Management of SPS Measures in the Philippines By: Alicia O. Lustre PhD Food Development Center, National Food Authority Department of Agriculture

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1 1 Management of SPS Measures in the Philippines By: Alicia O. Lustre PhD Food Development Center, National Food Authority Department of Agriculture Prepared for the Specialists Meeting for Asia on The Challenges and Opportunities of Sanitary and Phyto-sanitary Standards Cost and Benefits of Strategies of Compliance Hosted by the Chinese Government, Sponsored by the World Bank Beijing, China, 20 November 2004 I. BRIEF DESCRIPTION 1.1. Legal Framework and Management of SPS Measures The Philippines is a founding Member of the World Trade Organization. The WTO Agreement on Sanitary and Phytosanitary Measures (or the SPS Agreement), is important to agricultural trade and therefore to 12 million farmers and fishermen comprising the agriculture sector and representing 40% of the country s labor force. The Philippine Department of Agriculture manages the implementation of the SPS Agreement. It maintains an SPS Notification Authority and Enquiry Point and an SPS Information System ( The SPS Notification Authority and Enquiry Point is the Policy Research Service (PRS) of the Department of Agriculture. It receives and disseminates SPS notifications and answers questions on SPS measures operational in the country. The Sanitary and Phytosanitary Standards Information System (SPIS) is the official web portal on SPS measures of the Department of Agriculture. It contains the following information: Philippine SPS measures as provided by the DA regulatory agencies SPS measures of other countries and international standards organizations, Working documents relevant to SPS development, enforcement and monitoring in the Philippines Institutional Responsibilities SPS measures are implemented through regulatory agencies of the Department of Agriculture and the Department of Health. The Department of Agriculture has ten (10) regulatory agencies with responsibility over animal and plant health protection and the safety of fresh foods from production to consumption. The Department of Health has one agency responsible for the safety of processed foods. Agencies in the Department of Agriculture have been traditionally involved in plant and animal disease control. With the SPS Agreement, the responsibility over the safety of such plants and animals when used for food has been made a part of their regulatory programs. Regulatory agencies in the Department of Agriculture and their responsibilities are the following: Bureau of Animal Industry (BPI) Responsible for preventing the entry and spread of exotic and communicable animal diseases and with safeguarding animal health and industries. It is also responsible for control measures for feeds and feedstuff National Meat Inspection Commission (NMIC)

2 2 Responsible for SPS measures related to meat hygiene and the safety of meat products including chicken. Its regulatory program includes the inspection of imported meat and meat products and the accreditation of slaughterhouses and meat processing establishments Bureau of Fisheries and Aquatic Resources (BFAR) Responsible for the safety of fish, shellfish, crustaceans and other seafood and aquaculture products for human consumption. It is the assigned competent authority for the export of fishery products to the European Union. In this capacity, the agency inspects and accredits fish processing establishments, monitors marine biotoxins in seafoods, and levels of antibiotics and veterinary drug residues in aquaculture products. The agency is also responsible for fish health and implements quarantine regulations for live fish Bureau of Plant Industry (BPI) Responsible for measures related to protecting plant health. It conducts pest risk analysis, issues phytosanitary certificates and implements measures regulating the international and domestic movement of plants and plant products. It maintains the country s official pesticide residue analysis laboratories. It is also responsible for approving biotechnology-derived plants for food and feeds Fertilizer and Pesticide Authority (FPA) Responsible for establishing and enforcing maximum residue limits for pesticides in local and imported raw agricultural commodities. Maximum Residue Limits (MRL s) for pesticides is based on standards of the Codex Alimentarius Commission Bureau of Agricultural and Fisheries Product Standards (BAFPS) Responsible for the development and implementation of standards for quality and safety of fresh, primary and secondary processed agricultural and fishery products, aquaculture, and livestock. It harmonizes local and international standards and is the Codex contact point Philippine Coconut Authority (PCA) Responsible for developing and implementing SPS measures related to coconut, coconut oil, other vegetable oils, copra, and other coconut products and all other SPS measures that impact on the coconut industry There are three (3) other regulatory agencies in the Department of Agriculture that play minor roles in the implementation of SPS measures namely, the Sugar Regulatory Administration (SRA), for sugar; the Fiber Industry and Development Authority (FIDA), for abaca and silkworm eggs; and the Cotton Development Administration (FIDA), for cotton seeds The regulatory agency in the Department of Health is the Bureau of Food and Drug (BFAD). It is responsible for ensuring the safety and purity of foods and implements regulations on the approval and use of food additives, labeling of pre-packaged foods, dietary supplements, and others. 1.3 Public-Private Interaction Public private interaction is an integral part of the development and implementation of SPS measures. The private sector is consulted in the development and finalization of regulations to ensure a transparent and inclusive decision-making process. There are many food associations and several consumer organizations in the Philippines of varying levels of awareness and knowledge of food safety issues. The Philippine Chamber of Food Manufacturers (PCFM) has created technical working groups with the Bureau of Food and Drug to harmonize local standards. The Department of Agriculture recently approved the creation of a National Codex Committee to allow different government

