Trade In Food

  • Lockwood Smith
International Trade

Ladies and gentlemen. Thank you for the opportunity to speak here today.

Your conference is timely as a number of issues associated with food and food safety have hit the headlines lately. Not least of which is genetically modified food but more on that later.

Food trade plays a key role in enhancing both food security and the range and quality of foods available for all. It also is a vital part of the New Zealand economy providing close to half of our export earnings.

Uruguay Round

Until the Uruguay Round of multilateral trade negotiations was concluded in 1993, agricultural products were largely exempt from international trade rules. However, the Uruguay Round, while delivering reasonable results for New Zealand, was only a first step in liberalising agricultural trade.

New agriculture negotiations are due to get under way in the WTO at the end of this year. These negotiations provide a real opportunity to achieve gains for New Zealand food producers through better access to markets and reductions in the subsidisation in those markets. New Zealand's determination on this front is well known by our trading partners.

Most developed countries, which depend on free trade in industrial goods, continue to restrict trade in food and food products, whether through high tariffs, or unjustified technical barriers to trade. Again, the majority of our food exports attract huge tariff and technical barriers into those markets.

Recent ructions in Europe and the United States hail more from the fact that their industries are finally being forced to face up to long overdue reform, than any political tendency towards stepping back into protectionism. The origins of GATT after World War II, meant the focus on food self sufficiency excluded agriculture from the agreement.

Future liberalisation will lead to improvements in efficiency in a number of countries. As a result, lower-cost producers in places like South America and Eastern Europe might be able to displace New Zealand from its lowest-cost quality producer status. But if anything this threat provides an even greater incentive to ensure that New Zealand produce is positioned at the top of the value chain through a commitment to innovation, to excellence and consumer responsiveness. But we should not be complacent. Rapid changes in food production processing and technology are bringing down our competitive advantages in some cases as rapidly or more rapidly than barriers are reducing.

Until recently it would have been out of place for any conference on 'Nutrition and Food Trade' to focus on such things as technical barriers to trade, food safety, sampling methods or nutrient profiles. Just a few decades ago, nutrition and food trade meant only one thing: how to feed the starving millions. Some may remember the ominous beginning of Paul Ehrlich's best-selling book, 'The Population Bomb'. In it he wrote:

"The battle to feed all of humanity is over. In the 1970s the world will undergo famines - hundreds of millions of people are going to starve to death."

And remember the predictions of the Club of Rome? That many of our raw materials should now be exhausted.

Thankfully these scenarios did not materialise. Instead, around the world people, with some exceptions, have become increasingly better fed, and are living longer and healthier lives. There is now a greater variety of food available than ever before. And people now care more about what they and even their pets are eating.

Adding value

New Zealand's export food products are becoming more sophisticated as we move away from commodities. In recent decades a great deal has been said about the advantages of adding value versus production of commodities. In terms of trade and market access, the benefits are compounded because trade barriers tend to be much lower for products with a higher added value content. Generally speaking, the more sophisticated the composition of our food exports, the better the market access. Many specialist dairy products enjoy open access to Europe, United States and Japan against a US quota of 3 tonnes of wholemilk powder out of maybe 400,000 tonnes produced.

For this reason, the Government is committed to removing barriers for exporters to add value to their products. This has been a major reason for producer board reform for example. The New Zealand Dairy industry would be better off to have changed its focus a decade ago to increasing value instead of increasing volume.

In a globalising world with trade increasing at three times the rate of production, there is an expanding economic freedom. And freer trade underpins that economic freedom. It provides the incentives for people to invent and innovate. We should never lose sight of that fact.

Significantly all the work being done on trade reform, by the WTO, by the Australasian Prime Ministers' working group on CER, by APEC, by the Cairns Group, by South America's free trade grouping Mercosur, by NAFTA, and even by the seemingly immovable Europeans, is predicated by a general commitment, globally, to growing free-trade. Internationally, trade is growing at three times the rate of production.

Our Government will continue to practise and preach free trade, in all fora: multilaterally in the World Trade Organisation; plurilaterally, in such fora as the OECD and APEC, and bilaterally, with our ever-increasing number of trading partners.

Even as I speak, my colleague Dr Lockwood Smith is in Washington advocating strongly for the access of New Zealand lamb. New Zealand is very concerned at the message that the US administration will give about international free trade if it restricts or penalises unsubsidised lamb imports.

We will continue to argue vigorously that any measures adopted should be non-trade restrictive and should focus on co-operative strategies to grow the US domestic lamb market. Trade restrictions will only hurt all concerned

The Role of Government

The role of governments have changed in recent years. The scrutiny of government functions, existing or envisaged is a sign of political maturity.

Some years ago, the call was for governments to give cast-iron assurances that pesticides and other agricultural chemicals for example, were not present in food at levels which would threaten health. Newer concerns relate to additives during the processing, food preparation or cooking stages.

Clearly there is a legitimate role for government to play in:

protecting consumer health and safety;
preventing fraud and deception; and
facilitating trade.

New Zealand is known as a country with good quality production of agricultural products. For these reasons New Zealand has an overarching interest in regulating food to ensure consumer health and safety, in addition to facilitating trade. It would be irresponsible for the Government to abdicate responsibility in this area. We must protect our national brand, that of New Zealand Inc.

