Trade Adjustment Costs in Developing Countries: - World Bank ...

332Miet Maertens and Jo Swinnenmeasures to the WTO have increased exponentially over the past 10 years (Henson,2006). The EU General Food Law of 2002 introduced new food safety requirementsand health issues such as the precautionary principle—that measuresto protect human health are permissible on the ground of reasonable food safetyconcerns, even if scientific support is lacking—and traceability, implying the identificationof the origin of feed and food in order to facilitate the withdrawal ofproduce in case of food safety hazards. Also EurepGAP requirements, which rapidlyexpanded internationally over the past couple of years as GlobalGAP standards,became more stringent with more and stricter compliance criteria. Forexample, the number of EurepGAP compliance criteria increased from 145 to 199in just three years (EurepGAP, 2009).Food standards have mainly emerged from high-income countries and regions,such as the EU and the United States. A number of factors contribute to explainingthe increase in food standards in global agri-food trade. A series of majorfood safety hazards in high-income countries has increased consumer and publicconcern on food-borne health risks and created an increased demand for foodsafety. In addition, rising income levels and changing dietary habits have increasedthe demand for high-quality food. Consumers are also increasingly (made)aware of ethical and environmental aspects related to food production and trade,which has increased the need for specific standards related to these aspects. Butalso the increased trade in fresh food products such as fruits, vegetables, fish,and meat, which are prone to food safety risks and subject to specific quality demandsby consumers, have increased the need to regulate trade through standards.In addition, the increased dominance of supermarkets in food chainscontributes to explaining the increased importance of food standards. Large retailchains put much emphasis on freshness, product quality, and food safety asa product-differentiation strategy or so as to reduce food safety risks and thecosts related to the risk of selling unsafe food.2. CONCERNS FOR DEVELOPING COUNTRIESThe increased proliferation and tightening of food standards has cast doubton the beneficial effect of trade liberalization for poor countries. Major concernsare that:1. standards act as new non-tariff barriers diminishing the export opportunitiesof the poorest countries who face multiple constraints in complyingwith stringent standards and upgrading their supply chains;2. poor farmers and smallholder suppliers are excluded from high-standardsfood supply chains because of their inability to comply with high standards;and3. these farmers are exploited in the chains because stringent standards decreasethe bargaining power of small farmers vis-à-vis large food exportersand multinational food companies, and increase the possibilities for rentextracting in the chain.