WORLD TRADE  
ORGANIZATION  G/SPS/GEN/823 
4 March 2008 
 (08-0965) 
Committee on Sanitary a nd Phytosanitary Measures Original:   English 
  
 
 
OVERVIEW OF RECENT WORLD BANK SPS ACTIVITIES  
AND PUBLICATIONS 
 
Submission by the World Bank
 
 
 
Barrier, Catalyst, or Distraction? Standards, Competitiveness, and Africa's Groundnut Exports 
to Europe 
 1. This new paper
 from the World Bank examines the trade impacts of food safety standards -- 
in this case the impacts of EU aflatoxin standards on  Africa's groundnut trade.  In part due to some 
earlier World Bank research on this subject, the af latoxin issue has been frequently cited as an 
illustration of how standards serve as 'trade barrier s" for developing countries.  Trade economists and 
African policy-makers often refer to this case as an example of how requirements that exceed 
international  standards have resulted in large losses of developing country expo rts.  This paper draws 
upon trade and regulatory data, country experiences, and interviews with  groundnut exporting  and  
importing companies.  The conclusions of this pa per differ sharply from the "standards as barrier" 
hypothesis. 
Specifically, the paper demonstrates that:  
 
• Africa's groundnut trade was marginalized well before the EU's adoption and enforcement of 
more stringent standards;   
 
• The aggregate effects of the EU regulation for the region, in terms of intercepted trade, are 
small and vastly overstated by prior research.  For the companies involved in the notifications, however, the EU regulations have  had more profound effects, as the economic 
implications of returned consignments or discounted product may be significant;  
 
• there are sharp differences in response to the standards and overall competitiveness among 
countries, in large part due to differences in industry leadership and the efficacy of  public-
private collaborations;   
 
•  major competitors from Latin America and Asia  have substantially upgraded their export-
oriented groundnut supply chains, meeting ma rket and regulatory requirements and taking 
market share and customer loyalty from earlie r African suppliers.  The EU standards have 
thus catalyzed regulatory, technological, administrative, and other changes in certain developing countries, although not in others;  
 
• it is these competitors, rather than African suppliers, who would ha ve benefited had the 
European Union adopted a less stringent harmonized  standard (such as that of Codex).  Most 
of the African groundnut trade that has been  intercepted by the EU authorities since 2000 
would have failed the Codex (or any ot her prevailing) standards;  and  
 G/SPS/GEN/823 
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  • African industries need to catch up with thei r competitors in terms of productivity, product 
quality, and supply reliability in order to eff ectively service any growing international market 
for groundnuts, let alone the  more discerni ng EU (confectionary) market.  There are ample 
examples of "good practice'" that could be replicat ed to achieve this result that involve efforts 
of research, extension, seed  suppl y and supply-chain coordination.  
 
The paper can be downloade d using this hyperlink:  
http://siteresources.worldbank.org/INTARD/825826-
1111055015956/21663468/ARDDiscussionPaper39.pdf  
 
Workshop on investment in laboratory infrastructure 
 
2. Under the STDF umbrella, on 15-17 November  2007, UNIDO and the World Bank organized 
a workshop to examine issues rela ted to investment in laboratory infrastructure in developing 
countries which provide services for food safety and ag ricultural health.  A total of 40 participants 
attended the meeting - about a third of whom were  resource persons from developing countries in 
Asia, Africa and the Americas.  Their participati on was funded by a Netherlands Trust fund (BNPP).  
The meeting was also attended by a number of de legates to the SPS Committee, officials from EU 
regulatory agencies, private lab operators, and donor agencies.  The i mmediate purpose of the 
workshop was to provide input for the finalization of a guide being jointly developed by the World 
Bank and UNIDO to assist in assessing and making investme nt decisions in laboratory infrastructure.   
3. The meeting addressed several key topics with re spect to the role of laboratories providing 
food safety and agricultural health services, notably: 
• the core functions of laboratories; 
• the optimal balance between the public and pr ivate provision of laboratory services and the 
appropriate division of labour between the two; 
• the economics of building new laboratory capac ity versus the re-organization of existing 
services and how to ensure the sustainability of both, and 
• the effect of the rise of private standards schemes on the demand fo r, and organization of, 
laboratory services in developing countries;  and 
• capacity-building challenges associated with diagnostic services. 
4. An issue which was discussed w as the respective roles of public and private laboratories.  Fee 
structures used by public laboratories in developing countries are often below the actual cost of the provision of such services.  In some cases, changing the fee structures of public laboratories requires government legislation.  Unless otherwise obliged  (e.g. by a buyer), producers typically use the 
cheapest provider (normally the government lab) which can lead to "crowding out" private laboratories from providing services. 
5. A corollary of non-market based charging structur es is that public laboratories typically face 
both investment capital and working capital constraint s.  By extension, this creates problems in 
seeking or maintaining international accreditation for services provided and thus confidence in results.  
Capital investment, budgetary and technical as sistance designed to upgrade public laboratory 
networks to international sta ndards often run into sustainability problems, commonly due to 
inadequate understanding of the underlyi ng effective demand for such services.  
6. There are divergent views regarding the most appropriate division of labour between private 
and public laboratory networks.  One view is th at the provision of laboratory services (e.g. for 
veterinary health) are a public good.  Others believe  that even with respect to the provision of basic  G/SPS/GEN/823 
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  regulatory services, such as the surv eillance of plant or animal pests and diseases, private laboratories 
have a role to play.  
7. The issue of public versus private provisi on of services has an important bearing on the 
sustainability of existing or new investments.  Demand for testing services arises from three main 
sources:  (i) legal requirements (e.g. domestic food safet y, animal or plant health legislation);  (ii) 
market needs (e.g. a contractual obligation to test fo r a particular variable at a specific laboratory) or 
(iii) for research reasons (e.g. testing for the pr esence of certain animal diseases).  WHO and FAO 
stress that laboratory services are needed to addr ess various public policy objective that cannot be 
evaluated from a purely market perspective.  WHO gave an overview of on-going work to judge the 
global burden of food-borne disease,  notably through the concept of  disability-adjusted life years 
which provides a measure of the impact of disease.  
8. Another issue that was discussed was the influe nce of changing market requirements on the 
provision of laboratory services.  Private standard s are generating new demand for services, however, 
it was cautioned that buyer requirements may be und ermining some of the assistance being provided 
by donors for the provision of laboratory standards.  The "gold standard" here is accreditation of 
laboratories to ISO standard 17025.  Yet even t hough a laboratory in a developing country may have 
achieved accreditation to ISO-17025, some interna tional buyers determine the laboratories from 
which they will accept test results.  
9. Investment in laboratory networks can be either on a grant or concessional basis through 
technical assistance, or on a commercial investment  basis.  Various initiatives were cited, including 
UNIDO’s Labnet service which provides an electr onic platform to link laboratories;  twinning 
programmes offered by the Central Science Labor atory in the United Kingdom;  and the EU’s BEST 
programme.  One participant succinctly summed up the discussion by stating that donors should not "build it, photograph it and leave it" - a longer-ter m engagement is needed which is adapted to the 
particularities of the local situation. 
For more information, contact Mr John Lamb at the World Bank e-mail:  jlamb@worldbank.org
 
 
 
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