By Dr. Arthur Phillips and Dr. Jan Yves Remy
Oftentimes, in public discourse, trade and health are presented as opposing factions competing for governments’ attention and priority. Those who ardently believe in the right of governments to protect the well-being of their citizenry often see trade rules that promote the dismantling of barriers to trade as being antagonistic to health objectives. Likewise, trade officials often find the concerns raised by health aficionados as irritants to the promotion of liberalization goals.
That “divide” has played out in the context of disputes between countries at the World Trade Organization. For instance, cases have been brought against the European Union for its ban on hormone-treated beef; and more recently, small countries like Cuba and the Dominican Republic brought a dispute against Australia for legislation curtailing the right of tobacco manufacturers to use attractive designs and trademarks on their packaging that could lure young persons to smoke.
The issue of how trade can be accommodated in health, and health in trade, comes to the fore in the Caribbean in the context of how CARICOM should regulate “front-of-packaging labelling” (FOPL) requirements. These requirements aim to provide consumers with information on the nutrient value of the foods they eat. In this SRC Trading Thoughts, the authors – hailing from the disciplines of health and trade – show that it is possible, and desirable, for the two worlds to co-exist harmoniously.
The Health Perspective: Why is Front of Package Labelling (FOPL) Important?
Non Communicable Diseases (NCDs), such as diabetes, cancer, and heart disease, are the leading cause of death and disability worldwide. In addition to impacts on health, these conditions affect the everyday realities of billions of people. They affect issues such as productivity, income, and social relations.
Barbados continues to have a large and increasing prevalence of NCDs across all segments of the population. The years of life lost to NCDs in Barbados is significantly higher than the global average. It has further been estimated that the healthcare and productivity losses on Barbados’s may be as much as 16% of GDP. According to the Barbados Health of the Nation Survey (2015), the prevalence of obesity was 33.8%, with 40.6% and 18.7% of the population suffering from hypertension and diabetes, respectively. The WHO Global School-Based Student Health Survey (2011) indicated that children’s intake of added sugars and fat was too high, with fruit and vegetable consumption below the WHO’s recommended five or more servings per day. Given these impacts, is easy to understand how NCDs have been identified as a development issue.
As worldwide trends in eating habits change, it is becoming increasingly clear that the proportion of our diets occupied by processed pre-packaged foods has increased significantly. These include foods which tend to be calorie dense and nutrient low. Foods which contain high levels of sugars, sodium and fats, including saturated fats and transfats are associated with increasing levels of NCDS.
Both the World Health Organization and the Food and Agriculture Organization indicate that in order to address NCDS, there needs to be a reduction in the consumption of energy-dense, micronutrient-poor foods. The literature also indicates that consumers need concise and clear information at the point of making decisions about food products to purchase and consume.
- What is CARICOM doing?
Across the Caribbean, there is agreement that current labeling requirements for pre-packaged foods do not sufficiently facilitate consumers making informed decisions about what they consume. This has prompted CARICOM Heads of Government to take action. At the Summit of Non-Communicable Diseases in 2007, the CARICOM region was the first to have governments collectively commit to combat NCDs. More recently, in 2018, through the Port-of-Spain Declaration, Heads endorsed FOPL as one of six priorities which the Caribbean should pursue with respect to NCDs.
The CARICOM Regional Organisation for Standards and Quality (CROSQ), has been mandated to develop an FOPL standard through their normal consultative process which entails national and regional stakeholder engagement. Pursuant to that mandate, CROSQ has developed and has circulated for comment a regime for FOPL that is simple, consistent with evidence of effectiveness and consistent with what Canada and some Latin American countries have done in terms of regulation.
