DEPUTY DIRECTOR-GENERAL ALAN WM. WOLFF
Opening remarks by DDG Alan Wolff
The WTO is celebrating its 25th anniversary, and so is the Sanitary and Phyto-Sanitary (SPS) Agreement. The world has changed dramatically since 1995, but food safety was and continues to be a major concern for all of the WTO’s 164 Members. For that reason, and to foster safe trade to satisfy the nutritional needs of all, the SPS Agreement will continue to be central to WTO’s role in facilitating trade in safe food across borders.
The Uruguay Round, where most current WTO Agreements were negotiated, started in 1986. During the Round, now over a quarter-century ago, the central role of risk assessment for SPS measures, the equivalence of measures, their adaptation to regional conditions, and harmonization of measures with international standards were discussed. These were new, sometimes revolutionary concepts that reflected the forward-thinking of negotiators of the SPS Agreement. Unlike CODEX (the “food code” of the FAO) and the OIE (the World Organization of Animal Health), at the beginning of the negotiations, the International Plant Protection Convention had not begun setting standards — the first international standard for phytosanitary measures was only adopted in 1993. Over the past 25 years, the relationship between the SPS Committee and standards setting organizations has continued to evolve. Close cooperation and communication established decades ago continue to be as important as ever, at the level of the committees, international secretariats, and with Member governments participating in each of these bodies.
The SPS Agreement recognizes the need to protect health and ensure food safety, while aiming to avoid unnecessary barriers to trade. WTO Members also engage in many bilateral and regional trade agreements, and many of these contain SPS chapters, most of which begin by reaffirming the parties' commitment to the principles of the SPS Agreement.
The work of the SPS Agreement is not done. Recent studies on food safety, animal and plant health have shed light on the human health implications and economic relevance of SPS measures. The WHO in 2020 estimated that 600 million people still fall ill after eating contaminated food and 420 000 out of these people die every year. The World Bank in 2019 estimated the costs of unsafe food in low and middle-income countries at more than USD 95.2 billion. The OIE in 2016 estimated that losses in livestock production due to animal diseases amounted to around USD 300 billion per year. The OECD in 2018 found that antibiotic resistance could lead to costs of up to USD 3.5 billion a year on average. FAO in 2019 estimated that between 20 to 40 percent of global crop production were lost to pests every year, and that plant diseases cost the global economy around USD 220 billion, and invasive insects around USD 70 billion.
SPS risks can have devastating effects. Limited capacity to meet food safety, animal and plant health requirements is often one of the major obstacles for producers in developing countries to engage in trade in agricultural products. Recognising these challenges, the WTO together with the FAO, OIE, WHO and the World Bank Group, founded the Standards and Trade Development Facility (STDF) to support developing country governments and the private sector to tackle SPS capacity gaps, offering a way to boost economic development.
Research into non-tariff measures shows that SPS and TBT measures are the most frequently applied non-tariff measures (NTMs) and have a considerable effect on trade in food and agricultural products. According to UNCTAD (2019), the average cost of these measures amounts to 1.6 per cent of GDP, roughly USD 1.4 trillion globally. Research by the Center for Agricultural Trade in 2019 on specific trade concerns raised at the SPS Committee, found that, the ad-valorem equivalent tariff of SPS measures raised as a trade concern, ranged from 33% to 106%; and, on average, during the period during which the concerns were active, the affected product sectors faced losses of 50.8% to 81.5%.
The role of the SPS Committee in solving trade issues cannot be overstated. Since 1995, more than half of the concerns raised in the SPS Committee have been resolved or partially resolved. The engagement of Members has had a significant positive economic impact, especially for developing countries. And the discussions of specific trade concerns (STCs), even when they are difficult to resolve, allow Members to engage in a dialogue about regulatory approaches, their trade effects, and to spread the word on good practices, helping to contribute to future convergence.
The SPS Agreement, and further decisions and recommendations adopted by Members to improve its implementation, provide a large variety of instruments to prevent and resolve trade concerns. These are gathered in the Catalogue of Instruments available to Members to manage SPS issues adopted by the Committee in 2018. The engagement of Members in the SPS Committee has continued to deliver tangible results, for example adopting the Fifth Review of the Operation and Implementation of the SPS Agreement in June 2020, and embarking on further work, including on topics related to sustainability in agricultural production and trade.
In these uncertain times, the SPS Committee has shown that its work and the SPS Agreement are more relevant than ever. The next 25 years will bring new challenges that we need to try to anticipate just as the drafters of the SPS Agreement managed to do. Open discussions need to be held in order to find constructive solutions. I invite you to continue the engagement and productive discussions that are the path to consensus.
With these opening remarks, I wish you a productive session on this, the 25th anniversary of the Agreement.