Princeton University Global Governance Advocate Calls for New Wave of American Regulatory Socialism in the Image of European Protectionism

http://www.nytimes.com/2008/06/13/opinion/13krugman.html?em&ex=1213502400&en=a52b0be721dfaf26&ei=5087


Bad Cow Disease


By PAUL KRUGMAN


NEW YORK TIMES


June 13, 2008


“Mary had a little lamb / And when she saw it sicken / She shipped it off to Packingtown / And now it’s labeled chicken.”

That little ditty famously summarized the message of “The Jungle,” Upton Sinclair’s 1906 exposé of conditions in America’s meat-packing industry. Sinclair’s muckraking helped Theodore Roosevelt pass the Pure Food and Drug Act and the Meat Inspection Act — and for most of the next century, Americans trusted government inspectors to keep their food safe.


[WE MIGHT SUGGEST ANOTHER MORE APPROPRIATE 'LITTLE DITTY' THAT REFLECTS THE ESSENCE OF WHAT MR. KRUGMAN IS CALLING FOR - A RETURN TO EARLY 20TH CENTURY SOCIALISM: “Democracy and socialism have nothing in common but one word, equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.” Alexis de Tocqueville].

[MIGHT WE REMIND READERS THAT UPTON SINCLAIR WAS A MEMBER OF THE SOCIALIST PARTY AND WAS INFLUENCED BY EUROPEAN MARXIST POLITICAL THINKING. "The Jungle is a classic work of socialist realism. Critic Christopher Hitchens has described it as ‘the most fully realized instance of the genre, more telling and more moving than even the works of Dickens and Zola’. Sinclair’s objective was to expose the ways in which the capitalist class, in pursuit of maximum profit, exploits and discards the working people. Jack London called the book ‘the Uncle Tom’s Cabin of wage-slavery’...The Jungle was a bestseller in the United States and Britain, and its translation into 17 languages made Sinclair an international literary figure. The Jungle inspired scores of other successful social protest writers, including Iceland’s Halldor Kiljan Laxness (1902–98)...Upton Sinclair was born in Baltimore, Maryland, United States, on 20 September 1878. His father, an alcoholic, moved the family to New York in 1888. His parents were extremely poor but his grandparents, with whom he spent extended periods, were wealthy. He claimed that experiencing these extremes pointed him in the socialist direction. His outlook was influenced by the books of English Fabian Robert Blatchford, Russian anarchist Peter Kropotkin, American radicals Jack London and Frank Norris, and the investigative journalism of proud ‘muckrakers’ Ida M. Tarbell, Lincoln Steffens and Ray Stannard Baker...In 1915, Sinclair moved to California with his wife, Mary Craig, and in 1934 he won the Democratic Party’s pre-selection to contest the state’s election [FOR GOVERNOR]. For most of his life Sinclair defended communists, but his socialism was in the social-democratic mould. He parted company with Marxists in his belief that socialism could be achieved through electoral processes in America, without the need for the revolutionary overthrow of capitalism." See: Aiming for the Heart - Barry York describes how Upton Sinclair’s novel, The Jungle, shocked the American public and forced changes in legislation, National Library of Australia News (Jan. 2006), at:
http://www.nla.gov.au/pub/nlanews/2006/jan06/article3.html . READERS SHOULD NOTE THAT THE EUROPEAN UNION NOW REFERS TO ITSELF AS BEING IN THE 'SOCIAL-DEMOCRATIC MOULD'.]


Lately, however, there always seems to be at least one food-safety crisis in the headlines — tainted spinach, poisonous peanut butter and, currently, the attack of the killer tomatoes.


