosanitary protection: In determining the measure to be applied for achieving the appropriate level of sanitary or phytosanitary protection from a risk, Members shall take into account all the factors listed in the SPS agreement, and also the objective of minimizing negative trade effects. Consistency: With the objective of achieving consistency in the application of the concept of appropriate level of sanitary or phytosanitary protection against risks to human life or health, or to animal and plant life or health, each Member shall avoid arbitrary or unjustifiable distinctions in the levels it considers to be appropriate in different situations, if such distinctions result in discrimination or a disguised restriction on international trade. Proportionality: Members shall ensure that sanitary and phytosanitary measures are not more traderestrictive than required to achieve their appropriate level of sanitary or phytosanitary protection, taking into account technical and economic feasibility. Adaptation to regional conditions: Members shall ensure that their sanitary or phytosanitary measures are adapted to the sanitary or phytosanitary characteristics of the area whether all of a country, part of a country, or all or parts of several countries from which the product originated and to which the product is destined. Transparency: Members shall notify changes in their sanitary or phytosanitary measures and shall provide information on their sanitary or phytosanitary measures in accordance with the provisions of the SPS Agreement. Provisional application: In cases where relevant scientific evidence is insufficient, Members may provisionally adopt sanitary or phytosanitary measures on the basis of available pertinent information. In such circumstances, Members shall review the sanitary or phytosanitary measure within a reasonable period of time. 3.4 The benefit of basing sanitary or phytosanitary measures on international standards, guidelines or recommendations The SPS Agreement contains complex disciplines and rules, and defending a national measure can be 5
8 costly and time-consuming. The Agreement however provides that sanitary or phytosanitary measures which conform to international standards, guidelines or recommendations shall be deemed to be necessary to protect human, animal or plant life or health, and presumed to be consistent with the relevant provisions of the SPS Agreement and of GATT This creates a significant incentive for WTO Members to harmonise to international standards, guidelines or recommendations created under the auspices of the recognised international standards setting organisations. 3.5 The recognised international standards setting organisations The Codex Alimentarius Commission (Codex) was established in 1963 by the Food and Agriculture Organization of the United Nations (FAO) and the World Health Organization (WHO). It was established to develop food standards, codes of practice, guidelines and recommendations. The International Office of Epizootics (OIE) was created in 1924, in response to the need to address animal diseases at the global level. In 2003, it became the World Organisation for Animal Health, keeping the original acronym. The International Plant Protection Convention (IPPC) is an international plant health agreement, established in 1952, that aims to protect cultivated and wild plants by preventing the introduction and spread of pests. It provides an international framework for plant protection that includes the development of International Standards for Phytosanitary Measures (ISPMs) for safeguarding plant resources. 3.6 Other provisions of the WTO SPS Agreement The SPS Agreement notes that sanitary and phytosanitary measures are often applied on the basis of bilateral agreements and it contains provisions on accepting the measures of other Members as equivalent, and on consultations aimed at concluding recognition agreements. 3.7 A note about the aim(s) and objective(s) of the WTO SPS Agreement The WTO SPS Agreement does not have an explicit objects clause. This means that the implied aims and objectives have to be found in the Agreement itself, and several views have been expressed as to the exact point of departure of the Agreement. To state that the SPS Agreement aims to enhance trade is uncontroversial. However, 6
9 identifying the precise expectations of the regime is surprisingly difficult. There are three plausible premises. The first is that the SPS Agreement roots out unfair discrimination against foreign products as an unacceptable barrier to trade. In this sense, the Agreement extends the principle of non-discrimination established by GATT... A second view is that the SPS Agreement seeks to eliminate not simply discriminatory burdens, but all burdens that stand in the way of trade, following the principle of laissez faire... A third possibility is to take regulatory harmonisation as a starting point for the analysis of the regime. However, although harmonisation is an explicit goal of the Agreement, its precise intentions can be differently construed. For some it represents a step towards positive integration and a shift from what governments must not do, to positive regulations on what governments must do. Yet the SPS Agreement s harmonisation project falls considerably short of this level of integration. 3 It is important to keep the three premises mentioned above in mind when considering how the African Regional Economic Communities (RECs) interpret SPS aims and objectives. 