The countryside world-wide is in economic crisis. One cause is the way in which international trade is conducted. This statement is as true in Pennsylvania as it is in Peru. Pitted against the low pricing and integrated corporate control of industrialized agriculture, “excess” rural citizens have been forced to abandon family-scale farms in both developing and developed countries. Organic agriculture has provided a niche market that is profitable for many family farms, but here again the industrial model of agriculture threatens the livelihoods that have improved by the adoption of organic practices. Simplistic solutions offered to remove or create trade barriers for organic food are both doomed to fail if they do not look at the structural problems faced by all of agriculture.
The organic farmers who made their voices heard outside the WTO ministerials in Seattle 1999, Genoa 2001, and Cancun 2003 joined together with all kinds of farmers from all over the world. They went to great trouble and even risked their lives to defend fair trade. These organic farmers do not want to end trade or prevent equivalency among the various sets of organic standards. There is much to be said to remove barriers to trade that result in deadweight losses. As a values-driven process-based standard, the rules applied to conventional agriculture for equivalency are inappropriate for organic agriculture.
For all to benefit from trade in organic food, any equivalency agreement must 1) respect food sovereignty, 2) be fair to all stakeholders, 3) allow for continuous improvement, 4) be transparent and accountable, and 5) adhere to organic principles.
1) Food sovereignty. With organic standards, as with other standards, the customer is always right. It is the importing country or region that determines equivalency based on mutually agreed upon rules.
2) Fair trade. Competitive advantage will need to be based on factors other than lower standards. Differences in organic standards cannot put organic farmers in an importing country at a competitive disadvantage.
3) Continuous Improvement. The organic standards need to improve continuously and not be eroded by efforts to push the standards to the lowest common denominator. Organic agriculture must adhere to its mission to lead all of agriculture to be more sustainable.
4) Transparency and Accessibility. Where there are differences between trading partners in standards, those differences need to be clearly articulated and justified, and trading partners must be recognized as stakeholders by the importer’s standard setting body and be given the ability to persuade the import standards to be amended based on criteria consistent with the principles of organic agriculture.
5) Adherence to Organic Principles. Differences in standards must respect the organic principles of health, ecology, care, and fairness. Unhealthy, environmentally destructive, unproven or unjust practices on the part of an export country or region cannot be tolerated in an equivalency agreement.
It is possible for organic agriculture to have both free and fair trade as long as this framework is adopted.
Free Trade and Fair Trade
The main instrument used to liberalize trade since 1945 has been the General Agreement on Tariffs and Trade (GATT). Regional agreements, such as the European Economic Community (EEC) and the North American Free Trade Agreement between Canada, Mexico and the United States. The European Union (EU) based on a Common Market and a free flow of goods with rules governing imports received from outside the EU. The removal of tariffs and quotas lowered prices and increased the supply of goods crossing international boundaries. Consumers benefited from increased competition and lower prices. Producers benefited by greater access to markets.
Free trade depends on an elaborate code of rules and regulations that governs foreign exchange, industry standards, property rights, and contracts. Where differences in standards between trading partners exist, then these potentially can be called technical barriers to trade (TBT). Exceptions are made based on health and safety considerations that take into account local conditions. Some TBT disputes have taken years to resolve.
Alongside reduced trade barriers has grown a movement for fair trade. Fair trade seeks to protect those who have the least advantage in the trading system. GATT does not establish minimum wages, environmental standards, or worker safety standards. Countries that mandate such standards on trading partners are frequently seen as violating technical barriers to trade. Fair trade is conducted mostly on a voluntary basis and is often cast as a counterpoint to correct the injustices caused by free trade.
International movement of organic agriculture products finds itself in the unusual situation of having a foot in both. Private standards were applied internationally before there were any government standards. The foremost principle of organic agriculture is that of health and a growing body of scientific evidence supports that organic food is healthier by a number of measures. Despite this, few governments officially recognize the organic label as a health claim.