[IT IS ALWAYS HELPFUL THAT PUBLICITY-SEEKING CONSUMER & ENVIRONMENTAL GROUPS PROVIDE MEDIA WITH THE SENSATIONAL HEADLINES THAT WORRY THE AMERICAN PUBLIC ABOUT PRACTICALLY EVERYTHING IN THEIR DAILY LIVES. MR. KRUGMAN, WHY NOT ADMIT THAT THIS IS WHAT OCCURS? PLEASE ALSO BE HONEST ABOUT HOW SENSATIONALIST FEAR CAMPAIGNS SERVE THE INTERESTS OF SUCH GROUPS - i.e. IT PERMITS THEM TO 'POSTURE' TO ATTRACT FUNDING. FUNDING FLOWS IF THEY ARE SEEN AS 'SERVING THE PUBLIC INTEREST' BY PROVIDING IT WITH INFORMATION. ALTHOUGH CONSUMERS OFTEN HAVE LEGITIMATE CONCERNS ABOUT WHERE THEIR FOOD COMES FROM & HOW ITS SAFETY IS ASSURED, HOWEVER, WE QUESTION WHETHER THESE GROUPS PROVIDE MORE INFORMATION THAN DISINFORMATION.]


The declining credibility of U.S. food regulation has even led to a foreign-policy crisis: there have been mass demonstrations in South Korea protesting the pro-American prime minister’s decision to allow imports of U.S. beef, banned after mad cow disease was detected in 2003.


[MR. KRUGMAN CONVENIENTLY LEAVES OUT SOME IMPORTANT FACTS HERE, NAMELY, THAT THE KOREAN BEEF INDUSTRY AND NGO COMMUNITY DO NOT HAVE 'CLEAN HANDS'. KOREA'S BEEF INDUSTRY WAS PREVIOUSLY FOUND BY THE WTO TRIBUNALS TO VIOLATE INTERNATIONAL TRADE LAW THROUGH IMPOSITION OF 'FOOD SAFETY' REGULATIONS DEEMED TO ACTUALLY CONSTITUTE 'DISGUISED REGULATORY TRADE BARRIERS'. IN ADDITION, KOREAN NGOs HAVE BEEN STEADILY INFLUENCED BY THE EUROPEAN SOCIALIST NGOs TO BLOCK ALL KINDS OF FOODS, EVEN WHEN SCIENTIFIC RISK ASSESSMENTS HAVE PROVEN THE FOOD is 'SAFE'. HORMONE-INJECTED BEEF, IS ONE EXAMPLE THAT TIES BACK TO THE EUROPEAN BAN ON U.S. BEEF, IN PLACE SINCE THE MID '90's, NOTWITHSTANDING THE WTO'S RULINGS AGAINST THE EU CITING THEIR BAN AS ILLEGAL 'TRADE PROTECTIONISM'. IN ADDITION, KOREAN NGOs, WITH THE HELP OF EUROPEAN SOCIALIST-GREEN GROUPS, HAVE WORKED TO BLOCK THE INTRODUCTION OF GENETICALLY MODIFIED FOODS, FEEDS & SEEDS, NOTWITHSTANDING THE SCIENTIFIC RISK ASSESSMENTS IN BOTH THE U.S. & THE EU SHOWING THE PRODUCTS TO BE 'SAFE', AND THE WTO TRIBUNAL RULING FINDING THAT THE EU MORATORIA ON 'GMOs' WAS AN ILLEGAL DISGUISED PROTECTIONIST BARRIER TO TRADE. See: Lawrence A. Kogan, Discerning the Forest From the Trees: How Governments Use Ostensibly Private and Voluntary Standards to Avoid WTO Culpability, Global Trade and Customs Journal (Sept. 2007), at: http://www.itssd.org/GTCJ_03-offprints%20KOGAN%20-%20Discerning%20the%20Forest%20from%20the%20Trees.pdf ; Lawrence A. Kogan, World Trade Organization Biotech Decision Clarifies Central Role of Science in Evaluating Health and Environmental Risks for Regulation Purposes, Global Trade and Customs Journal (March 2007) at: http://www.itssd.org/Publications/GTCJ_04-offprints_Kogan[2].pdf .]


How did America find itself back in The Jungle? It started with ideology. Hard-core American conservatives have long idealized the Gilded Age, regarding everything that followed — not just the New Deal, but even the Progressive Era — as a great diversion from the true path of capitalism.


Thus, when Grover Norquist, the anti-tax advocate, was asked about his ultimate goal, he replied that he wanted a restoration of the way America was “up until Teddy Roosevelt, when the socialists took over. The income tax, the death tax, regulation, all that.”


