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Thursday, 13 July 2017

Can Aid for Trade Assist Firms in Developing Countries to Comply with Sustainability Standards?

For a developing country exporter, for example, of fresh bananas from the Philippines seeking market access to the EU, it is necessary to comply with at least seven categories of sustainability standards, from food safety controls to labelling standards, with each category of compliance carrying with it a range of production guidelines and documentation – a somewhat daunting prospect for a semi-literate farming producer in rural Mindanao. As such, one of the major contemporary challenges facing developing country firms, and especially small and medium-sized enterprises (SMEs) today, is the ever-increasing number of regulations and sustainability standards they are required to conform to if they are to integrate into global value chains (GVCs). The exponential increase in the complexity and diversity of standards and regulations – over 20,000 types of standards according to the International Standards Organisation (ISO) – is in response to a number of factors, including for example consumer demands in terms of health, safety, and environmental protection, as well as private sector-driven demand for quality, efficiency, and corporate reputation. Sustainability standards such as those governing production processes, quality and safety requirements, or environmental and labour standards can, and do contribute to progress towards the Sustainable Development Goals. Successful exporters can expect an increase in export income and sustainable profits, with flow-on effects for the local community. However, sustainability standards can also be exclusionary. The cost of compliance is often forbidding for SMEs and small-scale producers in developing countries. Standards compliance may involve for example, certification costs, the purchase of infrastructure, the cost of laboratory testing or protective clothing, packaging and labelling measures, the cost of membership to a relevant standards institution, and a reasonable budget for training management and staff.

Source: ictsd