Carol Chouchani Cherfane

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Environmental Requirements and Competitiveness in
the Middle East and North Africa

• Carol Chouchani Cherfane
• Coordinator, METAP MedPolicies Initiative
• Economic and Social Commission for Western Asia
• United Nations

UNCTAD Expert Meeting on Environmental
Requirements and International Trade
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Regional Trade EnvironmentPartnerships in MENA
Region

• Region engaged in TE examination and capacity
  building since 1997
• Mediterranean Environmental Technical Assistance
  Program (METAP) via World Bank has sponsored
  MedPolicies Initiative since 1997, implemented by
  ESCWA since 2000.
• ESCWA TE work program underway since 1998.
• Mediterranean Commission for Sustainable
  Development (MCSD) fosters consultation through
  Trade Environment Task Force since 1998,
  supported by Blue Plan/MAP, working with ESCWA on
  SMEs.
• League of Arab States support National TE
  Committees in 2000.
• UNCTAD UNEP Task Force training activities at
  global regional levels have benefited region
  supporting cooperative efforts with ESCWA.

UN-ESCWA
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Examining the Impact of Environmental
Requirements on Exports

• In Destination Markets ESCWA prepared study in
  2001 entitled The Impact of Environmental
  Regulations on Production and Exports in the Food
  Processing, Garments and Pharmaceuticals
  Industries in Selected ESCWA Member Countries.
• In Destination Markets and Domestic Markets
  METAP MedPolicies Initiative has prepared several
  case studies examining cost impacts of more
  stringent environmental regulations on
  agricultural agro-food sector outputs and
  exports.
• Publication by HIID/METAP (2000) ESCWA currently
  preparing policy notes based on application of
  Larson Model.

UN-ESCWA
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Agricultural ProductsRelevant Industries

• Raw Agricultural Products
• Fresh fruits, vegetables
• Packaged Agricultural Products
• Dates, sugar, rice
• Processed Agricultural Products (packaged)
• Canned or packaged fruits and vegetables
• Dairy products, fish products, meats (involve
  different issues)
• Other Processed foods
• Agro-industries that support Agro-food sector
• Fertilizer industry, seed suppliers
• Cooperatives, distributors

UN-ESCWA
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Conceptual Framework

• Major Categories of Requirements
• Product Requirements involve testing
• Production Process Methods (PPM) involve
  certification
• Conformity Assessment requires accreditation to
  conduct testing and certification
• Requirements may be
• Regulatory - Required by governments and
  enforced by customs administrations/ministries
• Voluntary - Required by importers or
  preferred by end consumers
• Dispute Resolution
• Public International Law - Between Governments,
  WTO
• Private Contract Law - Between Companies

UN-ESCWA
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Sample Issues for Agricultural Products Sector

• Product Requirements (strong link to food safety
  consumer awareness)
• Process Requirements

UN-ESCWA
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Implications for ESCWA Region Data Sources

• Survey of a sample of firms in Egypt, Jordan,
  Lebanon, Syria to identify some of the major
  environmental regulatory constraints faced by
  private sector exports in the region.
• Review and compilation of USFDA detentions of
  agro-food exports from ESCWA member countries,
  which were posted on the USFDA Operation and
  Administration System for Import Support (OASIS)
• see http//www.fed.gov.oasis
• several EU Member States maintain similar
  databases
• Interviews with chambers of commerce and
  ministries since info on trade detentions and
  delays to/from Arab countries poorly documented.

UN-ESCWA
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UN-ESCWA
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FINDINGSMost Troublesome REGULATORY
Environmental Requirements faced by ESCWA
Agro-Food Exporters
UN-ESCWA
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FINDINGSMost Troublesome VOLUNTARY Environmental
Requirements faced by ESCWA Agro-Food Exports
UN-ESCWA
Note Egypt Center for Measuring Organic
Products - accredited by EU
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Additional Findings

• Exporters in ESCWA-MC often find environmental
  requirements customs procedures more
  troublesome in Arab countries than in EU US
  markets.
• Lack of access to full, accurate and timely
  information regarding reason for detention or
  return of shipment major complaint by regional
  agro-food exporters to Arab markets also
  concerns regarding TBTs.
• Question non-discrimination of regulatory
  enforcement between imports and domestically
  produced products WTO dispute potential.
• Agro-food exporters feel threatened by informal
  sector and cottage industries producing for
  domestic market only, since do not need to comply
  with environmental requirements in foreign
  destination markets
• Linkage of compliance and enforcement to
  competitiveness exporters must be registered and
  are more regulated, while firms producing only
  for domestic market not necessarily registered or
  regulated.