The late Milton Friedman agreed, calling for the abolition of the Food and Drug Administration. It was unnecessary, he argued: private companies would avoid taking risks with public health to safeguard their reputations and to avoid damaging class-action lawsuits. (Friedman, unlike almost every other conservative I can think of, viewed lawyers as the guardians of free-market capitalism.)


[MR. FRIEDMAN WAS CORRECT IN HIS ASSESSMENT OF THE ROLE THAT TRIAL LAWYERS CAN CONSTRUCTIVELY PLAY IN A SYSTEM SHAPED BY FREE MARKET CAPITALISM. WE DON'T AGREE, HOWEVER, THAT GOVERNMENTAL REGULATORY BODIES, SUCH AS THE FDA, SHOULD BE DISMEMBERED AND/OR ABOLISHED. BUT, REGULATORY BODIES SHOULD BE CONSTRAINED BY PRAGMATIC OBJECTIVE BENCHMARKS OF GOVERNMENTAL ACCOUNTABILITY & DUE PROCESS, INCLUDING ECONOMIC CONSIDERATIONS OF THEIR PROPOSED PROMULGATIONS. THE 'SOCIALIST' APPROACH ADVOCATED BY MR. KRUGMAN WOULD PROVIDE GOVERNMENTAL REGULATORY AGENCIES UNFETTERED DISCRETION TO EXERCISE THEIR 'GATEKEEPER' AUTHORITY ON BEHALF OF THE 'PUBLIC INTEREST' THEY ARE 'CHARGED TO PROTECT'. BUT, WHO WILL WATCH THE GATEKEEPERS & HOLD THEM ACCOUNTABLE??]


Such hard-core opponents of regulation were once part of the political fringe, but with the rise of modern movement conservatism they moved into the corridors of power. They never had enough votes to abolish the F.D.A. or eliminate meat inspections, but they could and did set about making the agencies charged with ensuring food safety ineffective.


[THIS DISTORTION-PRONE AD HOMINEM RHETORIC DOES NO ONE ANY GOOD. IT EXAGGERATES THINGS FOR THE PURPOSE OF PROMOTING 'PET' POLITICAL/POLICY GOALS & PERSUADING THOSE UNFAMILIAR WITH THE MECHANISMS OF THE 'WASHINGTON ESTABLISHMENT' THAT THOSE GOALS AND POLICIES ARE 'GOOD'. THIS SOUNDS SO MUCH LIKE PLATO PHILOSOPHER KING-'TALK'.]


They did this in part by simply denying these agencies enough resources to do the job. For example, the work of the F.D.A. has become vastly more complex over time thanks to the combination of scientific advances and globalization. Yet the agency has a substantially smaller work force now than it did in 1994, the year Republicans took over Congress.


[MR. KRUGMAN, ONCE AGAIN, YOU DISTORT THE TRUTH. IS 'BIGGER' ALWAYS 'BETTER', CONSIDERING ALL OF THE BUREAUCRATIC WASTE, MISAPPROPRIATION, INEFFICIENCY & CORRUPTION THAT COMES ALONG WITH BIGGER GOVERNMENT??]


Perhaps even more important, however, was the systematic appointment of foxes to guard henhouses. Thus, when mad cow disease was detected in the U.S. in 2003, the Department of Agriculture was headed by Ann M. Veneman, a former food-industry lobbyist. And the department’s response to the crisis — which amounted to consistently downplaying the threat and rejecting calls for more extensive testing — seemed driven by the industry’s agenda.