Minor variations in organic standards and conformity assessment systems can and should be tolerated to facilitate free trade. However, major variations that undermine consumer confidence in organic food in the importing country and give an unfair competitive advantage to the trading partner with the lower standard. Equivalency that does not have the trust of the consumers will be only a temporary solution and will in the long run undermine confidence in the brand and drive out of business those organic farmers who meet the higher standard demanded by consumers. In the long run, all sides lose in such a trade war because the exporter kills the market. What might be barely tolerated in one country may be wholly unacceptable in another. For equivalency in organic standards to be successfully negotiated, a bright line is needed between minor differences and deal breakers.
A way for trading partners to understand their differences would benefit everybody. Trading partners should have an avenue to converge towards the ‘best possible’ standard. The discussion was framed by an International Task Force on Harmonization and Equivalence in Organic Agriculture (ITF, 2008). While identified a way forward, but it is not a practical alternative to establishing a global consensus standard. While billed as more realistic and less idealistic, the Equitool provided by ITF falls short of giving people the ability to determine whether two standards are equivalent and raises many more questions about equivalency than it answers. We need a healthy debate about what kind of trade will be both beneficial and sustainable. Fair trade is more in keeping with organic principles, in particular the principle of fairness and the organic movement’s commitment to food sovereignty, than is free trade as enforced by the WTO.
The best standard in a utilitarian sense is not a uniform standard or the highest standard or the lowest common denominator, but rather the standard that provides the greatest benefit for the greatest number. Ideally, one can draft a set of standards that will have a broad consensus of the entire organic community. A more teleological approach, defines the best standard by a set of meta-standards that fulfill the principles of organic agriculture. IFOAM should maintain and continuously improve the IFOAM Basic Standards (IFOAM, 2005). Codex Alimentarius as a practical matter has established the floor for the minimum standard (CAC 32-1999). Each national standard can be set at what is acceptable for their domestic producers to sell to their domestic customers—even if it falls below that floor. IFOAM should continue lead the way to organic agriculture’s future and the IFOAM Basic Standards remain a viable tool to do that.
Where trading partners permit practices and substances that violate the principles of organic agriculture and fall below what is an acceptable minimum, some forum or mechanism is needed to change those standards. Obviously, much depends on who represents the different sovereign nations negotiating equivalence. These individuals are not necessarily driven to uphold organic principles, bound to use objective universally accepted criteria, or even to protect the interests of their own organic sector. There is nothing to prevent political and short-run market conditions from dominating an equivalency agreement that will be in the best economic interests of both parties in the long run.
Food sovereignty is Consumer Sovereignty
Another economic principle that needs to be honored in equivalency is consumer sovereignty. Codex Alimentarius recognizes that it is the importing country that considers and determines whether the standards of the exporting country meet the importing country’s requirement (CAC/GL 34-1999 §5.7). In short, the customer is always right.
One reason that the USDA negotiations with the EU failed in 2005 was the differences in how antibiotics may be used. The allowance of antibiotics in organic livestock production in the EU was a deal breaker because consumers in the US expect organic animal products to be produced without antibiotics. Another reason is that the USDA does not accept extended withdrawal periods following the application of animal drugs, such as the EU has, as legally possible or enforceable. If the USDA considers extended withdrawal unverifiable and unenforceable with domestic livestock producers, it would not be possible to consider such an approach to be legitimate elsewhere.
Allowing antibiotics in imported dairy products and not for US dairy farmers would not only put US dairy farmers at a competitive disadvantage, the knowledge that some dairy products are from cows treated with antibiotics would reduce consumers’ propensity to pay a premium and would likely cause some consumers to stop buying organic dairy products altogether.
A parallel situation exists with factory farming practices in the US. In response to the first proposed rule, the USDA explored the exclusion of factory farming from organic certification. Ultimately, the NOP precluded some practices associated with industrialized animal production but stopped short of adopting the standards on humane treatment found in the EU standard.
