WORLD TRADE  
ORGANIZATION   
G/SPS/GEN/1100 
27 June 2011  
 
(11-3144) 
Committee on Sanitary and Phytosanitary Measures Original:   Spanish 
  
 
IMPACT OF PRIVATE FOOD STANDARDS IN THE SOUTHERN CONE: 
FINANCIAL COSTS AND LEGAL IMPLICATIONS 
 
Communication from the Inter-American Institute for 
Cooperation on Agriculture (IICA) 
  
The following communication, received on 23 June 2011, is being circulated at the request of 
IICA. 
 
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 1. The present document contains a summary of the main conclusions drawn from the study 
Incidencia de los requisitos privados para alimentos en el Cono Sur  (Impact of private food standards 
in the Southern Cone). 
1. Background 
2. In 2005, Saint Vincent and the Grenadines rai sed the issue of private standards with the 
Committee on Sanitary and Phytosanitary M easures (SPS Committee) of the World Trade 
Organization (WTO).  This resulted in a series of consultations, surveys and discussions on the impact 
of private standards and their implications for the production and marketing of  agrifood products.  As 
the issue gained momentum within the SPS Comm ittee, IICA decided to provide follow-up and 
support the discussion in its member countries. 
3. The issue of private standards and the discussions taking place within the multilateral 
framework were of special interest to the Sta nding Veterinary Committee (CVP) of the Southern 
Cone (made up of Argentina, Bolivia, Brazil, Chile , Paraguay and Uruguay).  As a result, the impact 
of private standards was discussed within the frame work of the technical cooperation of IICA and the 
CVP and it was decided that a study was needed to identify the financial and legal effects of such 
standards on beef production and trade in the southe rn region.  A profile for a regional activity was 
designed in collaboration with the Programa de Inserción Agrícola  (Agricultural Insertion Program)
1 
and the parties involved followed the progress of the study closely. 
4. The objectives of the study were to: 
(a) Identify, through in-depth, qualitative res earch, the costs associated with the 
implementation of, and dem onstration of compliance with, the private standards 
imposed by retail chains and other food indus tries on beef producers and exporters in 
Argentina, Uruguay, Brazil, Paraguay and Chile (Bolivia was not included in the 
                                                      
1 Made up of the Fundación Instituto para las Ne gociaciones Agrícolas Internacionales (INAI), the 
Centro de la Industria Lechera (CIL), the Sociedad Ru ral Argentina (SRA), Confederaciones Rurales Argentinas 
(CRA), the Federación Agraria Argentina (FAA),  the Multilateral Investment Fund (MIF) and the 
Inter-American Development Bank (IDB), http://www.insercionagricola.org.ar/ . G/SPS/GEN/1100 
Page 2  
 
  study because the country is a net beef impor ter and its industry is not integrated into 
international markets). 
(b) Analyse the legal consistency of such  standards with the rules of the 
WTO Agreement on the Application of Sanitary and Phytosanitary Measures. 
2. The approach adopted by the study 
5. Surveys were carried out to compile information directly on the impact of private standards 
on the meat exporting sectors of the countries in qu estion, and a wide-ranging  legal study looked at 
private standards, the multilateral legal framework, and the role played in this sphere by the countries' 
governmental authorities. 
3. The findings of the study 
6. Based on the responses of producers and business pe ople in the region, the authors concluded 
that the adoption of private standards, at least fo r beef exports, is a structural condition for selling 
products in developed markets. 
7. This trend will become more pronounced in the years ahead.  The speed with which it does so 
will depend on the adaptability of exporters, the role  of governmental sectors and the establishment of 
new requirements by importers and retail chains. 
8. These practices are becoming an increasingly important factor in international trade, and there 
is widespread recognition among exporters of the a dvantages of having private certifications, of the 
opportunities they offer, and of their im plications and implementation costs. 
9. Such requirements are part of growing effort s to boost consumer confidence and guarantee 
food safety.  If a business and/or a primary producer adopt(s) these practices, they can become a 
powerful internal organizational tool (records, manage ment of claims, audits, etc.);  and if the senior 
management plans them carefully, it will be possibl e to keep down some of the initial costs involved 
in their implementation and subsequent certification. 
10. An additional aspect that has contri buted to this trend in the meat industry is the fact that meat 
is one of the products that has seen the biggest a dvances in innovations and regulations designed to 
improve product security and safety (product qualit y is, in fact, closely linked to this aspect), 
following a series of animal and human health sc ares that undermined consumer confidence.  The 
region's meat industries were not immune to th ese changes and had to adopt traceability, pathogen 
control, HACCP and many other systems.  It is reasonable to assume that such innovations created a 
consistent platform for responding to the new requirements of buyers. 
11. The dynamics of international beef markets have also had an important impact, for 
two reasons:  the presence of foot-and-mouth diseas e in the region and the high commercial quality 
demanded, which have led companies in the region to adopt different business profiles.  Commercial 
considerations determine the speed with which new standards are implemented:  when the most active 
markets are the least stringent in terms of quality and safety, standards are adopted more slowly, but 
when the most attractive markets offer better re lative prices, they are introduced more quickly.  G/SPS/GEN/1100 
 Page 3 
 