[MR. KRUGMAN, ONCE AGAIN, DISTORTS THE TRUTH BY LEAVING OUT PERTINENT FACTS. CALLS FOR MORE EXTENSIVE CASE-BY-CASE TESTING & ANALYSIS WILL DETERMINE WHETHER PARTICULAR FOODS PRESENT PROBABLE HEALTH 'RISKS' TO CONSUMERS. GOVERNMENT MUST UTILIZE TOOLS THAT PROVIDE IT WITH METRICS & USEFUL INFORMATION THAT CAN THEN TRANSLATE INTO PRACTICES & PROCEDURES FOR INDUSTRY THAT WILL ENSURE GREATER FOOD SAFETY WITHOUT CAUSING COMPANIES (THE FOOD PROVIDERS) TO GO BANKRUPT, TO PASS THE HIGHER COSTS OF REGULATION TO CONSUMERS THROUGH PRICE INCREASES, OR TO OTHERWISE DEMAND HIDDEN GOVERNMENT TAXPAYER -FUNDED SUBSIDIES. MR. KRUGMAN'S PREFERRED REGULATORY 'FIX' WOULD BE TO PERMIT A CHANGE IN REGULATION THAT DISPENSES WITH THE EXTRA TESTING AND REPLACES IT WITH A A GENERAL RULE BASED ON A REGULATORY PRESUMPTION OF POSSIBLE FOOD 'HAZARDS', EVEN WHERE NONE ARE SHOWN TO EXIST. THAT FUNDAMENTALLY TRANSLATES INTO MORE UNNECESSARY COSTS, DELAYS & A MUCH BIGGER GOVERNMENT, AS IN THE EUROPEAN UNION. FISCALLY CONSERVATIVE POLITICIANS ON BOTH SIDES OF THE AISLE ARE CORRECT ABOUT ONE THING THAT ESCAPES MR. KRUGMAN - BIGGER GOVERNMENT IS USUALLY NOT THE ANSWER.]


One amazing decision came in 2004, when a Kansas producer asked for permission to test its own cows, so that it could resume exports to Japan. You might have expected the Bush administration to applaud this example of self-regulation. But permission was denied, because other beef producers feared consumer demands that they follow suit.


[MR. KRUGMAN, YET AGAIN, LEAVES OUT IMPORTANT FACTS. THE U.S. GOVERNMENT WAS OPPOSED TO PERMITTING U.S. INDUSTRY TO 'SELF-REGULATE' (i.e., to BYPASS U.S. DEPARTMENT OF AGRICULTURE HEALTH & SAFETY REGULATIONS BY HAVING EACH HEAD OF CATTLE INSPECTED & LABELED AS 'SAFE' & MAD COW-FREE), BECAUSE IN MANY CASES THE CATTLEMEN DID NOT HAVE ADEQUATE SAFETY LABORATORIES TO UNDERTAKE THE NECESSARY SAFETY ASSESSMENT AND TO ENSURE THE ACCURACY OF THEIR DESIRED MARKETING CLAIM THAT THEIR BEEF PRESENTED ZERO RISK, AND THUS WAS 'SAFE'. IN ADDITION, IT IS THE REGULATORY PHILOSOPHY OF THE UNITED STATES NOT TO ADOPT THE EUROPEAN PRECAUTIONARY PRINCIPLE, WHICH WOULD REQUIRE THAT EACH HEAD OF CATTLE BE TESTED WITHOUT REFERENCE TO TELLTALE SIGNS OF DISEASE. THE IMPOSITION OF THIS EXTRA COST & BURDEN UPON EUROPEAN BEEF EXPORTERS HAS MADE THEM LARGELY NONCOMPETITIVE WITH EXPORTERS FROM OTHER COUNTRIES, WITHOUT MAKING THE BEEF ANY 'SAFER'. MR. KRUGMAN WOULD LIKE TO HAVE THE EXPENSIVE & INEFFICIENT FOOD SAFETY SYSTEM IMPORTED INTO THE U.S.]


When push comes to shove, it seems, the imperatives of crony capitalism trump professed faith in free markets. Eventually, the department did expand its testing, and at this point most countries that initially banned U.S. beef have allowed it back into their markets.


[THE U.S. DEPARTMENT OF AGRICULTURE, LIKE OTHER U.S. AGENCIES, CONTINUALLY UPDATES ITS SCIENTIFIC EVALUATIONS, PROCEDURES & PRACTICES, TO REFLECT MORE CURRENT KNOWLEDGE, JUST AS THEY SHOULD. THIS RESULTED IN MORE EXTENSIVE & EFFICIENT TESTING.]


But the South Koreans still don’t trust us. And while some of that distrust may be irrational — the beef issue has become entangled with questions of Korean national pride, which has been insulted by clumsy American diplomacy — it’s hard to blame them.