The determination as to whether two trading partners are equivalent is not simply a matter of comparing the written standards. One needs to look at how those standards are interpreted or enforced—or not. Current farming practices on US certified organic livestock farms are not just at odds with the EU and forthcoming Canadian standards but are unacceptable even to US consumers and family farmers. After a lengthy process, the USDA proposed a revision of standards in October. It remains to be seen if or when those revisions will be finalized and implemented. Some expect the proposal to be modified significantly based on public comment. There is also the political question of the USDA's will to enforce the law and support the decertification of a significant percentage of current organic dairy and egg production if those operations fail to comply within the implementation period set.
Respect Organic Principles
Equivalency needs to be consistent with organic principles to be respected. The WTO has been called a closet dictator by removing from the democratic process the basic decision making on the rules to structure and govern society. The organic movement was founded upon decisively democratic principles. Trade agreements by nation states conducted in secrecy without the opportunity for the movement to be consulted violates the organic principle of care. Equivalency agreements that go against the expectations of those who buy organic food in the importing country can be reasonably expected to undermine consumer confidence. Lower demand will lead to lower premiums and smaller volumes, which will in turn serve as a disincentive for farms in the importing country to go organic.
Lack of enforcement and implementation on the part of an exporting country can create situations of fraud. The detection by a US television station of the highly toxic pesticide aldicarb in ginger from China sold as organic should raise concerns (WJLA, 2008). Bogus organic product from the exporting country can result in disillusionment with the label in the domestic market of the importing country. A healthy organic domestic market provides consumers the health and environmental benefits of organic food. The protection of its own citizens from being swindled can serve as a strong incentive to enforce food fraud laws. The self-interest of domestic buyers of organic food requires that organic food laws are adequately enforced. An organic sector that is entirely export oriented has no such domestic oversight or accountability. Combine that with a corrupt regulatory system and soon the authorities will be serving as active accomplices in perpetrating fraud.
In conclusion, equivalency agreements between trading partners on organic standards can potentially benefit the global organic community. However, to do so, they must be done in a way that respects food and consumer sovereignty, allows for continuous improvement and convergence of standards and is negotiated openly with full stakeholder representation, and remains consistent with the principles of organic agriculture. Organic agriculture is in a unique position to promote the benefits of both free trade and fair trade.
References
Canadian General Standards Board. 2006. Organic Production Systems: General Principles and Management Standards. Gatineau: CGSB 32.310-2006 as amended through November 7, 2008.
Canadian General Standards Board. 2006. Organic Production Systems: Permitted Substances Lists. Gatineau: CGSB 32.311-2006 as amended through November 7, 2008.
European Council Regulations. 2008. Laying down detailed rules for the implementation of Council Regulation (EC) No. 834/2007 on organic production and labelling of organic products with regard to organic production, labelling and control. EC 889/2009, 5 September 2008.
International Federation of Organic Agriculture Movements. 2005. The IFOAM Norms for Organic Production and Processing. Bonn: IFOAM.
______. 2005. Principles of Organic Agriculture. http://www.ifoam.org/about_ifoam/principles/index.html. Accessed February 10, 2009.
International Task Force on Harmonization and Equivalence in Organic Agriculture (ITF). 2008. Guide for Assessing Equivalence of Organic Standards and Technical Regulations. http://www.unctad.org/trade_env/itf-organic/meetings/itf8/ITF_EquiTool_finaldraft_080915db2.pdf (Accessed February 10, 2009).
Codex Alimentairus Commission. 1999. Guidelines for the Production, Processing, Labelling and Marketing of Organic Processed Foods.CAC/GL 32-1999. Rome, Italy: FAO/WHO.
______. 1999. Guidelines For The Development Of Equivalence Agreements Regarding Food Import And Export Inspection And Certification Systems.CAC/GL 34-1999. Rome, Italy: FAO/WHO.
Sophia Twarog. 2008. Equivalency: The Case for Organic Free Trade. The Organic Report. Fall: 1ff.
USDA National Organic Program. 2000. National Organic Program Final Rule. 7 CFR 205. As amended through
WJLA News. 2008. Organic Food Contamination. Newscast July 24. http://www.wjla.com/news/stories/0708/538424.html.%20Accessed%20February%2010, 2009.
