A change of mindset
Business Mirror
October 5, 2016
ADDRESSING nontariff measures (NTMs) is undeniably a pressing issue for Philippine exporters. The NTM survey conducted by the ITC, in cooperation with the Department of Trade and Industry (DTI), has identified product certification, private standards, fumigation requirements, rules of origin, testing requirements and labeling requirements as among the top burdensome NTMs faced by Philippine exports.
What could also be found very interesting from the survey is the observation that “for the preponderant majority of interviewed Filipino exporters, the general perception is that anything “required” by the client is something that is nonnegotiable and should generally not be considered as “burdensome regulation.” The mindset is that any exporter who is unable to either comply with such basic requirements or find some (informal) way to surmount them should simply not be in the business of exporting.
We need to start working on changing this mindset, particularly for our micro, small and medium enterprises (MSMEs), which comprised 79 percent of interviewed companies for the survey.
The average international trade transaction is subject to a number of procedural and documentation requirements and, indeed, there are regulations that may be more trade-restrictive than necessary. This may entail requirements that are too complex, duplicative documentation and inefficient procedures, all resulting in high transaction costs and delays.
A global marketplace thriving on standards
STANDARDS and certifications figured prominently as a burdensome requirement for Philippine exporters mainly because the global marketplace is now characterized by a myriad of international and country-specific standards, private standards and national certification systems that cover all sectors, from simple agricultural products to the most complex electronic goods. The phenomenon’s extent and development could be described by the following figures:
The International Organization for Standardization (ISO) has about 246 committees with 4,900 work programs for various sectors and products.
The ISO has issued about 21,000 standards as of to date. This is 6,000 more standards from the 15,000 reported by the WTO in 2005.
A survey of national product standards in a selection of member-countries of the Organisation for Economic Co-operation and Development (OECD) identified a total of nearly 300,000 documents (Moenius 2005). This is expected to have multiplied in the span of 10 years.
In 1975 there were only 20 Europe-wide standards, but by 1999, the number had grown to 5,500 (Moenius 2005).
Private standards have been increasingly influential over the past decades. These are often coordinated by lead firms that use standards as one means to govern production processes and supply chains across the globe to ensure coherence between value chain partners. Other factors driving the increase in importance of private standards are civil-society groups that address environmental and social impacts through private standards, which are also referred to as voluntary sustainability standards (VSS) (WEF & OECD, 2016).
Based on studies from select countries, standards and certifications were found to also open doors for MSMEs. Certified products and services allow MSMEs to charge a price premium and increase profits, and can facilitate access to credit. Recently, voluntary certified markets have displayed double-digit growth rates, often surpassing conventional-market growth rates. MSMEs can move from niche to mainstream markets, and gain the status of a preferred supplier for multinational brands. Such medium- to long-term relationships are particularly positive for both buyers (often multinational enterprises) and suppliers (often MSMEs) (ITC 2015).
In ensuring the trends in standards and certification systems do not become trade barriers and opportunities are identified for Philippine exporters, both government and private-sector stakeholders should continue to work together toward building a body of information on regulations specifically encountered by Philippine exporters. This information would contribute to the development of more targeted interventions.
The WTO’s “e-ping-alert” system, available at http://www.epingalert.org/en, is a very practical tool for Philippine traders in monitoring developments on their export markets—both potential and existing. The system enables trade players, such as exporters, importers, producers and sector organizations, among others to have timely access to WTO members’ reports on new regulations and facilitate dialogue among the public and private sectors in addressing potential trade problems at an early stage.
The advocacy programs of the Export Marketing Bureau (EMB), which include Doing Business in Free Trade Areas (DBFTAs), and the EMB-FTSCs joint publication of the NTM advisory are avenues for dialogue in understanding and addressing these regulations.
The Standards and Conformance Portal, established by the Bureau of Philippines Standards (BPS), also make available information on technical barriers to trade (TBT) to domestic stakeholders and provides a weekly bulletin of foreign TBT notifications and listing of Philippine notifications to the WTO.
Feedback and comments on NTMs could be sent to the EMB’s ntms@dti.gov.ph. For those specific to standards and a particular regulation from the e-ping alert system, comments and positions for forwarding to the country concerned can be e-mailed to the Philippines’s TBT enquiry point at bps@dti.gov.ph.
FTSC Posts are also on the ground to monitor their base countries. Thru EMB and BPS, FTSC also assist Philippine exporters by conducting consultations with relevant agencies on issues of concern.□
May Niña Celynne P. Layug, Foreign Trade Service Corps, Department of Trade and Industry