[MR. KRUGMAN, THE GLOBALIST, TAKES IT UPON HIMSELF TO APOLOGIZE TO THE KOREAN GOVERNMENT AND THE KOREAN PEOPLE FOR THE AMERICAN OFFENSE OF TRYING TO HOLD THE KOREAN GOVERNMENT TO THE WTO RULES WHICH THEY HAVE AGREED TO FOLLOW, AND OF NOT HONORING THEIR 'CULTURAL PREFERENCE' FOR 'PURE' KOREAN BEEF & DISGUISED PROTECTIONISM . APOLOGY UNNECESSARY & INAPPROPRIATE. See: Lawrence A. Kogan, Looking Behind the Curtain: The Growth of Foreign Trade Barriers that Ignore Sound Science, National Foreign Trade Council (May 2003), at pp. 8, 12-13, at: http://www.wto.org/english/forums_e/ngo_e/posp47_nftc_looking_behind_e.pdf .]

[MR. KRUGMAN PREVIOUSLY LAUDED THE SOCIALIST REGULATORY SYSTEM OF THE EUROPEAN UNION THAT SEEMS TO PROVIDE A MODEL FOR KOREA AND OTHER COUNTRIES FROM TIME TO TIME, IN HIS PREVIOUS NEW YORK TIMES ARTICLE ENTITLED, The Comeback Continent. See: Why Has an Avowed Multilateralist Princeton Academic Been Recruited as a 'Spin-Doctor' to Improve Europe's Image Among Americans???, ITSSD Journal on Economic Freedom (Jan. 12, 2008) at: http://itssdeconomicfreedom.blogspot.com/2008/01/why-has-avowed-multilateralist.html .]


The ironic thing is that the Agriculture Department’s deference to the beef industry actually ended up backfiring: because potential foreign buyers didn’t trust our safety measures, beef producers spent years excluded from their most important overseas markets.But then, the same thing can be said of other cases in which the administration stood in the way of effective regulation. Most notably, the administration’s refusal to countenance any restraints on predatory lending helped prepare the ground for the subprime crisis, which has cost the financial industry far more than it ever made on overpriced loans.


The moral of this story is that failure to regulate effectively isn’t just bad for consumers, it’s bad for business. And in the case of food, what we need to do now — for the sake of both our health and our export markets — is to go back to the way it was after Teddy Roosevelt, when the Socialists took over. It’s time to get back to the business of ensuring that American food is safe.


[MIGHT WE REMIND MR. KRUGMAN AND HIS FELLOW 'SOCIALISTS' ABOUT A FAMOUS QUOTE FROM NONE OTHER THAN SIR WINSTON CHURCHILL? “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.”]

EU Board Members of World Bank Behind New Study That Modifies Prior World Bank Study Findings: Politics Once Again At Play

http://siteresources.worldbank.org/INTARD/825826-1111055015956/21663468/ARDDiscussionPaper39.pdf


Barrier, Catalyst, or Distraction? Standards,Competitiveness, and Africa’s Groundnut Exports to Europe


By: Luz B. Diaz Rios and Steven Jaffee


Introduction


In recent years, industrialized countries have sought to strengthen their food safety management systems to provide increased protection to consumers against long-standing and emerging risks. Increasingly strict measures are being adopted in the wake of a series of food safety scares or crises, and in the context of expanded trade in higher-value food products, increased scientific knowledge about various food safety hazards, and improved access to modern detection technologies and mitigation methods. In parallel with changes in official standards and regulatory measures, private protocols and other stipulations for food safety within national and international supply chains have proliferated and been strengthened.


Although countries have a legitimate right to protect their consumers, there is concern that increasingly stringent food safety standards would adversely affect the market access and/or competitiveness of developing-country suppliers. This could be because of their comparably weaker administrative, technical, and scientific capacities to comply with the emerging requirements, as well as the fixed and recurrent costs that they incur in the process of compliance. Even when rising standards do not result in absolute barriers to trade, there is the distinct possibility that they amplify underlying competitive (and managerial) strengths and weaknesses, thus working to (further) marginalize the position of smaller producers, industries, or countries. From this perspective, emerging standards are frequently cast as “barriers to trade.”


An alternative, and less pessimistic, view emphasizes the potential opportunities provided by the evolving standards environment and the likelihood that certain developing countries can utilize such opportunities to their competitive advantage. From this perspective, many of the emerging public and private standards are viewed as a necessary bridge between heightened (and demanding) consumer requirements and the participation of distant (and international) suppliers. Many of these standards provide a common language within the supply chain and promote consumer confidence in food product safety. Without that confidence, the market for these products cannot be maintained, let alone increased, in turn jeopardizing international trade.