 
  12. However, although private standards help businesses to improve their production systems 
and, therefore, to make them more efficient, they can also have the effect of excluding exporters from 
markets.  The one-on-one meetings that were held yielded the following results: 
(a) Nearly all the leading companies in the region are quick to assume the 
implementation costs, except in specific situations; 
(b) the adoption of such standards makes it possible to obtain better prices and position 
the business in the international market; 
(c) infrastructure costs, but particularly human resources and training, tend to reduce the 
possibilities of obtaining certifications of private standards; 
(d) the impact of private standards is theref ore felt most keenly by the businesses and 
producers of relatively less developed countries; 
(e) certification costs are lower than implem entation costs, giving the lie to the 
traditionally held view that certification makes the beef business unviable; 
(f) large or medium-sized companies that can afford to hire experts and train personnel 
can easily cover the costs of implementation; 
(g) in the case of the businesses surveyed, labor atory accreditation costs were not high, 
particularly because most of the laboratories are not part of export companies.  They should not be ruled out as one of the ch ief obstacles to compliance with private 
standards, however. 
13. All in all, the existence of private standards th at are more stringent than public ones limits the 
market access opportunities of relatively less ec onomically developed countries and businesses or 
producers whose scale of operation rules out investment  in infrastructure, human resources, training, 
etc.  In other words, the adoption of private standards requires resources in proportion to each 
company's volume of production. 
14. The second objective of the study relates to the legal aspect;  it analyses the legal framework, 
in order to determine whether governments ne ed to assume direct responsibility for the 
implementation of the SPS Agreement and thus en sure that the rights that Members acquired as a 
result of the Uruguay Round are not prejudiced or undermined;  and looks at the specific aspects of the SPS Agreement that should be considered when ev aluating the application of private standards in 
multilateral trade. 
15. Taking into account the responses contained in the Descriptive Report adopted by the 
SPS Committee, based on Members' replies to the qu estionnaire circulated in December 2008, it is 
obvious that the requirements contained in private st andards are not always consistent with the rules 
of the SPS Agreement. 
16. This is especially worrying because, althou gh compliance with private standards is 
"voluntary", in practice they constitute market a ccess conditions.  Therefore, since their impact on 
international trade could be similar to that of o fficial standards, governments and the international 
reference organizations should b ecome involved in the issue. 
17. As stated in the Introduction, the objective of th e present document is not to contribute to the 
ongoing theoretical debate about the costs or benefits  of private standards, but to shed light on the 
challenge that governments face in addressing new si tuations not envisaged when the Uruguay Round G/SPS/GEN/1100 
Page 4  
 
