Competitive Halal regulations as a Technical Barrier to Trade: Stakes and Solutions within OIC
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1 27/2/203 Competitive Halal regulations as a Technical Barrier to Trade: Stakes and Solutions within OIC Dr El Hassane HZAINE Director General Islamic Centre for Development of Trade (ICDT/OIC) 27/2/203 HALAL CONGRESS MIDDLE EAST 203 SHARJAH. UAE. 6-8 DECEMBER 203 OUTLINE I. Brief presentation of trade in Food products in OIC Member States II. III. IV. Barriers to trade in Halal Food Products Halal regulations Policy options 2
2 27/2/203 HALAL INDUSTRY The Halal Industry could be categorized into following components : Food Products : Halal food is mostly poultry, meat and meat products as well as chocolates, bread and biscuits, milk and milk products including cheese, beverages and additives such as spices, marinades and gelatine. Pharmaceutical, Cosmetic and Personal Care: Drugs/Vaccines, Nutraceuticals Lifestyle : Apparels, Restaurant & Hotels. Services: Logistics, Standard, Auditing & Certifications, Tourism, Research and Technology Development. 27/2/203 3 HALAL INDUSTRY: some indicators in 202 Global Halal products market is estimated at 2.3trillion (excluding Islamic banking according to Mazeedi (Kuwait) Food & Beverage: 70%. Pharmaceutical: 22%. Personal care & cosmetics: 0%. OIC Halal Food Market: USD 222 billion Intra-OIC Halal Food trade : USD 2 billion USD Intra-OIC Halal food trade share: 54.7% 27/2/
3 27/2/203 Key Halal Market Saudi Arabia Malaysia Indonesia Egypt Turkey Algeria Nigeria Morocco Pakistan Kazakhstan Yemen OIC Countries Non-OIC countries India = 40million China = 40 million Russia = 20 million France = 6 million USA = 8 million Philippines = 6 million Germany = 3 million UK =.5 million South Africa= million Canada = 800,000 5 Composition of Intra-OIC trade in food products in 202 in% Tobacco/manufactures 6% Fish/shellfish 4% Sugar/sugar preparations/honey 6% Meat & preparations 3% Miscellaneous food products 7% Beverages 3% Dairy products & eggs 9% Processed animal/vegetable oils 5% Coffee/tea/cocoa/spices 9% Vegetables and fruit 23% Cereals/cereal preparations 22% Live animals except fish 2% Oil seeds/oil fruits % 27/2/
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5 27/2/203 Barriers to Intra-OIC Trade in Halal products In many OIC countries halal products face some difficulties in the export markets notably : Severe requirements of halal products in some OIC Countries Difference of interpretations by different authorities in OIC Countries Labeling and sanitary and phytosanitary imports requirements, poor product adaptability to suit the local taste requirement Lack of incentives of Halal Industry (tax exemption, cold room equipment for Food) 9 Survey of ITC on NTBs Types of Reported Barriers Reported non-tariff barries average of the surveyed countries Sanitary and phytosanitary measures (SPS) Technical barriers to trade (TBT) Pre-shipment inspection and other formalities Licences, quotas and other quantity control measures Charges, taxes and other para-tariff measures Finance measures regulating the access to and cost of foreign exchange for imports and define the terms of payment. Other *Based on the data analysis for 5 countries: Chile, the Philippines, Thailand Tunisia, Uganda 5
6 27/2/203 Barriers to Intra-OIC Trade in Halal products Mimouni ITC 2009 Tunis 27/2/
7 27/2/203 27/2/203 3 GENERAL EXCEPTION IN GATT WTO The sovereign right of each country to protect its own population through specific laws or standards for safe halal food. article 20 of GATT Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures: (a) necessary to protect public morals; (b) necessary to protect human, animal or plant life or health; 27/2/
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9 27/2/203 DIFFERENTS DOMESTIC LAWS There are many Halal standards in varying jurisdictions (regional, national and even at Certification Body level) About 0 of the 57 OIC member countries have an official Halal standard In most countries where Halal products are produced & exported, there is no official Halal standard 7 MANY STANDARDS FOR THE SAME PRODUCTS Until to date, there are many National Halal Food Standards being produced to serve the local regulator, industry and populations.. Malaysian Standard MS500:2009,Halal Food - Production, preparation, handling and storage General Guidelines(Second Revision) 2. Brunei Standard PBD 24:2007 Brunei Darussalam Standard Halal Food 3. Saudi Standard SASO 272:2003, General Requirements for Halal Food 4. Bosnia and Herzegovina Standard BAS 049:200 Halal Foods: Requirements and Measures 5. Austria Standard ONR 42000:2009 Halal food Requirements for the food chain 6. Pakistan Standard PS 3733: 200 Halal Food 7. Croatia HRN BAS 049:200, Halal food Requirements and measures. 8. Serbia HSS 2009, Halal Standard of Serbia (HSS 2009, Srpski halal standard). Islamic community. 27/2/
