V. CONSIDERATION OF MULTILATERAL TRADE AND ENVIRONMENTAL AGREEMENTS IN DOMESTIC POLICY FORMULATION

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C. Uruguay round multilateral trade agreement of the world trade organization

The conclusion in 1994 of the Uruguay round of multilateral trade negotiations and the establishment in 1995 of WTO as a successor to the General Agreement on Tariffs and Trade imposed stringent conditions which impact on the trade of signatory countries. Furthermore, under the agreement, WTO is empowered to prohibit the trade of goods which are not produced under acceptable sanitary standards.

The use of trade policies as a means of achieving environmental objectives has become a highly controversial issue, since developing countries argue that the imposition of such standards could be a subtle means of imposing non-tariff barriers on their exports. Nevertheless, the environmental concerns of the developed countries also provide new opportunities for developing countries like Sri Lanka. One striking example is the relatively high-value, environmentally friendly organic products demanded by consumers in developed countries.

Sri Lanka, like other WTO members, is also bound by the Agreement on Technical Barriers to Trade (TBT) and is obliged, among other things, to circulate full information on standards, technical regulations and conformity testing procedures among the other members. Furthermore, the new TBT agreement includes the Code of Good Practice for the Preparation, Adoption and Application of Standards which contains important provisions dealing with the development of standardization, in which information services also have an important role to play.

WTO has also recognized the importance of ISO certification and has urged governments to make the broadest possible use of international standards with a view to facilitating the free circulation of goods. It is also encouraging its members to actively participate in international standardization.

In that context it is pertinent to state that Sri Lanka has adopted the Black Tea Standard, ISO 3720, as the Sri Lanka Standard equivalent which ensures that the technical parameters and quality requirements are the same. Although a Sri Lanka Standards Certification Scheme has been implemented by SLSI for certain non-traditional products, it does not apply to tea, as SLTB with assistance from SLTRB carries out checks on tea shipments to ensure that the product conforms to international standards. As a result, Sri Lanka teas have gained the reputation of being among the cleanest teas in the world. However, with respect to ISO 9000 quality certification, the Sri Lanka tea industry appears to be facing certain constraints concerning the availability of professional assistance for the installation of ISO 9000 quality management systems.

SLSI, is one of several accredited bodies in Sri Lanka for granting certification of ISO 9000 quality management systems, and it has so far certified 18 companies which have installed such systems covering all sectors. However, according to available information, the tea sector has received barely any certification.

Although several private sector consultancy firms provide services for the installation of ISO 9000 quality management systems, they do not appear to have the necessary expertise for providing adequate support to the tea sector. According to available information, SLTRB has been slow in filling that gap through the development of appropriate procedures and manuals for installing such systems.

In order to comply with the hygienic standards and procedures required by European Union for food imports, the early adoption of ISO 9000 systems and procedures by the tea sector is imperative.

In addition to the above considerations, increased awareness of the urgent need to protect the environment is catalysing changes in all spheres of human activity including the production, marketing, utilization and disposal of goods and services in domestic and international markets. Consumers and retailers are increasingly basing their purchasing decisions not only on the key aspects of quality, price and availability of goods, but also on the environmental aspects associated with the products, such as the environmental impacts that might occur from the raw material stage to actual production. In that context, the ISO 14000 series of environmental standards reflect the increasing concern of the international community for the preservation of the environment, as they relate specifically to the steps that enterprises need to take in meeting internationally accepted environmental management criteria.

Compliance with the ISO 14000 series will increasingly be a competitive factor in international trading. It is therefore receiving the attention of all, including the producers and exporters of commodities, such as tea, and government agencies such as SLSI. Although SLSI is still not an accredited body for ISO 14000, 16 of its staff members have been trained and registered with IQA in the United Kingdom of Great Britain and Northern Ireland as Environment Management Systems (EMS) auditors. Hence, SLSI certification has validity. However, the development of EMS related to the ISO 14000 series is at the embryonic stage.

A number of countries, including competitors of Sri Lanka, have implemented eco-labelling schemes. Thus eco-labelling (also known as green labelling or environmental labelling) is now one of the most important international trading issues that is facing the tea industry. In Sri Lanka a recognized certification body as well as a scheme to offer a registered eco-label are needed. However, the costs related to securing an eco-label or, for that matter, certification under other related schemes is bound to be a contentious issue, in terms of the ability of products to remain price competitive in international markets.

However, a healthy development is the increasing interest among the producers and exporters in the production of environmentally preferable (organic) food products. In the tea sector the production of organic teas (although still in limited quantities) has been undertaken by a few producers and exporters, more as a challenge and in response to demand and premium prices in the niche markets.

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