THE ARAB QUALITY AND FOOD SAFETY CONFERENCE 15-16 June 2006, Beirut “QUALITY AND GLOBAL TRADE”

1. www.unido.org THE ARAB QUALITY AND FOOD SAFETY CONFERENCE 15-16 June 2006, Beirut “QUALITY AND GLOBAL TRADE” UNIDO Perspective Gerardo Patacconi IDO, UNIDO Focal Point for UNIDO/WTO MoU and ISO/DEVCO Trade Capacity Building Branch G.Patacconi@unido.org

2. www.unido.org Emerging Quality and Safety issues • Food scares and other security issues • Global, regional, national TBT/SPS regulations • Standards and Conformity Assessment infrastructure • Supply-capacity (quality, quantity, price) and competitiveness • global/regional value chains • UNIDO Global Approach

3. www.unido.org Food scares and other security issues I’ve got MAD………. and the World become CRAZY about improving food quality and safety systems

4. www.unido.org EMERGING ISSUES • Focus on supply-chain and border security: • Bioterrorism Act) to protect the US from the threat of bioterrorism using the food chain.(Registration, US Agent, Prior Notice and Establishment and Maintenance of Records) • Custom Trade Partnership Against Terrorism (C-TPAT) • The Container Security initiative (CSI) • The 24-Hour Rule HIGH COST SECURITY: Risk of deliberate contamination, frauds and misuse of shipment SAFETY: Distribution of unsafe/adulterated Food products (to be withdrawn from the supply chain and timely and accurate information given to consumers) • Focus on supply-chain and food safety: • EU Food Law – Regulation (EC) 178/2002 • Residual of pesticides • Labeling, • Standards/Technical Regulations • Conformity Assessment procedures • ………….

5. www.unido.org • Standards and Conformity Assessment infrastructure • Poor physical facilities/infrastructure • Limited academic and research capabilities and technical/scientific know-how/skills • Inefficient institutional set up (Standards and conformity assessment functions, when exist, are scatters among too many institutions) • Early focus on mandatory standards and inspection • Revenues generated could not be retained due to the public law status

6. www.unido.org • Standards and Conformity Assessment infrastructure • Labs established even with donor support not sustainable • Donation of equipment with poor planning, training, and lacking adequate local physical infrastructure/staff, absorbion capacity • Political instability and conflicts, • Lack of funding • Lack of demand • Low-level of manufacturing due to focus on commodities • Exposed to barriers to trade especially SPS measures

7. www.unido.org Standards and Conformity Assessment infrastructure • Poor and uneven quality of local products • National quality infrastructure lacks credibility and tests and certificates by local laboratories notrecognized in export countries. • Inability of DCs to utilize preferential treatment/ market access concessions. High Risk of rejection of products in export markets due to lack of conformity (TBS and SPS).

8. www.unido.org Supply-capacity (quality, quantity, price) and competitiveness and integration in regional/global value chains

9. www.unido.org Global Trade Growth & Marginalisation World exports, 1980-2004 (US$ billion) • Share of developing countries in global trade only 26% • Every 1% growth in Trade, LEADS TO one-half % Income increase • Over 75% of global trade is in manufactures (Industry the key)

10. www.unido.org +11% +19% - 9% - 20% Immediate Opportunities: Agro Food Exports World and Developing country exports of fish,processed fruits & vegetables now exceed the combined value of exports of tropical crops: Cotton, Coffee, Sugar, Tobacco. (source:UN COMTRADE)

11. www.unido.org Immediate Opportunities: Agro Food Exports

12. www.unido.org Global Trade Challenges Tariffs reduced – Other Barriers remain “LDCs have neither the surplus of capacity of exportable products nor the production capacity to take immediate advantage of new trade opportunities” Kofi Annan - UN SG, Financial Times, 5 Mar. 2001 US$ 1.75 bn.exports from developing countries have been disrupted in2004, due to SPS (food safety) non-compliance. Whileonly US$ 53 mn. spent by donors onSPS support. World Bank 2004, Steven Jaffee & Spencer Henson, Standards and Agro-Food Exports from Developing Countries – Rebalancing the Debate COST OF COMPLIANCE TO FOOD SAFETY RULES -UNIDO Estimates Shrimp exports to the EU - Testing and Compliance cost adds 2.8% Enterprise Quality/safety set up cost – adds 5% to product cost National Quality & Testing infrastructure – US$ 5.0 mn. to US$ 25.0 mn.

13. www.unido.org ISO 22000 direct supplier to the retail AFITA/WCCA 2004 Quality systems in the Agri-Food-Industry Stages of the food industry - retail processing farmer Feed industry - Q+S Certus IKB Label Rouge GMP EurepGAP BQM Agri Confiance QM-Milch IKM KKM DQG IFS EFSIS BRC Quality systems Quality and safety and Beyond

14. Integration Needs DifferentProduct Lines BRC HACCP ABM Enterprise/ChainManagementSystem ISO 22000 ISO9000 Q+S Traceability GHP ISO14001 EurepGAP IFS etc. GMP 1...X SQF

15. www.unido.org Quality Price safety AFITA/WCCA 2004 The “big”dilemma

16. www.unido.org Compete Conform Connect UNIDO GLOBAL APPROACH: The UNIDO 3 Cs • “Countries must have marketable products for export”  COMPETITIVITY of productive capacities • “Products must conform to requirements of clients and markets”  CONFORMITYwith standards • “Rules for trade applied and simplified cross border transactions”  CONNECTIVITYto markets

17. Forming Strategic Partnerships for Trade Capacity Building

18. Thank You

19. www.unido.org Total UNIDO TRTA Portfolio: OECD/WTO TCB Data Base UNIDO TCB projects 2005: US$ 64.6 Mn. Additional US$ 90.4 Mn. under negotiations Source: UNIDO elaboration

20. Case of Egypt Traceability of agro-industrial products for the European Market Situation Before • Exporters not aware of impact of new Directive EC 178/2002 that could become a TBT as of 1st January 2005: • Insufficient national capability to assess the problem, its impact and implement cost-effective solutions • Lack of funding (institutions/enterprises) • Risk of loosing foreign markets by local suppliers and complementary industries • Key priority exported products to be effected with high negative impact not known

21. Case of Egypt Traceability of agro-industrial products for the European Market Situation Today • TRTA/CB Project elaborated jointly by UNIDO and the Ministry of Foreign Trade (MOFT) with support of Italian authorities • TRTA/CB funded utilising a debt swap agreed between Italy and Egypt and linked to an Italian Initiative for trade facilitation called the “green corridor” • Egyptian producers assisted and traceability scheme implemented and linkages with Italian/European Importers established Funded in the framework of the “Debt-for-Development Swap” agreement (19.02.2001) by the Government of the Italian Republic and the Government of the Arab Republic of Egypt

22. Case of Egypt Traceability of agro-industrial products for the European Market Situation Today • Assistance to Pack Houses (~100) and through them to over 5000 producers • Available software assessed and 5 best options selected • UNIDO Traceability manual developed and adopted • Over 600 Egyptian trained in traceability and related issues • Physical traceability assessed (farm to fork) • Value chain analysis of selected products • Mapping of pack Houses and production pattern

23. Case of Egypt Traceability of agro-industrial products for the European Market Situation Today • Financial scheme designed • Applicants to traceability fund assessed (ICT infrastructure, traceability system SWAT, assistance in selection of technology, support in implementation) • Physical traceability assessed (farm to fork) • Assess sector technology upgrading needs • Assistance planned for Plant Quarantine system • Preparatory work for assistance to food manufacturers (also internal traceability)