10 27/2/203 Competitive regulations and involvement of business circles (private food law) Informal market VS Formal Market The official market includes large-scale exporting companies, large supermarket chains and certification agencies. The uncle and auntie market is a local market based on trust in the local butcher and grocery store of the same social and ethnic group. At present there are around 44 active Halal certifying bodies around the world consisting of government or part government bodies, nongovernmental organizations, local mosques or Muslim associations. 9 ACTORS OF CERTIFICATION 44 around the world VARIOUS STRUCTURES. Islamic/ Muslim Associations 2. Certification body under an Islamic/ Muslim Association 3. Mosque/ related to a specific mosque 4. NGO or Group/ Private initiative 5. Profit making entity 6. Semi government/ Government related 27/2/
11 27/2/203 USA Brazil UK Canada Nederland s Taiwan Pakistan India Russia Chile Sudan Malaysia Bangladesh Belgium Senegal Morocco Kenya Gambia Burkina Faso Singapore Lebanon Yeman UAE Qatar Indonesia Spain Sweden Number of certifying bodies Norway 27/2/
12 27/2/203 distribution of CBs by regions Africa non OIC % Oceania 3% Europe 29% OIC 23% North America % Asia 5% South America 8% 27/2/ Certification Systems at World Level 2% 2% World Halal Council 3% 3% Halal Stock (Philipines) 8% 5% 28% MUI (Indonesia) Jakim Malaysia Halal Development Council 8% International Halal Integrity Alliance (IHI) Halal Research Council Islamic Republic of Iran 0% 8% Islamisches Zentrum Hamburg RAL-Gütesiegel Halal (Germany) 3% Chualalongkorn University Thailand 24 2
13 27/2/203 IMPACT OF ABSENCE OF AGREED NORMS Different national regulatory systems (rules and conformity assessment procedures) may cause impediments to trade in three ways (Spencer Hensen) : import restrictions and high trade cost for production suppliers requirements can have discriminatory effect among partners trade can be reduced due to higher prices or more severe trade barriers 25 27/2/
14 27/2/203 Harmonization is probably the most well known trade-facilitating tool. The goal of harmonization is uniformity of trade measures on an international basis. The harmonization of halal standards at the regional and international level is achievable if a consensus is obtained on commonalities 27/2/ DYMAMIC OF HALAL NORM BUILDING explanation legal perspective Role of non state actors in building customary law World Halal Council, IHI Alliance, Global Harmonisation Initiative Working Group 2 explanation sociological approach Stage persuasion by norms entrepreneurs Stage2 dynamic of imitation of norms leaders by followers Stage 3 norms are taken for granted and no debate around the norms 27/2/
15 27/2/203 27/2/ The effect of international law differs from country to country depending on the membership in international and regional organisations and their ratification of the relevant treaties. We can also distinguish between soft law (codex alimentarius, OIC SMIIC; ASEAN) and hard law (WTO and EU agreements) Current International Halal standards that address food labeling and halal food production :. Organization of Islamic Cooperation, OIC/SMIIC :20, General Guidelines on Halal Food General guidelines on halal foods, Guidelines for bodies providing halal certification, and Guidelines for the authorized accreditation body accrediting halal certification bodies 2. Codex Alimentarius Commission, CAC/CL General Guidelines for Use of the Term Halal 3. Arab guidelines, (AIDMO)ASEAN General Guidelines on the Preparation and Handling of Halal Food 4 EU Project Committee CEN/TC 425 Project Committee - Halal Food with the task of preparing a European Standard on halal food in WTO TBT and SPS agreements 30 5
16 27/2/203 HALAL IN GLOBAL ARENA 27/2/203 3 WTO FRAMEWORK The WTO is placing great emphasis on the role of harmonization through the use of standards. Even though compliance with international standards is voluntary, standards may in practice be ascribed a certain semi-binding authority through the WTO. on the basis of the SPS Agreement (Agreement on the Application of Sanitary and Phytosanitary Measures) and the TBT Agreement3 (Agreement on Technical Barriers to Trade), WTO members are committed to participate in establishing new international standards and to base their national regulations on relevant international standards when such exists. 32 6
17 27/2/203 THE WAY FORWARD Policy options Five options: POLICY OPTIONS ) HARMONISATION BY ADOPTION OF OIC STANDARDS AS REFERENCE AT OIC AND CODEX ALIMENTARIUS LEVELS; 2) EQUIVALENCE; 3) MUTUAL RECOGNITION AGREEMENTS ; 4) Code of conduct : SMICC GUIDELINES 5) TPS/OIC EXAMINATION WITHIN TNC 34 7
18 27/2/203 BENEFITS OF HARMONISATION 27/2/ Barriers to Harmonisation of Halal standards Difference of Islamic rulings in certain cases such as gelatin, food flavouring, mechanical slaughter, stunning of animals and also phosphates. conflict of interest and competing national standards. lack of mutual recognition and disconnection between halal certifiers. lack of infrastructure, new technology equipment and raw material related to Halal products Many certification agencies are not industry friendly. Halal Auditors do not have relevant industry knowledge (Shariah centric). Certification agencies do not follow SOPs, Quality Management Systems, etc. and putting aside the minor differences between the scholars of different School of Thoughts and conflict of interest. 36 8