4. The WTO SPS Agreement and the African debate on trade and integration SPS measures are of particular importance to African Trade: Agriculture is the most important sector of the African economy and will have to play a major role in alleviating poverty. It accounts for 65% of the continent s employment and 75% of its domestic trade. The products which fall under the SPS Agreement are almost always agricultural in nature. SPS policy frameworks and strategies in Africa: possible aims and objectives: There were distinct phases in the African debate on SPS policies, and different problem definitions were put forward during each phase. They were: A lack of national strategies on SPS matters in African states. Inadequate SPS measures as a factor limiting export capacity. Inadequate SPS measures as a factor limiting the ability to control imports. A lack of harmonised SPS measures as a barrier to intra-african trade. Most of the African RECs have the mandate to develop legal and technical instruments to enhance the 3 Chris Downes: The Impact of WTO SPS Law on EU Food Regulations, Springer Science and Business Media,
10 management of SPS issues in the context of promoting trade. For the CFTA this implies that there is a need for a thorough discussion on the agreed aims and objectives of existing regional SPS policies. The WTO SPS Agreement does not expressly deal with harmonisation at the regional level: The WTO SPS Agreement does not expressly provide for harmonising SPS measures at the regional level, yet this is what many regional trade arrangements are or have been considering. It is therefore necessary to discuss the benefits of regional harmonisation and the ideal that it should always fit in with the WTO SPS principle of being based on international standards, guidelines or recommendations. Regional harmonisation of SPS measures can be beneficial to trade: Regional harmonisation of SPS measures in the RECs could involve reaching agreement at the regional level on identical SPS measures which Members should implement in a specific sector. Such cooperation can contribute to the SPS status of a region by: Identifying regional priorities on SPS. Re-evaluating the suitability of international standards, guidelines or recommendations for specific regional conditions. Selecting international standards, guidelines or recommendations which are appropriate for the SPS needs of a specific region. Selecting international standards, guidelines or recommendations for which the required capacity exists in the region under discussion. Identical SPS measures across a region can contribute to trade flows in that region, but it should also be kept in mind that the risk-based nature of some SPS measures means that they cannot always be applied in this manner. 5. Comparing the SPS approaches of the RECs The African Union (AU) has so far recognised eight African regional trade arrangements as regional economic communities (RECs) 4. The level of ambition on regional integration varies amongst the RECs; some are free trade areas (FTAs) and will remain so, some are customs unions (CUs), and some want 4 They are the Arab Maghreb Union (UMA), the Common Market for Eastern and Southern Africa (COMESA), the Community of Sahel-Saharan States (CEN-SAD), the East African Community (EAC), the Economic Community of Central African States (ECCAS), the Economic Community of West African States (ECOWAS), the Intergovernmental Authority on Development (IGAD) and the Southern African Development Community (SADC). 8
11 to progress even further. Generally speaking, the progress on developing an overall approach to SPS matters appears to have been slow, with a lot of ad hoc sector-based activity taking place instead. The Tripartite Free Trade Area also addresses SPS matters and the outcome of its negotiations contains important lessons. 5.1 A few general observations The setting of aims and objectives in the SPS instruments of the RECs has yielded widely varying results. The treatment afforded to the WTO SPS text varies a lot, and SPS provisions and principles are often undermined, maybe unintentionally. There is no uniform understanding of the term regional harmonisation, and no unified view on what specific actions have to be undertaken in this regard. The powers and responsibilities of the institutions which have been created vary considerably. There are inconsistencies regarding dispute settlement. Sectoral activity is often taking place independently from the progress being made in the REC instruments. 5.2 The main Issues that were identified The design of the overall legal frameworks: The overall design of the arrangements addressing SPS matters, and the way in which they fit into the legal instruments creating regional trade arrangements, are vital for successful subsequent implementation. Determining the objectives reflected in the new legal Instruments: As the WTO SPS Agreement does not contain an explicit objectives clause; the setting of aims and objectives for the SPS instruments of the RECs has yielded widely varying results. Duplication, overlap and inconsistency with the WTO SPS Agreement: The practice of repeating, restating in part, and rephrasing selected parts of the texts of the WTO SPS agreement is questionable, as it leads to a situation where important rules and safeguards contained in the WTO agreements are amended or omitted. The restatement of the WTO texts undermines WTO SPS rights and obligations or leaves them in a state of uncertainty at the REC level. 9