3 3 agencies and private sector representatives to participate in the development of country positions at the Codex Alimentarius. 1.4 International Agreements SPS measures developed and implemented by Philippine regulatory institutions are consistent with international standards, statutes and protocols set for inter-country trade as defined by the OIE for animal health, the IPPC for plant health and the Codex Alimentarius Commission for food safety. The Philippines is signatory to these international standards making bodies. II. EXPERIENCE IN MANAGING SPS MEASURES 2.1 Main problems encountered by the public and private sector Inability to gain market access due to difficulties in resolving risk assessment conflicts or satisfying risk assessment requirements of trading partners. This has affected market access for poultry and the export of coconuts, bananas, mangoes and pineapple to new markets. Cost has played a major role in satisfying risk assessment requirements and political intervention has at times been necessary to get a pest risk analysis request evaluated due to inadequate resources on the part of trading partners. The major technical difficulties that have been encountered however are the following: a) determining and executing research protocols that will satisfy an importing country s needs for evaluating pest risks; b) gaining recognition for the absence of quarantine pests and/or of wider pest free areas in the country for the export of mangoes and fresh coconuts; and c) providing own scientific data and findings on food safety issues Shipment rejections due to sudden detection of new contaminants as (BADGE and BFDG) in canned tuna, chloramphenicol and nitrofuran antibiotics in aquaculture and other products and 3-monochloropropanediol in soy sauce. Problems arose because the analytical requirements for monitoring the limits were complex and could not be established quickly. Problems are anticipated for the same reason with the rec ent notification by the EU of a limit of 0.2 ppm for lead in fish. An important issue underlying this problem is the setting of limits for contaminants by the EU on the basis of what is the lowest analytical findings on foods and food products or what is interpreted as as low as reasonably achievable (ALARA). The procedure does not consider the need for or the results of scientific risk assessment as required by Codex for the setting of standards for contaminants. The Philippines has questioned this procedure at Codex Shipment rejection due to lack of information on new SPS measures. Rejection of fresh mango shipments in Japan occurred recently due to the lowering of limits for residues of chlorpyriphos in mangoes Technical marketing difficulties due to unharmonized labeling and food additive regulations. Before 2000, shipment rejections took place in Australia for Philippine sauces with benzoic acid, even if similar products from New Zealand were accepted. Continuous queries at the SPS Committee of the WTO, led to an end to this problem The Philippines has also been asked to respond to queries on its SPS measures for imported meats and dairy products from Europe and fruits from China. 2.2 Main achievements of the public sector and of the private sector

4 The main achievement in the private and public sector resulting from the implementation of SPS measures is the improved capability to respond to requirements of trading partners following problems encountered in the trade. There is now better understanding, if not agreement, with issues related to market access. The market access problem on the use of benzoic acid in sauces to Australia was resolved in the year Since then, the benzoic acid to extend shelf life has been permitted in Philippine sauces. Constructive efforts are being undertaken on a regional basis to improve the level of harmonization of requirements for pesticides and for food additives Greater transparency has allowed government to learn from approaches to regulation by other countries and to improve its own procedures The recognition of the standards set by Codex, the IPPC and the OIE in the SPS Agreement has provided the country with a resource for developing and harmonizing local standards with trading partners. This is a significant achievement of the SPS Agreement There has been a significant upgrading in manpower expertise in regulatory agencies through technical assistance provided by international organizations and trading partners. III. MAIN CHALLENGES AHEAD 3.1 Coping with increasing public requirements by trading partners Coping with the regulatory requirements of importing countries is an increasing challenge for both government and the local industry. Some of these requirements are the adoption of Good Agricultural Practices, Good Animal Husbandry Practices, Good Manufacturing Practices and HACCP by the industry. Upgrading of skills in risk assessment, use of HACCP based inspection systems and monitoring contaminants is increasingly required of governments Coping on the part of industry Large producers and industries are able to change traditional ways of doing things to respond to SPS requirements. They have the resources to do so and to adopt new technologies as a business investment. Cost considerations will still play a crucial role however on the level of compliance achieved by industry. While every industry desires to have safe food products, the adoption of SPS measures does not currently affect the market demand for products. Small industries due to limited resources require government assistance. The system for providing such technical assistance by government also requires that the technology providers understand the technical needs of SPS measures. Further work is needed to achieve this in order to ensure that appropriate technology will be available and effectively delivered Coping on the part of regulatory authorities Regulatory authorities have to address the need for continuing the upgrading of capabilities to respond to SPS requirements. There must be qualified knowledge on HACCP and risk assessment. This includes expertise in the design of research protocols and the generation of data that will satisfy the international requirements for risk evaluation. Reorganizing for better governance is also necessary. Besides the need for capable manpower for current and new activities, there is also a need for better systems to carry out activities clearly and more simply in a cost-effective way. The physical infrastructure, including the use of computers to document operations and to access information, needs to be improved.