UN-ESCWA
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Measuring the Cost of Compliance with
Environmental Requirements

• Once the environmental requirements most
  troublesome for producers/exporters/SMEs
  identified, question remains
• How do we assess the cost of complying with this
• new environmental requirement?
• METAP MedPolicies Initiative The Larson Model
• Simple (5 variables)
• Empirically tractable (tested model and peer
  reviewed)
• Economic forecasting policy tool
• Estimates the percentage change in output,
  exports and imports from compliance with an
  environmental requirement
• Environmental requirement may be in a destination
  market or a domestic environmental regulation
• Training on Larson Model in Beirut (Oct 2002)
  Rabat (Nov 2002)

METAP
UN-ESCWA
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METAP MedPolicies InitiativeSample Findings on
increase in water costs

• Tunisia Increase in cost of irrigated water
• Impact of 50 increase in irrigated water costs
  for the citrus sector yields
• Loss of output by - 2.2 to - 2.6
• Loss of exports by - 3.0 to - 4.9
• Tunisia Increase in cost of irrigated water
• Impact of 50 increase in irrigated water costs
  for the dates sector yields
• Loss of output by - 9.0 to - 12
• Loss of exports by - 14 to - 26

UN-ESCWA
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METAP MedPolicies InitiativeSample Findings on
increase in fertilizer costs

• Cyprus Increase in fertilizer prices
• Impact of 40 increase in fertilizer prices on
  the potato sector yields
• Loss of output by - 0.3 to - 0.1
• Loss of exports by - 0.4 to - 0.2
• Jordan Decrease of cadmium content in P2O5
• Impact of 2.5-10 increase in price of P2O5
  phosphate fertilizer exports due to cadmium
  removal costs yields
• Loss of output by - 0.3 to - 7.5
• Loss of exports by - 0.3 to - 7.5
• (same, all exported)

UN-ESCWA
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Recommendations

• SMEs and private sector in developing countries
  need more information regarding environmental
  requirements in destination markets prior to
  contracting shipment.
• Ministries of trade, health and customs
  administrations need technical and institutional
  capacity building to be better able to ensure
  conformity with environmental requirements
  requires pursuit of accreditation and
  improvements in testing and certification.
• Better communication is needed between government
  trade officials and private sector exporter to
  inform each other of problems and to improve
  dispute settlement.
• Developing countries need to gain better capacity
  in evaluating and assessing the impact of
  compliance with environmental requirements
  which could be achieved by applying Larson Model.

UN-ESCWA
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Recommended Resources

• United Nations Economic and Social Commission for
  Western Asia (ESCWA), The Impact of Environmental
  Regulations on Production and Exports in the Food
  Processing, Garment and Pharmaceutical Industries
  in Selected ESCWA Member Countries,
  E/ESCWA/ED/2001/14, 25 October 2001.
• Bruce Larson, Eri Nicolaides, Bashir Al-Zubi,
  Nabil Sukkar, Karim Laraki, Mohammed Salah
  Matoussi, Katalin Zaim and Carol Chouchani, The
  Impact of Environmental Regulations on Exports
  Case Study Results from Cyprus, Jordan, Morocco,
  Syria, Tunisia, and Turkey, World Development,
  Vol. 30, No. 6, pp. 1057-1072, 2002.
• Bruce Larson, Evaluating the Impact of Specific
  Environmental Regulations on Exports, Land
  Economics, 76, pp. 534-549, 2001.
• Mediterranean Environmental Technical Assistance
  Program (METAP) and Harvard Institute for
  International Development (HIID), Trade and
  Environment and International Competitiveness in
  the Mediterranean Region Selected Case Studies,
  Cambridge, MA and Beirut Harvard Institute for
  International Development, 2000.

UN-ESCWA
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Thank you.

• Economic and Social Commission for Western Asia
• United Nations
• P.O. Box 11-8575
• United Nations House Beirut Lebanon
• Tel [phone]
• Fax [phone]
• Web http//www.escwa.org.lb
• E-mail cchouchani_at_escwa.org.lb