September 19, 2013 (Thursday)
Japan External Trade Organization (JETRO), 5th Floor, Ark Mori Building

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As a specialized agency of the United Nations, the United Nations Industrial Development Organization (UNIDO), focuses on poverty reduction through industrial development, analyzes issues related to energy and environment, as well as provides capacity-building programs in general and in particular to improve trade standard compliance aimed at developing countries. While there are currently a wide variety of trade-related challenges facing developing countries, one of the concerns is their inability to fully comply with the safety and quality standards on agricultural and food products set by the importing markets. Their concern is that this will hamper their ability to continue exporting these products to advanced countries, which is a first necessary step for development.

As an approach to promote global trade participation in agriculture and food products, UNIDO emphasizes the following: improving the productivity and capacities of producers, upgrading the capacity of governments regarding conformity assessment as an essential infrastructure for compliance with food safety and quality standards in importing countries, export promotion activities based on these efforts, and the promotion of trade facilitation by streamlining customs clearance procedures. Meanwhile, it was deemed indispensable to analyze the bottlenecks in these challenges to support developing countries effectively.

In order to deepen the understandings in this issue, UNIDO obtained individual data on import rejections provided by the regulatory authorities of four countries: EU Directorate General for Health and Consumer Protection (EU DG Sanco); U.S. Food and Drug Administration (US FDA); Japan’s MHLW; and the Australian Quarantine and Inspection Service (AQIS), and analyzed the data in cooperation with the Institute of Development Studies (IDS). The analysis based on this data can reveal which goods from which countries were rejected for what reasons, frequencies of rejections, and each country’s comparative performance in compliance with food safety standards. Moreover, UNIDO conducted surveys of importers and also developed indicators that assess the quality control infrastructure available in each country. These data and indicators are all made publicly available.

TSCR 2010 presents the results of analytical work conducted based on these data. For example, the loss incurred by Vietnamese fish and fishery product exporters due to the rejection in four major markets (Australia, EU, Japan, and the U.S.) is estimated to worth 13 million U.S. dollars. The loss accounts for only a small percentage of the country’s export value, but these import rejections by the regulatory authorities represent only a ‘tip of the iceberg.’ We believe that a fundamental improvement in quality control within the food supply chain is needed to improve the overall regulatory compliance capacities in these countries.

IDE-JETRO produced an East Asian version of TSCR (ATSCR) with a focus on East Asia, complementing the TSCR written by the UNIDO from a global perspective. The East Asian version covers ASEAN countries, China, Japan, and South Korea. In terms of the global export value of agricultural and food products, the export value of agricultural and food products from East Asia is large and comparable to that from Latin American countries. In addition, the food processing industry has a large share in the manufacturing industry in most countries and the food processing industry will continue to be an important industry for developing countries in Asia. For example, the share of food processing industry in overall manufacturing activity is 30% in Vietnam and 25% in Indonesia. The backward linkage effect will affect the agricultural production that is expected to absorb employment in rural areas. Japan remains an important export counterpart for the East Asian countries, although its share is decreasing.

Among the top 10 countries from which products were rejected by Japan, Asian countries occupied five placesChina ranking the 1st, Vietnam the 3rd, Thailand the 4th, Indonesia the 7th, and South Korea the 9th. Based on this statistical data, the ATSCR conducted an analysis with a focus on the agricultural and food products exported from Asian countries and rejections by the Japanese authorities. More than one-third of the rejected commodities were fish and fishery products. The major causes for rejections were bacterial contamination and pesticide residues.

The case studies analyzed import rejections with the recognition that, to reduce import rejections at ports, it is necessary to examine in which step of the supply chains various rejection factors occur and what issues exist in each step of these supply chains. The results of the detailed case studies of Vietnam and China are summarized as follows. First, it is critical that proper uses of pesticide residues and antibiotic products are well understood, and these substances are well controlled and managed by farmers. However, the case studies reveal that small-scale farmers lack sufficient knowledge on these, making the supply chain management difficult. In export-oriented supply chains with stricter standards, vertical integration is progressing to ensure traceability. As a result, supply chains are being bifurcated, depending on their destinations, into export and domestic markets. Meanwhile, China and Vietnam are upgrading domestic food regulations, foreshadowing that food safety will become an important domestic issue even for developing countries in the future. The case studies revealed that producers in developing countries find it difficult to: keep up with changing regulations in importing countries; obtain an increasing number of certificates and private standards required by customers, and to adjust their production processes reflecting more complex requirements imposed by their buyers.

Japan’s food self-sufficiency ratio (calculated by caloric base) was 39% in 2009, and Japan depends on approximately 60% of all of its foods being imported. Ensuring the safety of imported foods is a very important issue, and commercial food products need to submit notifications to appropriate authorities without an exception. In Japan, 140 municipalities monitor domestic and imported food. To ensure domestic food safety, three different measures are implemented within the monitoring system: measures for exporting countries, measures taken at the time of importation, and in-country measures. To exporting countries, Japan is actively disseminating information about its food and sanitation regulations. Bilateral discussions and field investigations are also conducted when deemed appropriate. Japan also provides technical assistance to exporting countries. For example, Japan provides three-year training programs to Vietnamese trainees through the Japan International Cooperation Agency (JICA) to improve their inspection abilities.

In Japan, there are 32 quarantine stations where one can submit import notifications for food and related products. Inspection centers in Yokohama and Kobe are in charge of advanced inspections. The inspection system at the time of importation consists of three major types of inspection. The first one is provision of guidance to importers by MHLW, in which importers checks for the pesticides or food additives as a part of their voluntary inspection. The second one is monitoring inspections where a wide variety of imported foods are classified and undergo a sampling inspection according to the nation’s total amount of intake of the targeted food, probability of violation, and past track records of violations. In FY2012, approximately 90,000 samples were inspected. In monitoring inspections, residual agricultural chemicals, antibiotics, pathogenic microorganisms, additives, component specifications, toxigenic fungi, genetically modified foods, and irradiated foods are inspected based on violation histories in the past and on the probability of violation, at the expense of the government. The last one consists of inspection orders given to importers. The importers who received this order must conduct an inspection at each time of import on foods with higher probability of violation. These foods were found to be violating laws during voluntary inspections, monitoring inspections, and sampling inspections conducted in Japan. The expenses of these inspections are paid by the importers, and the importers are not allowed to import foods without obtaining the results of the inspections. As many as 1,053 violations were reported in FY2012, of which approximately 60% violated the standards and regulations on agricultural chemical residues and additives.