5 5 There is also a need to improve the current situation for analytical testing. Besides minimizing duplication of testing activities, government faces the daunting task of finding ways to respond to the complex analytical testing requirements of contaminants. 3.2 Coping with increasing private buyer requirements Private buyers are increasingly requiring documentation, certification and traceability. These requirements are driven by a need to avoid litigation, provide evidence of good practice and support the demands for safety and quality of high priced markets. In most cases, the market pays for the cost of buyer requirements by facilitating the trading process. Generally, coping on the part of industry requires knowledge of how to do things and providing training to carry it out cost effectively. As with coping with government requirements, coping with private buyer requirements can be carried out by large industries but cannot be readily carried out by small industries due to limited resources. Providing private buyer requirements for certification needs attention. There is currently no certification system in the Philippines for GAP, GMP and HACCP that is linked to an international certification body. There are only government certifying bodies. The linkage is necessary to ensure that the certification system operates in accordance with internationally accepted norms. Certifying small industries, small farmers and fishermen will also constitute a new challenge especially as this sector is a major player in terms of number in the food supply chain. Small farms and postharvest fish handling operations near seashores supply buyer consolidators with their produce. Buyer consolidators will pay for the cost of training and certifying small farmers and fishermen if they are assured that the products are sold to them. This type of trading relationship is difficult to establish. Government will therefore have to undertake the certification process of small farmers and fishermen associations. IV. MAIN OPPORTUNITIES AHEAD 4.1 Gaining Better Market Access Opportunities for better markets propels the effort to learn and practice the new trading rules under the SPS Agreement of the WTO. The technical skills, resources and new systems needed to achieve this have been discussed in previous sections. A difficult challenge is the need for political commitment to effect the required change in skills, resources and organizations. Gaining this political commitment is difficult because food safety resulting from the application of SPS measures is not recognizable by the market. Desirable levels of food safety, compared to food quality, is not market driven but is imposed by regulation. For this reason, consumers, industry, and government officials cannot recognize the need for a strong SPS management and implementation system in the food supply chain. SPS measures however are pre-requisites to the opening of markets. It is necessary that our government plays a role in the development and implementation of these measures. We should therefore work towards better capabilities for SPS management and strive to overcome the political sensitivities that make this difficult. Market access will evolve and become stronger as the foundation for scientific risk assessment, research and technology on food safety and a sustainable food control system is laid. 4.2 Increasing Competitiveness through better SPS management.

6 6 Higher levels of wealth and of food security create demands for increasingly higher goals for food safety, animal and plant health and higher requirements for ensuring that these goals are achieved. Meeting the requirements of these goals in a less costly manner, increases competitiveness. This requires technology, skills, and a good management system in the government and private sector. Better SPS management can increase competitiveness if it can reduce the cost to industry and government in complying with SPS measures. Some possibilities are a) providing focal points for identifying critical issues and clearly predicting the impact of these issues on consumer health and trade; b) evaluating the cost benefit of risk assessment; c) identifying technologies needed to address issues and making these available to the private sector or to government; and d) ensuring that regulatory programs are coordinated. Increasing competitiveness would also benefit from policies and activities that strengthen industry sectors as a whole. Public health incidents arising from failure to meet food safety goals can be damaging not just to a manufacturer but to the industry sector as a whole. Consumers have been known to avoid types of foods and not sources of the food when public health incidents involved these foods. They have feared all beef for BSE and not just beef from a single cattle farm where BSE was found. Incidents abound of markets lost because industry players gave it a reputation for poor sanitation and safety. It is essential that manufacturers of high risk foods such as fresh lettuce and seafoods, work together in achieving a single reputation for high quality in order to increase their competitiveness. Governments through better SPS management can support industry in this regard. 4.3 Prospects for Improving Regional Cooperation There are currently several regional programs in the ASEAN on SPS concerns. These involve creating regional databases and manpower networking arrangements. The current projects on harmonization are Harmonization of Maximum Residue Limits (MRL s) of Pesticides, Harmonization of Regulations on Agricultural Products Derived from Biotechnology, Harmonization of Fisheries Sanitary and Phytosanitary Measures. The manpower networks that have been established are: ASEAN Food Safety Network, The ASEAN Task Force on Codex, The ASEAN Experts Group on Food Safety, The ASEAN Consultative Committee on Food Quality and Conformance, The ASEAN Network on Cultured Shrimp Inspection Authority, ASEAN Task Force on Drug Residues in Shrimp Products, and The Network for Pesticide Regulatory Database. These manpower networks and databases will be useful if individual countries contribute actively and meaningfully. In view of this, it is important that regional programs represent strong individual country priorities. Careful planning is necessary to identify programs that meet this criteria. Following are some suggestions: a) Pooling institutions and experts in gathering data for risk assessment for products commonly marketed; b) Expanding harmonization of food regulations; and c) Strengthening of the ASEAN task force on Codex and information network on food safety. Acknowledgment The assistance of Maribel G. Marges of the SPS Notification Authority and Enquiry Point; and Larry Lacson of the Bureau of Plant Industry, in providing information materials for this paper is gratefully acknowledged.