12 The Relationship between voluntary standards and mandatory measures: Many developing countries have a backlog in terms of officially regulating issues such as Food Safety, Product Safety and Consumer protection. Quite a few of the REC instruments do not address the issue of standards versus mandatory measures in sufficient detail. This leads to uncertainty and ambiguity with regard to good regulatory practice, legal certainty and national treatment. Understanding of and expectations about regional harmonisation : The purpose, application and purported effect of regional standardisation processes are not always clarified in full. Duplication, overlap and contradictions among the different SPS Frameworks of the RECs: It appears unlikely that the current format and content of the SPS arrangements in the RECs will be affected materially by the CFTA, as the RECs will most likely continue to exist in their current form. Lack of clarity about the applicable dispute settlement mechanisms: The present situation allows State Parties to choose between more than one forum and more than one set of rules. This is, inter alia, a consequence of overlapping membership challenges. Institutional issues: The integration of existing AU institutions (such as ARSO, AFSEC, AFRIMETS, AFRAC, AU-IBAR and the AU-IAPSC) into the overall CFTA SPS/TBT dispensation should be given in-depth attention during the CFTA negotiations. The appropriate role of national and regional standards bodies should likewise be revisited. Dispute settlement: The RECs are not strong on formal dispute settlement when it comes to SPS disciplines. This applies to both inter-state and private disputes. 6. Some recommendations on the way forward for the CFTA Rewriting or paraphrasing the provisions of the WTO SPS Agreement when drafting regional trade and integration agreements should be avoided, as it results in ambiguities and legal uncertainty. Building upon WTO SPS obligations/principles/procedures are in order, as long as the negotiating process pursues clear WTO compatible outcomes. Additions which are outside of the scope of the WTO SPS agreement, such as good regulatory practice, active elimination of unjustified SPS measures or regional harmonisation are in 10
13 principle in order, as long as they are clearly in line with the objectives of regional integration or boosting intra-african trade. The legitimacy of the exceptions enjoyed by States under the WTO SPS Agreement (such as the protection of national health and safety) should not be elevated to the level of independent and free-standing SPS objectives, as it dilutes the real intention, namely to limit such trade restrictions to only those instances which are really necessary and which can be justified. Presumed SPS obligations, which do not appear in the WTO Agreement, should not be set as objectives. Only those harmonisation objectives which are achievable in the region and compatible with the SPS Agreement should be adopted. Trade facilitation and trade development objectives should preferably be dealt with separately and be addressed elsewhere during the negotiating process. The final agreement should be an inherently consistent legal instrument. Objectives and obligations in the founding treaty, its protocols and annexes should be fully aligned with each other. Regional harmonisation objectives should clearly explain how they fit into the greater WTO SPS framework of harmonising to international standards. Regional integration, to the extent that it might be discussed as part of the CFTA agenda, are still to be clarified. Whether and how SPS arrangements can, on their own, promote regional integration should be considered and be clarified. Objectives should not be described as contributing to regional integration or boosting intra- African trade without providing a clear context and aim. Objectives which desire to put in place active programmes beyond what is required by the WTO SPS Agreement should not be referred to as sourced from the WTO Agreement. Objectives such as making the SPS measures of State Parties compatible with each other should be clarified by the appropriate use of mechanisms such as equivalence and mutual recognition. 11
14 Extensive and compulsory regional consultation/mediation/arbitration mechanisms for resolving SPS related disputes should be established, given the reluctance of African Governments to formally declare disputes against each other. The ability of private firms and other private parties to complain about breaches of the applicable rules and non-compliance with prescribed procedures merit urgent attention. The dissemination of technical information once the relevant CFTA instruments have been adopted, is vital for transparency and effective implementation. Domestic reforms of national laws and institutions should also be provided for. Regional harmonisation could focus only on essential health and safety measures, while other standards could be dealt with by way of equivalence or mutual recognition. Technical assistance remains important where the levels of development differ significantly. A standing role for institutions to assist in resolving trade-related problems should be considered. A work in progress approach, with clear objectives, priorities, commitments and mechanisms and even a work plan as a living document could be considered. With 55 countries involved, the judicious use of soft and hard law will be very important. The negotiators should look beyond the WTO SPS Agreement and should also consider what has since been achieved in the WTO committees in relation to for example additional guidance and procedures. The purpose, effect and acceptability of using a regional standardisation process as a driver of regulatory cooperation should be investigated fully. It should be kept in mind that the CFTA aims to achieve REC plus outcomes
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