Fresh from an APEC delegation in Vietnam National Farmers’ Federation Scott Kompo-Harms explains how non-tariff measures are reducing returns to exporting farmers and pushing up consumer prices.
Last week the New Zealand Ministry of Foreign Affairs and Trade hosted a trade policy discussion to advance the understanding of non-tariff measures (NTMs) in the food sector in Nha Trang, Vietnam.
I, on behalf of the NFF, was invited to speak and explain the critical importance of reducing NTMs and how doing so was integral to the ongoing growth of our ag sector.
NTMs as policy measures other than ordinary customs tariffs that can potentially have an economic effect on international trade in goods, changing quantities traded, or prices or both. Such as biosecurity and customs considerations, testing and labelling.
The costs imposed by excessive and burdensome NTMs when compounded along the supply chain, often result in higher consumer prices and lower returns for farmers.
Last week’s delegation brought together a range of speakers from the 21 APEC economies. Speakers discussed the nature of non-tariff measures, quantify the burden of NTMs on economies and explained the impact on producers in the food sector and sought real solutions.
The first session focussed on the impact of NTMs on trade and recent trends in NTM usage. Mr John Balingall from the NZ Institute of Economic Research (NZIER) presented results of estimates of the total burden of NTMs on particular products throughout APEC by converting NTMs into Ad-Valorem Equivalent (AVEs) tariffs and applying these ‘per unit’ costs to trade flows. This research is useful for helping governments to prioritise which products and sectors to target.
Dr Jared Greenville from the Trade and Agriculture Directorate at the OECD described work being undertaken to benchmark countries’ performance on NTMs, noting that NTMs can have beneficial impacts by promoting confidence in markets and protecting consumer health and the environment. The main concern is how these goals are achieved – whether legitimate goals are being pursued in the most efficient and effective way and whether food safety or environmental concerns are used as a protective measure.
Both the NZIER and OECD research showed that agricultural products were some of the most affected products in terms of costs and price impacts of NTMs and as food products were increasingly produced in global supply chains, these costs cascaded throughout
Ms Sarah Horn discussed the results of a study undertaken by Marshall Business School at the University of Southern California on behalf of the APEC Business Advisory Council (ABAC) – the study investigated perceptions of businesses and government officials from APEC countries on the burden of NTMs and sought to explain the divergence between the two. The Marshall School’s analysis showed that businesses in the food sector were bearing the brunt of NTMs and that Government’s
I participated in a panel discussion on the experience of the private sector with NTMs, along with Ms Cecelia De La Paz from the Philippine Chamber of Food Manufacturers Inc. and Ms Melissa San Miguel from the US Grocery Manufacturers Association. The session was moderated by Ms Stephanie Honey from the APEC Business Advisory Council. Each speakers gave an outline of their associations’ policy positions and members’ experiences with NTMs.
It was noted that the food sector is increasingly characterised by global supply chains and NTMs were prevalent all throughout supply chain. The costs imposed by excessive and burdensome NTMs compound throughout those supply chains, resulting in higher consumer prices and lower producer returns. They also hinder the ability of farmers and other small and medium enterprises to integrate into global supply chains, both as buyers and sellers. The NFF highlighted the fact that farmers are typically small and medium enterprises that were wedged in between larger, often multinational companies that had the ability to pass on the costs of NTMs on to farmers and hence squeeze farm gate returns.
Excessive and burdensome NTMs also cause producers to lose interest in particular markets and reduce their product offerings, further damaging consumers. Questions focussed on the impact of possible solutions to NTMs such as harmonisation to international standards, mutual recognition and equivalency.
The next session had a line-up of five speakers:
The session, moderated by Ms Hannah Jacobi (New Zealand Ministry of Foreign Affairs and Trade), covered policy options to reduce the burden of NTMs. Speakers noted that while only Governments could address NTMs directly through Government‑to‑Government dialogue and negotiations, industry could play a substantial role in developing and implementing solutions. Indeed the input of industry into the development of solutions was crucial to ensure they are effective and lasting.
There was a focus on the collaboration between industry and Government through the Wine Regulators Forum to have wine classified as ‘low-risk’ in terms of food safety and encouraging countries to treat it accordingly. One suggestion was to investigate a risk-based product list approach to food safety standards. NFF will continue to work with the AFGC and the Australian Government to see how this approach could be expanded from wine to other food products for the benefit of Australian producers.
The final session of the day was a wide-ranging open discussion on the way to proceed, both through the APEC Committee on Trade and Investment, other APEC and non-APEC international forums and in individual markets. The discussion focussed on how industry and Government can collaborate more effectively and what potential solutions might look like. All up, APEC economies are focussed on the problem of non-tariff barriers restricting trade and are keen to find mutually beneficial solutions through dialogue, cooperation, collaboration with industry and capacity building initiatives.
Thank you to the New Zealand Ministry of Foreign Affairs and Trade for organising this highly productive event.
Scott Kompo-Harms is the General Manager - Trade and Economics, National Farmers' Federation