MEETING STANDARDS, WINNING MARKETS – EAST ASIA 2013 Meeting Standards, Winning Markets Regional Trade Standards Compliance Report East Asia 2013
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Printed in Slovakia November 2013 - 700 MEETING STANDARDS, WINNING MARKETS – EAST ASIA 2013 ASIA EAST – MARKETS WINNING STANDARDS, MEETING Meeting Standards, Winning Markets Regional Trade Standards Compliance Report East Asia 2013 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Vienna International Centre, P.O. Box 300, 1400 Vienna, Austria Telephone: (+43-1) 26026-0, Fax: (+43-1) 26926-69 E-mail: [email protected], Internet: http://www.unido.org INSTITUTE OF DEVELOPING ECONOMIES, JAPAN EXTERNAL TRADE ORGANIZATION Wakaba 3-2-2, Mihamaku, Chiba, Chiba Prefecture, 261-8545, Japan Telephone: (+81) 43-299-9535, Fax: (+81) 43-299-9736 E-mail: [email protected], Internet: www.ide.go.jp/English/ Disclaimer: No part of this report may be reprinted by any means without written permission from the institute (IDE-JETRO) or UNIDO. This document has been produced without formal United Nations editing. The designations employed and the presentation of the material in this document do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations Industrial Development Organization (UNIDO) concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries, or its economic system or degree of development. Designations such as “developed”, “industrialized” and “developing” are intended for statistical convenience and do not neces sarily express a judgment about the stage reached by a particular country or area in the development process. Mention of firm names or commercial products does not constitute an endorsement by UNIDO. The opinions, statistical data and estimates contained in signed articles are the responsibility of the author(s) and should not necessarily be considered as reflecting the views or bearing the endorsement of UNIDO. Similarly, IDE-JETRO maintains that the views expressed in the book are those of the author(s) and neither the Institute of Developing Economies nor the Japan External Trade Organization bears responsibility for them. Although great care has been taken to maintain the accuracy of infor- mation herein, neither UNIDO nor its Member States assume any responsibility for consequences which may arise from the use of the material. Cover photo: © Paramat Keereewan / Shutterstock.com Meeting Standards, Winning Markets Regional Trade Standards Compliance Report East Asia 2013 ii Regional Trade Standards Compliance Report - East Asia 2013 Acknowledgements This Regional Trade Standards Compliance Report (TSCR) for The following regulatory authorities provided the original East Asia is the outcome of a strategic partnership and coop- datasets on their rejections of agri-food imports: the Austral- eration between UNIDO and IDE-JETRO that started in the spring ian Government Department of Agriculture, Fisheries and For- 2012. The objective of this cooperation is to conduct joint re- estry (DAFF), the European Commission’s Directorate General search and to present new analytical approaches that help to for Health and Consumers (DG SANCO), the Japanese Ministry gain insights about the challenges that East Asian developing of Health, Labour and Welfare (MHLW), and the United States countries face in complying with product quality and safety Food and Drug Administration (FDA). This generous granting of standards and regulations in agri-food trade towards both re- unprecedented access to their import rejection data laid a key gional and global markets. UNIDO and IDE-JETRO intend that foundation for our analyses and the present report. this work will lead to a series of such regional reports. Ms. Judy Hartley worked as editor and gave the final touch to The present report was prepared by an IDE-JETRO team led by this report. Kaoru Nabeshima (IDE-JETRO) and comprising Tsunehiro Otsuki (Osaka University), Aya Suzuki (University of Tokyo), Vu Hoang The preparations for the report have been greatly facilitated by Nam (Foreign Trade University), Etsuyo Michida (IDE-JETRO), Ro- the financial support that the Norwegian Agency for Develop- mio Mori (JETRO), and Nanae Yamada (IDE-JETRO). ment Cooperation (NORAD) provided to UNIDO for its work on trade standards compliance challenges of developing countries At UNIDO, our counterpart team was led by Steffen Kaeser with in the framework of the global Trade Standards Compliance Re- Thomas Bernhardt providing research and analytical contribu- port. tions. Comments and feedback on the report and the analyses under- Spencer Henson and John Humphrey from the Institute of Devel- taken are welcome and can be addressed to: opment Studies (IDS) in Brighton, United Kingdom, carried out [email protected] and the