[THIS CASTING OF THE FACTS REFLECTS A POLITICAL EFFORT BY THE WORLD BANK'S EUROPEAN BOARD MEMBERS TO REWRITE PAST WORLD BANK STUDIES BECAUSE THEY SIMPLY DO NOT LIKE THE NEGATIVE RESULTS FOUND]


From this “standards-as-catalyst” perspective, the challenge inherent in compliance with food safety and agricultural health standards may well provide a powerful incentive for the modernization of developing-country export supply chains, and give greater clarity to the necessary and appropriate management functions of government.


[THIS IS WHAT THEY CALL 'SPIN']


Further, via increased attention to the spread and adoption of “good practices” in agriculture and food manufacture, there may be spillovers into domestic food safety and agricultural health, to the benefit of the local population and domestic producers. Part of the costs of compliance could be considered necessary investments.


[WHY THEN DOESN'T THE EU PRIVATE TRADE CAPACITY BUILDING FUNDING AND TRAINING TO ENSURE THEIR OVERLY STRINGENT STANDARDS PREMISED ON THE PRECAUTIONARY PRINCIPLE CAN BE SATISFIED BY THESE POOR COUNTRIES???]


In addition, an array of benefits, both foreseeable and unforeseeable, might arise from the adoption of different technologies or management systems. Rather than degrading the comparative advantage of developing countries, enhancement of capacity to meet stricter standards could potentially create new forms of competitive advantage. Hence, the process of standards compliance could conceivably provide the basis for a more sustainable and profitable trade over the long term, albeit with some particular winners and losers. (See Jaffee and Henson 2004 and World Bank 2005 for broader evidence and discussion of standards as “barriers” and “catalysts.”)


Among the more widely referenced assessments of the impact of standards on developing-country trade, supporting a trade-barrier perspective, are those by Otsuki et al. In these assessments, the authors employed gravity models to estimate the adverse effects on African trade from the EU’s adoption of Community-wide harmonized standards for mycotoxins. In a first paper, the authors examined the effects on African exports of cereals, dried fruits, and edible nuts (Otsuki et al. 2001a). Their findings suggested that the trade of nine African countries would potentially decline by $400 million under the proposed, stringent new EU standards,1 whereas this trade might have increased by some $670 million had the EU based its new harmonized standards on the guidelines of the Codex Alimentarius. A second study, focusing only on edible groundnut exports from Africa, estimated that the new EU standard for aflatoxin would result in an 11 percent decline in EU imports from Africa, and a trade flow some 63 percent lower than it would have been had the Codex international standards been adopted (Otsuki et al. 2001b). Although Otsuki et al. employed a hypothetical and greatly simplified model, their findings have frequently been referred to as evidence that African countries in fact lost such levels of trade as a result of the EU regulation. This research is frequently cited as a clear example of the negative effects on developing-country trade of regulations adopted by industrialized countries.


[HERE IS WHERE THE EU BOARD MEMBERS AND THEIR ECONOMIST PROXIES SEEK TO DISCREDIT THE PRIOR STUDIES AND THEIR AUTHORS AS EMPLOYING 'SIMPLISTIC' METRICS AND METHODS OF ANALYSIS - THIS IS SIMPLY SCANDALOUS!]


It is empirically quite difficult to determine definitively how one country’s or region’s adoption of new or more stringent standards affects trade, given the multiple repercussions of such measures, the varied responses taken once such measures are adopted, and the multiple other factors affecting trade flows and competitiveness. In general, econometric studies using simplified models and cross-country data have tended to estimate rather large changes in (or adverse impacts on) trade. In contrast, most case studies have tended to find more modest impacts, varied winners and losers, and considerable difficulty in separating the distinct role of standards from the other factors affecting trade flows and performance.