  was negotiated, and that inevitably involve comple x scenarios that should be addressed multilaterally, 
using the tools created within the lega l framework of the existing agreements. 
18. Consequently, the first conclusion of this section of  legal analysis is that private standards are 
a new and growing reality and the situation they  are creating should therefore be addressed by 
governments. 
19. This conclusion is based on the analysis of the relationship between private standards and 
international trade, in a broader legal framework than that of the GATT/WTO system, which points to 
the desirability of governments defining lines of action aimed at preventing such standards from 
undermining the rules of the SPS Agreement, using th e tools provided for in  the Agreement itself. 
20. Governments' failure to take such action would constitute tacit acceptance of the fact that the 
GATT/WTO rules and, in particular, the SPS Agreem ent, have ceased to be effective because private 
standards are playing an increasingly importa nt role in the global trading system. 
21. The Codex Alimentarius placed the question of private standards on the Agenda of the 
Commission's meeting in July 2009.
2  During the meeting of the IPPC Commission on Phytosanitary 
Measures held in April 2008, several Members e xpressed concern at the proliferation of private 
standards and asked the Commission to discuss the imp lications of such standards.  In May 2008, the 
OIE adopted Resolution No. XXXII on the implications of private standards in international trade of 
animals and animal products. 
22. The second conclusion of this section is that the tools needed to address these issues are to be 
found in the letter and spirit of the SPS Agreement itself, and that the competent forum is the 
SPS Committee, which is equipped to perform the ta sk under its current work programme.  The OIE 
has already stated that the SPS Committee should be  used as a forum for countries to identify and 
discuss specific problems they have experienced due to the application of private standards.3 
23. The third conclusion is that, in the work of the Committee, Members should explore all 
possible alternatives for strengthening the analysis of  the concerns arising from the implementation of 
private standards (transparency, equivalence, ha rmonization, regionalism, special and differential 
treatment (SDT), among others).  In this regard, it is to be hoped that the ad hoc working group4 will 
identify a wide range of actions that governments co uld take to influence the new scenario created by 
the rapid spread of private standards. 
24. The fourth conclusion is that the international reference organizations should play a key role 
in supporting the efforts of the SPS Committee to monito r and analyse private standards in the light of 
international standards. 
25. As a contribution to the discussion, the next section describes some of the possible lines of 
action that could help improve the articulation be tween the multilateral forums and governments with 
respect to the role that private standa rds play in international trade today. 
                                                      
2 ALINORM 09/32/REP, paragraphs 246-271. 
3 Document G/SPS/GEN/822 of 25 February 2008. 
4 G/SPS/W/30.  G/SPS/GEN/1100 
 Page 5 
 
 
  What can the SPS Committee do? 
 
1. Development of guidelines for Article 13 
26. In relation to the formulation and implemen tation of positive measures and mechanisms in 
support of the observance of the provisions of the Agreement by other than central government 
bodies, and in the light of the information presen ted, it would be appropr iate for the SPS Committee 
to address the development of guidelines for the implementation of Article 13, as some Members have already proposed.
5 
27. The Committee could thus analyse and propose reasonable measures that governments should 
take and suggest those that should be avoided.  Clearly, the Article provides a positive instrument that 
Members should use to ensure observance of the Agre ement.  Legal interpretations of the wording of 
Article 13 aside, Members have an obligation under Article 13 to ta ke such reasonable measures as 
may be available to them to ensure that non-govern mental entities within their territories comply with 
the provisions of the Agreement.  In this regard , several authors have expressed support for a broad 
interpretation of the phrase "non-governmental entities".6  Therefore, it is recommended that, without 
prejudice to any other interpretations that may arise, the SPS Committee begin drafting guidelines to 
encourage the application of Article 13, since it is governments, through the SPS Committee, that 
have the authority to define and make use of th is tool.  Keeping the Committee on the side-lines and 
leaving governments without alternative means of acti on would be to admit that they have lost their 
role as guarantors of the rules established and that the WTO has been unable to provide a platform for 
the discussion or building of solutions. 
2. Inclusion of private standards on the Agenda 
28. Secondly, practically all the concerns raised in the Descriptive Report with regard to the 
application of private standards already form part  of the SPS Committee's permanent Agenda.  Nearly 
all the items on the Agenda, which relate to the issu es arising out of the application of the sanitary and 
phytosanitary measures imposed by governments, reflect the concerns over the application of private 
standards. 
29. The issues addressed by Members in their activiti es - specific trade concerns, the operation of 
the provisions on transparency, special and differen tial treatment, equivalence, pest and disease-free 
areas, technical assistance and cooperation - would be  appropriate for inclusion in Members' concerns 
regarding private standards. 
30. Review of the operation and implementation of  the SPS Agreement is another area of the 
Committee's work, although not a permanent activity.  There is also an item concerning monitoring of 
the use of international standards.  A specific item  was added relating to concerns with private and 
commercial standards.  As the OIE has pointed out7, on the basis of discussion it may be possible for 
the SPS Committee to develop recommendations on fu ture action for Members' consideration.  
Therefore, although these points on the Committee' s Agenda reflect the issues arising from the 
application of the sanitary and phytosanitary me asures imposed by governments, they could be 
adapted to address the concerns arising from private standards. 
                                                      