19 27/2/203 The concept of equivalence The concept of equivalence, is based on the fact that regulatory goals, e.g., in relation to health and food quality, in practice may be fulfilled by the use of different kinds of measures Trade barriers can thus be removed and the products can be accepted on the basis that they fulfill the relevant regulatory objectives even though regulatory differences persist. 27/2/ Mutual recognition Mutual recognition means that two or more parties mutually accept each other s rules or conformity assessment procedures, i.e., the process through which products are evaluated for compliance with the rules. Mutual Recognition Agreements (MRAs) primarily involve conformity assessment procedures. Under these agreements the parties mutually accept each other s conformity assessment procedures as equivalent in order to ensure compliance with prevailing regulatory requirements. Normally, an MRA is a voluntary agreement between governmental conformity assessment bodies. 27/2/
20 27/2/203 The code of conduct The code of conduct may include To strengthen as far as possible the use of international standards when they exist To seek mutual recognition of national trade related technical standards and sanitary and phytosanitary Sanitary measures among OIC Member States. Trade facilitation : to simplify and streamline as far as possible the procedures applied by the customs and other relevant authorities of the Participating States and adopt the international rules and best practices. 27/2/ HALAL ISSUE IN THE CONTEXT OF THE OIC TPS/OIC NEGOTIATIONS 27/2/
21 27/2/203 Non-Tariff Barriers IN the context of TPS/OIC NEGOTIATIONS TPS/OIC Agreement stipulates in Art 2 PARA 6 The exchanged preferences are not be limited to tariffs but are to be progressively extended to paratariff and non-tariff concessions Art 3 para «Negotiations are to cover. inter alia. the following areas :Tariff. para-tariff and non-tariff concessions» 27/2/203 4 PROVISIONS OF THE PROTOCOL ON THE PREFERENTIAL TARIFF SCHEME FOR TPS-OIC (PRETAS) Definitions Para-tariffs: Border charges and fees. other than tariffs. on foreign trade transactions of a tariff-like effect which are levied solely on imports. but not those indirect taxes and charges. which are levied in the same manner on like domestic products. Import charges corresponding to specific services rendered are not considered as para-tariff measures; It is agreed upon that border charges refer to all charges and fees. other than tariffs. imposed on import. Non-tariff barriers: Any measure. regulation. or practice. other than tariffs and para-tariffs. the effect of which is to restrict imports. or to significantly distort trade; 27/2/
22 27/2/203 PROVISIONS OF THE PROTOCOL ON THE PREFERENTIAL TARIFF SCHEME FOR TPS-OIC (PRETAS) Article 7 Elimination of Non-Tariff Barriers. Participating States shall eliminate. upon entry into force of this Protocol. and in the case of LDCs within three years. their non-tariff barriers on the products which are subject to tariff reduction. This period for LDCs may be extended. if a request is made to and approved by TNC. 2. Upon entry into force of this Protocol no new Non-Tariffs Barriers shall be introduced. nor shall those already applied be increased. on the products which are subject to tariff reduction. 27/2/ PROVISIONS OF THE PROTOCOL ON THE PREFERENTIAL TARIFF SCHEME FOR TPS-OIC (PRETAS) Article Institutional Structure 3. The Trade Negotiating Committee shall hold regular meetings with a view to fulfilling its mandate stemming from the Protocol and the Framework Agreement. to clarify and incorporate trade-related issues. and to help develop and expand the TPS-OIC. 27/2/
23 27/2/203 SELECTED EXPERIENCES OF REGIONAL ECONOMIC GROUPINGS WITHIN OIC 27/2/ ASEAN EXPERIENCE The CEPT Agreement for AFTA provides for the immediate elimination of quantitative restrictions for products included in the CEPT Scheme. and the elimination of other non-tariff barriers within a period of five years upon enjoyment of the CEPT concession. several measures have been taken within ASEAN to remove unnecessary barriers to trade through:. harmonization of product standards and mutual recognition of conformity assessment requirements. 2.simplification of customs clearance procedures 3. harmonization of sanitary and phytosanitary standards. 4. Establishment of a mechanism to address private sector complaints on non-tariff barriers. 5. Single window for customs and foreign trade Ministries 27/2/
24 27/2/203 ASEAN EXPERIENCE Establishment of a mechanism to address private sector complaints on non-tariff barriers.. Complaints or notifications are to be channeled directly to member countries and to the ASEAN Secretariat. 2. These complaints/notifications would go through a process of clarification and verification by member countries concerned. 3. and if they were found to constitute an NTB. efforts would be taken towards their removal. 4. Information on these non-tariff issues that have been raised with directly with the member country or the ASEAN Secretariat would be routinely placed on the ASEANWEB 27/2/ /2/
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