[THIS REFLECTS ANOTHER GOOD ATTEMPT TO 'SPIN' THE NEGATIVE RESULTS OF PRIOR STUDIES]


It has now been more than six years since the EU harmonized aflatoxin regulation was adopted. This paper uses cross-country data, as well as information from individual country (or company) experiences, to revisit the issue of trade and other impacts of the EU’s harmonized aflatoxin standards. The paper examines the challenges of and the responses to the new standards by a range of developing countries, although particular emphasis is given to Agricultural and Rural Development the positions, responses, and predicaments of sub-Saharan Africa’s groundnut industries. This experience is set within the context of the longer-term development (or decline) of developing-country groundnut industries and changing patterns in international groundnut product trade and demand.


The paper highlights the varied edible groundnut export performance patterns of developing (including African) countries both in the years or decades prior to the EU’s enforcement of stringent harmonized aflatoxin standards and in the period following adoption of the new standards. Several African countries once dominated global exports and EU imports of raw groundnuts (shelled and in-shell) and processed products (oil/cake). This dominance, mainly for raw groundnut exports, came to an end in the 1970s, initially due to internal supply-side or macroeconomic factors, and subsequently due to market developments, including the rise of strong competition from Latin America and Asia. Although still of some importance to a few particular countries, Africa’s trade in raw groundnuts was already marginalized prior to the EU’s enforcement of more strict aflatoxin standards, either because of an inability to compete on the bases of cost, reliability, and quality, or because of other factors that undermined the incentives for producers and agribusiness to invest in improved production and quality control.


Arguably, the new standards have exacerbated the underlying competitive weaknesses of these industries.


In contrast, for some groundnut industries, especially in Latin America and China, the stringency of the EU’s aflatoxin standards (and increased member-country enforcement of these standards) has served as a catalyst for production and supply-chain upgrades. Some upgrade strategies have also been undertaken within Africa, although with more mixed results. The good news from the recent experiences is that a considerable amount of research has been done and other efforts made, yielding promising insights on ways to prevent and reduce aflatoxin contamination in groundnut production, storage, and trade—and achieve compliance with very stringent standards. Important challenges still remain in implementation and in achieving a necessary degree of collective action and public–private sector collaboration to ensure the cost-effectiveness of adopted approaches.


[GOOD RATIONALIZATION !!!]


The objective of this paper is to improve understanding of the apparent trade impacts of the EU aflatoxin standards on edible groundnut exports from sub-Saharan Africa (SSA), within a framework that takes into account the multiplicity of factors determining the region’s competitiveness in this trade over recent decades. Insights are also provided on how other developing countries have been affected by and have responded to the EU’s more stringent standards. In some cases, a potential trade barrier has catalyzed technical and administrative changes, apparently resulting in improved competitive advantage. The paper draws upon data and other information from COMTRADE and the EU’s Rapid Alert System for Feed and Food (RASFF). It also draws upon findings from prior global or country-specific studies pertaining to groundnut industry development and trade. Interviews were also conducted with selected industry, regulatory, research, and service provider representatives in several groundnut-exporting countries, as well as with selected groundnut importer/distributors and regulatory authorities in Europe.


[SPIN, REINTERPRET PREVIOUS FINDINGS AND THEN RATIONALIZE YOUR NEW INTERPRETATION]


The paper is divided into four sections. Section 1 provides a brief historical perspective of the decline of SSA’s raw groundnut exports during the 1960s to the mid-1980s and its subsequent marginalized position in the contexts of emerging competition and changing patterns of international product demand and buyer requirements. Section 2 reviews the EU regulatory developments regarding aflatoxin since the late 1990s, with a detailed analysis of the apparent trade effects of these regulatory developments on developing country trade, particularly exports from SSA. Section 3 highlights the strategic approaches implemented by several exporting countries to ensure compliance with EU aflatoxin regulations and to gain competitive advantage. This section also provides an overview of the initiatives undertaken in the SSA region for effective aflatoxin management. Section 4 states conclusions.


Note


The EU levels were set at 2 ppb for aflatoxin B1 and 4 ppb for total aflatoxin in groundnuts for direct human consumption. In the case of groundnuts intended for further processing, the levels were set at 8 ppb for aflatoxin B1 and 15 ppb for total aflatoxin. The Codex established a level, set at 15 ppb, only for total aflatoxins in groundnuts intended for further processing; no level was set for aflatoxin B1.


(pp. 1-4)