initial analysis of import rejection data on UNIDO’s behalf [email protected]. and prepared the corresponding datasets that were used for this report. They also reviewed and commented earlier drafts. Dr. Sui Shuyan (Qingdao Agricultural University) provided us with valuable information regarding vegetable production in China while Dr. Nguyen Tri Khiem (An Giang University), Mr. Truong Dinh Hoe (Viet Nam Association of Seafood Export- ers and Producers), Dr. Le Xuan Sinh and Dr. Le Nguyen Doan Khoi (Can Tho University), and Dr. Tu Van Binh (CFVG – French- Vietnamese Center for Management Education) shared with us many insights into the pangasius (catfish) and shrimp sectors in Viet Nam. iii Table of Contents ACKNOWLEDGEMENTS iii ACRONYMS viii COUNTRY ABBREVIATIONS viii FOREWORD ix EXECUTIVE SUMMARY 1 1. ANALYSIS OF REJECTIONS OF ASIAN AGRI-FOOD EXPORTS TO GLOBAL MARKETS 7 1.1 Introduction 8 1.2 Trends in agricultural and food product exports from East Asia 10 1.3 General trends in import rejections of East Asian agri-food products 13 1.4 Performance of Asian countries in the major markets 15 1.5 Potential pitfalls along the supply chain 21 2. ANALYSIS OF JAPANESE IMPORT REJECTIONS OF ASIAN AGRI-FOOD PRODUCTS 25 2.1 Imported food safety inspection system in Japan 25 2.2 General trends in import rejections of agri-food products at Japanese ports 26 2.2.1 Overview of rejected products 27 2.2.2 Reasons for rejections 31 2.2.3 Selected focus on China, Viet Nam, and Thailand 33 3. CASE STUDY: CHINESE FROZEN VEGETABLE EXPORTS 37 3.1 Introduction 37 3.2 Production and distribution of vegetables in China 39 3.2.1 Domestic production of vegetables 39 3.2.2 Vegetable distribution system in China for the domestic and global markets 40 3.3 Exports of Chinese vegetable products 42 3.3.1 The distribution of major importing countries for Chinese vegetable products 43 3.4 Supply chain management by multinational corporations 45 3.5 Conclusions and policy implications 46 4. CASE STUDY: CHINESE EEL EXPORTS 49 4.1 Introduction 49 4.2 Trends in trade in live and processed eels 50 4.2.1 Trends in exports of live eels from China 50 4.2.2 Trends in exports of processed eels from China 51 4.3 Import rejections by Japan and underlying reasons for rejections 52 4.3.1 Live eels 52 4.3.2 Processed eels 53 4.3.3 Summary 53 4.4 Eel production in China 53 4.4.1 Moving locations of main production sites 53 4.4.2 The characteristics of eel production in China 53 4.4.3 The schedule of eel culture 54 4.5 Case study of Firm Y 54 4.5.1 Production process 54 4.5.2 Manufacture and export of processed eels 55 4.5.3 Inspections of eels 56 iv Regional Trade Standards Compliance Report - East Asia 2013 Table of Contents 4.5.4 Inspection of growing ponds by the Chinese government 58 4.5.5 Investments in inspection and testing infrastructure 59 4.5.6 Traceability 59 4.5.7 The causes of residues of agricultural chemicals and drugs 59 4.6 Case study of Firm T 60 4.6.1 Distribution of eels 60 4.6.2 The quality control problem from the perspective of middlemen 60 4.7 Conclusions and policy implications 61 5. CASE STUDY: VIETNAMESE FROZEN PANGASIUS AND SHRIMP EXPORTS 63 5.1 Introduction 63 5.2. History and current trends 65 5.2.1 Overview of the seafood sector in Viet Nam 65 5.2.2 History of and trends in the pangasius industry 70 5.2.3 History of and trends in the shrimp industry 71 5.3 Pangasius value chain and production process 73 5.3.1 Pangasius value chain 73 5.3.2 Pangasius production process 74 5.4 Shrimp value chain and production process 76 5.4.1 Shrimp value chain 76 5.4.2 Shrimp production processes 77 5.5 Compliance with what standards is required by importing countries? 77 5.5.1 What measures are taken in Viet Nam? 80 5.5.2 Observed effects of standards on stakeholders along the value chains 81 5.6 Major issues in import standards compliance 82 5.6.1 Inadequate incentive mechanisms to comply with standards/certificates 82 5.6.2 Weak control of upstream market 83 5.6.3 Still room for non-compliance 83 5.7 Conclusions and policy implications 84 6. CONCLUSION 85 7. REFERENCES 87 8. ANNEXES 91 Annex A: Contextualizing trade-related standards 91 Annex B: Overview of Agricultural and Food Exports from East Asia 94 Annex C: Cambodia 95 Annex D: China (including Hong Kong) 97 Annex E: Indonesia 99 Annex F: Malaysia 103 Annex G: Myanmar 105 Annex H: Philippines 107 Annex I: Republic of Korea 110 Annex J: Singapore 113 Annex K: Thailand 115 Annex L: Viet Nam 118 v List of Tables Table 1.1: Share of agricultural sector in GDP in East Asian countries (%) 8 Table 2.8: Reasons for Japanese import rejections, 2006–2010 32 Table 1.2: GDP share of food processing industry in East Asian countries (%) 9 Table 2.9: Trends in food product groups rejected for Table 1.3: Share of food processing