The Agri-Food Sector
EUROPE BEAT - Henry J. Schumacher (The Freeman) - October 17, 2014 - 12:00am

Agri-Business is a key component of economies across the EU and ASEAN. The food and beverage industry is Europe’s largest manufacturing sector while agriculture accounts for more than a quarter of GDP in several ASEAN member states. In the Philippines, agri-food or agri-biz have a great future if success is built on successful models like Nestle (coffee) and La Frutera (fruits), creating win-win alliances between farmers and industrial companies that can process the produce and have access to markets.

Although agri-food products account for a significant part of both region’s international trade, outstanding issues in the regulatory arena are constraining development and growth.

Within ASEAN, outdated regulatory practices and a lack of institutional capacity have contributed to problems with food safety, non-tax paid trade, overregulation and customs clearance delays. A number of market access issues have yet to be resolved satisfactorily, including the Philippines.

While ASEAN and the EU markets offer great potential for enhanced trade and investment in agri-food, there continuously to be key issues in the regulatory space that are constraining development and growth.

In  ASEAN:

1. Market Access

a. Tariffs, taxes and non-tariff barriers

b. WTO compliance

c. Technical standards and product classification rules

d. Labeling

e. Sanitary and Phytosanitary Standards (SPS)

f. Religion and Halal standards

2. Other issues

a. Foreign investment restrictions

b. Intellectual property protection

c. Traceability protection

As we are moving closer to ASEAN integration by 2015, here are key recommendations within the ASEAN-EU perspective:

•  Import tariffs and non-tariff barriers should be phased out over time;

• All member states should ensure their internal taxes and regulations are simple, transparent and fully compliant with WTO rules (in the Philippines we are happy that the Sin Tax Reform has pushed through in 2012);

• Labeling rules for packaged goods should be harmonized and simplified;

• Technical standards/definitions and product classification rules should be based on internationally-recognized standards;

• The protection and enforcement of intellectual property rights should be improved;

• ASEAN should strongly consider traceability information legislation to protect consumers and support legitimate EU trade; and

• Governments should consult industry on proposed amendments or any new regulations affecting the agri-food sector.

It is further recommend that the EU and ASEAN strengthen cooperation in the following key areas:

• Trade related capacity building support to regulatory and enforcement institutions in ASEAN;

• Product safety, labeling and technical standards, and SPS acceptance;

• Mutual recognition of food product registrations and of export establishments certified by the national competent bodies;

• Export quality infrastructure, which includes testing laboratories and inspection agencies; and

• Best practice customs valuation and transfer pricing frameworks for related party transactions.

Why does it make sense to focus on these key issues and key recommendations?

• ASEAN has a large agricultural base with over 60 million hectares of arable land. Agriculture accounts for over 25% of GDP in several ASEAN member states such as Myanmar, Cambodia and Laos.

• Businesses in the EU agri-food chain generate a turnover of Euro 2.2 trillion and provide direct employment to more than 33 million Europeans. Together, the European food and drink industries are the largest manufacturing sector in the EU in terms of turnover, value added and employment.

• Although ASEAN as a whole is the EU’s 3rd largest trading partner (after the US and China) with more than Euro 206 billion of trade in goods and services in 2011, the EU’s share of food imports into the ASEAN countries has tended to lag behind that of other ASEAN trading partners due to tariff, regulatory restrictions and requirements.

• It is expected that the Philippines will be granted GSP+ status by the EU at the end of this year; this will offer great opportunities for Philippine food exporters into the EU, given the fact that tariffs will drop from the high 20s to zero!!!!

In other words, plenty of work to do, preparing for increased trade of agri-food products in both directions.

schumacher@eccp.com

 

AGRI ASEAN CAMBODIA AND LAOS FOOD IN THE PHILIPPINES LA FRUTERA MARKET ACCESS RELIGION AND HALAL SANITARY AND PHYTOSANITARY STANDARDS
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