Processed food products exports from India: an exploration with SPS regime

Abstract

[Conclusion]: This exploration into the application of the SPS regime in the processed food products in India was focussed on five processed product lines, each from a different segment of the wide spectrum of available products. It was observed that all selected processed food products were assisted by the policy liberalisation regime of the early 1990s. But, in the post-WTO period, particularly since 1996/97, the complexity of the SPS regime seems to have significantly constrained market access in developed countries for Indian processed food products. The poultry product (e.g., egg powder) and marine (Shrimps) product exports to EU and USA reveal contrasting scenarios. Egg powder plants in India that were dedicated to produce exports to the EU markets closed down because of the imposition of stricter food safety standards. On the other hand, the EU approved plants for processing marine products, many exporters could not understand or cope with the shifting safety standards, and they explored alternative markets. As a result, the realized unit value of these exports declined. The hiatus between scientific merit and trade economics is further brought home, when the application of SPS measures to Peanuts/Groundnuts, Mango Pulp and Mushrooms export lines are examined. The case studies confirm the untenability of higher and stricter food safety standards in EU and USA, given emerging trends in dietary preferences and living standards. Although India has a competitive edge in production, market outcomes appear to have been dominated by the impact of SPS as a major non-tariff barrier. This development bodes ill for the successful continuation of multilateral trade arrangements visualised in the WTO agreement. We have repeatedly seen in all five case studies that SPS norms are used by manufacturers of the processing industry machinery in the developed countries to process food exports from the developing countries. The ingenuity, if any, of the importing nation in crafting non-tariff measures to thwart greater access to processed food exports from the developing countries has become more explicit and transparent. Detention of food consignments on grounds like unapproved, not listed, does not demonstrate the maturity of the dominant developed country trading partners. (It was shown that a large number of Indian poultry consignments got rejected due to the following specification targets: (i) Filthy, (ii) Salmonella, (iii) Not-listed, (iv)Unapproved and (v) Insanitary.) Similarly, actions like the insistence on the use of the Turtle Extruder Device (TED), a particular sampling techniques for Aflatoxin testing, and the practice of frequently changing sensitivity levels for testing results, and the resort to emergency notification clauses are indeed trade distorting. To conclude, the case studies highlight the crucial issues of maintaining quality norms, from a developing country perspective, and attempt to link issues of SPS barriers and broader economic issues related to international trade. Our preliminary investigation reveals that SPS affects Indias (and possibly other developing countries) exports differently than is generally believed. Besides, the push for use of highly capital intensive technologies to gain compliance with SPS regulations leads them to becoming, in practice, non-tariff barriers for the developing countries exports. Though the developed countries present a picture of genuine concern for the welfare of developing countries through different arrangements and programmes like preferential market access through the Lome Convention, the preliminary investigations undertaken in these case studies show a contrasting picture. In the final analysis, processed food exports must become a viable instrument to sustain and enhance social welfare in developing countries through poverty alleviation. This is possible if all trading partners work towards making the trinity of science, safety and trade of food products blend to form a harmonious unity.

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