5 Documents G/SPS/W/245 and G/SPS/W/236. 
6 Bohanes and Sandford in SIEL, 2008:38;  Gascoine and O'Connor and Company in 
WTO G/SPS/GEN/802. 
7 Document G/SPS/GEN/822 of 25 February 2008. G/SPS/GEN/1100 
Page 6  
 
  3. Periodic meetings with certification organizations 
31. At the request of Members, meetings could be held to jointly examine systemic issues, such 
as aspects relating to transparency and harmonization, and other, specific matters on a case-by-case basis.  This would provide the opportunity to addr ess particular difficulties that Members encounter 
when exporting.  The meetings with the entities th at develop and certify private standards could be 
workshops or ad hoc meetings held du ring the meetings of the SPS Committee. 
4. Monitoring and transparency 
32. It is suggested that in the framework of the SPS Committee Members pay special attention to 
two aspects that, if incorporated into the Comm ittee's work, could make a huge contribution to 
observance of the provisions of the Agreement: 
 
 Ongoing monitoring of the evolution of private standards, which implies identifying 
their effects on trade and analysing any sp ecific trade issues that may arise;  the 
implementation of technical assistance pr ogrammes;  and ensuri ng consistency with 
the SPS disciplines and international refere nce standards, for which the Committee 
should interact closely with the Code x, OIE and IPPC, among other actions. 
 
 The notification of draft private standards at  an early stage in the process, for which a 
transparency mechanism should be crea ted through the SPS Committee in order to 
enable the entities that develop private standards to publish their draft standards and allow countries and commercial operators to examine them and, where appropriate, to 
make comments or suggestions. 
 
What recommendations could the Committee make to governments? 
 
(a) A relevant step would be for the Comm ittee to recommend that governments adopt 
possible courses of action to address the speci al impact that private standards are 
having on agro-exporting developing countries, and to explore possible alternatives.  
On this point, the OIE recommended that, wh ile private standards are a global issue, 
the SPS Committee should focus on the e ffects they are having on developing 
countries' capacities to access world markets.8 
(b) Another interesting recommendation that the Committee could make would be to 
encourage governments to interact on an ongoing basis with the international 
reference organizations, so that the la tter can respond to queries and advise the 
national agencies and other stakeholders on issues that may arise from the implementation of government regulations w ith regard to the requirements contained 
in private standards, such as the existen ce of international reference standards and 
their scope and application, the compatibilit y or otherwise of international reference 
standards with the requirements imposed by private standards, etc.  It would also be 
advisable for the governments of importing c ountries to maintain permanent contact 
with the companies that develop and certify private standards for market access in their territories. 
 
                                                      
8 Document G/SPS/GEN/822.  G/SPS/GEN/1100 
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  What could governments do? 
 
(a) Meet with the entities that develop and certif y private standards, and with importers 
and exporters, in order to examine the re quirements contained in government rules 
and those incorporated in private standard s, pass on concerns raised within the 
Committee and work with the stakeholders to  find solutions that can contribute to 
observance of the Agreement.  It is al so recommended that representatives of the 
international reference organi zations be invited to take  part in such meetings. 
(b) Implement technical assistance and specific training projects for small-scale 
producers and small and medium-sized businesses.   It should be borne in mind that 
one of the key roles of governments is to guarantee that international trade leads to 
growth and development for their peoples.   Governments have a responsibility to 
ensure that the most vulnerable stakeholde rs and the most disadvantaged regions of 
the planet, whose income is usually deri ved from exports of primary products, are 
able to share in the benefits of intern ational trade and expect their production to 
penetrate the most demanding markets. 
 The complete document can be obt ained from the following websites: 
   http://www.infoagro.net/salud 
  http://www.insercionagricola.org.ar/ 
  http://www.iica.org.uy/ 
  http://www.cvpconosur.org/ 
 
 For further information, please contact Lour des Fonalleras (Lourdes.Fonalleras@iica.int). 
  
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