But I think that all at this conference would agree that the first responsibility for ensuring that food is safe, rests with the industry manufacturing the food. The food industry has a role in implementing standards and making sure that consumers are provided with sustenance, nutrition where it is called for and quality.

Likewise the distributors and retailers have to store and handle food properly. So do the restaurants. And so do consumers, in their homes. And again the incentives or drivers for retailers to ensure that quality assurance and food safety are seeing further pressure for even higher standards.

Government cannot maintain the regulatory framework alone. All the players need to work in partnership. But the Government must be there to provide basic laws which can be applied when systems break down. And to work on sensible standards and international guidelines to manage the risks.

The trust that underpins dealings between governments in food trade must be mirrored by industry providing adequate and helpful information to consumers which enable them to rely on their food supplies.

There is a powerful public good aspect to the production, sale and export of

safe food. Which brings me to the subject of genetically modified food. In New Zealand the establishment of the new Food Agency by combining the Food Safety and Standards area of the Ministry of Health and the same functions in the Ministry of Agriculture and Forestry will see a consistency in approach in these areas in times to come. The move away from prescriptive regulations to Food Safety Plans will allow for more innovation in the future.

GMFs

The debate surrounding genetically modified foods has gained some momentum in New Zealand. New Zealand is a world leader in some aspects of biotechnology research and should hope to remain so. Genetic modification is one small area of biotechnology, offering opportunity and risk to the food sector. Food producers need to learn how to use the opportunities presented by new biotechnologies, without endangering the trust and faith of consumers in the process.

It is clear that consumers want choice, and to be treated with respect. Consumers want to know what they are eating which is where labelling comes in. That is why the Government supports a system that is practical, affordable and meaningful.

But there is another aspect to the GM debate that should not be overlooked. All food industries have over time been selectively bred or genetically modified for preferred characteristics. Many major food types also currently contain protein which some in the population may be allergic to which are not singled out for labelling at present. And what about our restaurant meals? What were the actual ingredients?

We need to ensure that any labelling system is consistent, sensible, workable and meets our international obligations and our consumers' needs. The current GM debate is largely a non-issue in the US but a real political issue in the UK, potentially seriously damaging the UK's agricultural competitiveness. Emotion has overtaken much of the debate. I hope for a more balanced public debate in due course but that requires an openness and education by the food sector and a preparedness to listen, but also challenge misinformation.

International Agreements

There is no such thing as zero risk, in food trade or anything else. The Government's responsibility is to ensure that the regulatory framework is robust and that standards are based on scientific principles. For example by encouraging international bodies, like Codex, to establish clear standards.

International agreements such as the World Trade Organisation (WTO) Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) Agreements have provided a framework for food trade. The key provisions of the SPS Agreement are:

sovereignty: countries have the right to apply measures that protect public health and safety;
national treatment and non-discrimination;
harmonisation;
equivalence;
transparency; and
for measures to be based on scientific risk assessment.

International standard setting bodies promote harmonisation. Under the SPS Agreement, Codex standards are considered necessary to protect human health and safety, so a country incorporating a Codex standard into its own legislation cannot be challenged in the WTO.

Under the TBT Agreement, Codex standards are international standards, which are considered to fulfil a legitimate objective, and so may be used without fear of challenge.

Development of sound, robust standards protects consumers, and promotes fair practices in food trade. Without these agreements we would still face barriers to trade in food that would be difficult to overcome.

We should accept the primacy of science, but also accept that people are different in terms of their willingness to accept risk. We should use the principles of the SPS Agreement, and international standards-setting bodies, to provide more scientifically rigorous information than can be found in the popular media.

By applying scientific principles at the regional level, it will be possible to extend them to APEC and beyond.

ANZFA

Australia and New Zealand are co-operating in a number of ways in the food sector. Composition and labelling standards are being developed jointly by the Australia New Zealand Food Authority (ANZFA). Our officials work closely together in international meetings on food, because we have found that our views are so similar on most of the key issues. And our views carry more weight when we follow a common line.

Goods able to be sold in one country can now generally be sold in the other under the trans-Tasman Mutual Recognition Arrangement (TTMRA). Our food safety systems deliver similar outcomes, and where there is trust in each other's processes, there can be further development of food trade.

Government systems must be respected. If there is political mistrust of government agencies there is a real danger that trivial dangers will be exaggerated.

Public acceptance is the key. In general people are positive about new technologies and their usefulness to society. Government has a role in providing more information about biotechnology. The challenge is how to balance scientific developments with the public's right to make informed choices.

New Zealand has very strong regulations aimed at achieving safety and confidence in food safety measures. In the current debate about genetically modified foods it is important to remember that the safety of all genetically modified organisms must be approved on a case-by-case basis by independent statutory bodies before they are released in New Zealand.

Both the Australia New Zealand Food Authority, and the Environmental Risk Management Authority (ERMA) have public processes that allow any interested person to make information available before a decision is reached.

Conclusion

I have concentrated most of my remarks on food safety, and the importance of consumer satisfaction, because I consider the Government's prime role is to ensure the health of people and their confidence in our systems. But as I have said, there are limits to that Government intervention.

Thank you for the chance to address you today. I hope I have given you some food for thought.