THERE is a big potential for expanded bilateral trade in the agro-food sector between the Association of Southeast Asian Nations and the European Union if ASEAN economies can agree on regulatory issues hampering market access.

This was the gist of the presentation made by the European Chamber of Commerce of the Philippines (ECCP) during a recent Senate hearing on the risks and opportunities arising with the launch of the ASEAN Economic Community (AEC).

The agro-food industry is a key economic component of both the EU and ASEAN. In ASEAN, over 60 million hectares of land is devoted to agriculture, and the sector accounts for more than a quarter of the gross domestic product of several member-states. On the other hand, the food and beverage industry is Europe’s largest manufacturing sector, generating an annual turnover of EUR2.2 trillion.

But outstanding regulatory issues in ASEAN are constraining development and growth, the ECCP said. Although ASEAN is the EU’s third largest trading partner with more than EUR206 billion of trade in goods and services in 2011, the EU’s share of food imports from ASEAN has been lagging behind those of other ASEAN trading partners.

This, the ECCP said, is due to stiff regulatory restrictions and requirements.

“Within ASEAN, outdated regulatory practices and a lack of institutional capacity have contributed to problems with food safety, non-tax-paid trade, overregulation, and customs clearance delays. A number of market access issues have yet to be resolved satisfactorily, including the Philippines,” it added.

The ECCP said these key regulatory issues concern market access; tariffs, taxes, and non-tariff barriers; WTO compliance, technical standards and product classification rules; labeling; sanitary standards; and religion and halal standards.

There are also misgivings among EU companies about foreign investment restrictions, intellectual property protection, and traceability protection in the ASEAN.

The chamber proposed several key recommendations at the hearing to boost ASEAN-EU agri-food trade flow as ASEAN moves closer to integration by 2015.

It called for the phase-out over time of import tariffs and non-tariff barriers, and ensuring internal taxes and regulations are simple, transparent, and fully compliant with WTO rules.

Labeling rules for packaged goods should be harmonized and simplified; technical standards, definitions, and product classification rules should be based on internationally recognized standards; and the protection and enforcement of intellectual property rights should be improved.

“ASEAN should strongly consider traceability information legislation to protect consumers and support legitimate EU trade; and governments should consult industry on proposed amendments or any new regulations affecting the agri-food sector,” the ECCP said.

In addition, EU-ASEAN trade links can be strengthened by improving cooperation in key areas, such as providing mutual recognition of food product registrations and export establishments certified by the national competent bodies, and developing export-quality infrastructure, including testing laboratories and inspection agencies.

On the Philippines in particular, the ECCP suggested that the domestic agri-food sector be built on successful models like those of Nestlé and La Frutera, which would create “win-win alliances between farmers and industrial companies that can process the produce and have access to markets.”

At the same hearing, the Philippines’ Department of Agriculture agreed that agribusiness needs to “seize fully the immense market opportunities” that the AEC and other free trade agreements are presenting to both traditional and new agricultural exports.

It must update old models and develop new ones that will link small crop farmers to global and domestic markets through large corporate integrators. “To reduce costs and increase efficiencies there must be increased integration-backward and forward-in priority agriculture subsectors, such as grains/feeds, livestock and poultry and fruits and vegetables,” it said.

“Small crop farmers should increasingly be linked in consolidated or cooperative arrangements with large companies in order for their products to be more competitive, in domestic as well as export markets.” — Romelda Ascutia, PHILEXPORT News and Features

Source: Business Week Mindanao(www.businessweekmindanao.com); News; 05 October 2013