The aim of the CROSQ standard is to assist consumers in making informed decisions about the nutritional content of pre-packaged food items. Although each CARICOM country would decide how to apply the standard, it is envisaged that the FOPL requirements would be mandatory in that both domestic and foreign manufacturers would be required to comply with them. The model standard uses agreed thresholds developed by the Americas branch of the World Health Organization and indicates if items are “high in” critical nutrients such as sugar, salt and fat. For example, a food item may have one or more icons indicating if it is above the accepted levels for each of the nutrients. Packaged foods with nutrients exceeding the permissible limits of these critical nutrients will be required to bear a label such as the ones indicated below:
This ties in with the literature which indicates that front of package icons are read faster and have a greater influence on the purchase decision of consumers towards healthy decisions than other labeling systems. Ultimately this type of system has been shown to improve consumer awareness and understanding of the food that is being considered for purchase and consumption.
- What is Barbados doing?
The Barbados National Standards Institution (the BNSI) has coordinated mechanisms for representatives of the various stakeholders to be aware of and to influence the proposed CROSQ standard. This work has so far included hosting a National Sensitization meeting comprising stakeholders and the general public, facilitating the work of ‘mirror committee’ (responsible for developing the national position on the draft standard), and engagement with CROSQ. Based on comments from committees in other CARICOM Member States, CROSQ has sent revised drafts and requested views. The “health” view is that the CROSQ draft is clear and justified given its ability to better inform consumers of the contents of the prepackaged foods available for sale locally.
The Trade Perspective: What are the trade implications of FOPL?
International trade is concerned with the liberalization of trade and removal of barriers to the free flow of goods and services across borders. The scope of trade agreements has grown over the years to include standards that countries impose on products, compliance with which is required to access their markets. These standards may themselves serve as a constraint on trade. For this reason, they are regulated under trade agreements so that any unnecessary trade-distorting effects are minimized. That said, trade agreements also recognize that governments have the right to regulate in favour of other values, including health. In sum, trade agreements require a country to balance its obligation to liberalize trade against its right to take measures to protect health.
FOPL, while intended as a health measure, may have unintended or unforeseen impacts on international trade. For this reason, FOPL standards may fall for consideration under a number of international and regional agreements to which Barbados and other CARICOM states are party, including agreements under the World Trade Organization (WTO).
Among the most relevant trade agreements under the WTO that could regulate FOPL is the Agreement on Technical Barriers to Trade (TBT Agreement). This is because, as a labelling requirement, FOPL falls within the scope of the TBT Agreement.
The TBT Agreement prescribes binding rules which must be complied with. Among these is the requirement that labels applied to products be applied in a “non-discriminatory” manner, such that they do not discriminate in favour of some foreign suppliers over others, or domestically produced goods to the detriment of imported ones. In other words, if the effect of FOPL is to skew competition in a market among similar products that would otherwise compete, the CROSQ standard would be WTO-inconsistent. Only if governments have a “legitimate” health-based reason or “defence”, for discriminating, would such FOPL labels be allowed. In this regard, questions to be asked include whether costs relating to compliance with the new CROSQ standard would be equally borne by domestic and foreign manufacturers; or whether, by its design certain manufacturers are placed in a more favourable position than others (since they have more familiarity with the labelling requirement than others).
Another principle under the TBT Agreement is one akin to a “proportionality” standard under which various factors have to weighed and balanced. Here the question is whether, having regard to the trade restrictive impact a labelling requirement might have, it nonetheless makes a contribution to the objective of giving consumers more information, or protecting their health. Under the rules of the WTO, if these worthy objectives – providing information and protecting health – could be achieved in a less trade-restrictive way than through the proposed FOPL standard, it would not be WTO-consistent. Past cases decided at the WTO suggest that a government will be given wide latitude to take measures that contribute towards protecting consumer health where they can show that they have taken measures to ensure that negative commercial impacts are minimized. So for instance, if instead of creating added costs for manufacturers through compliance with the FOPL standard, the government could have conducted more effective public awareness campaigns, this type of regulation could be seen to be preferable.
Finally, the WTO also requires that any new labelling requirements that may have a trade impact are properly notified to the relevant TBT Council at the WTO before they are put in place. This type of notification ensures that foreign manufacturers from other countries that might be affected by the CROSQ standard would be made aware in advance. CARICOM Members should therefore have regard to these transparency obligations at the WTO before implementing any new labelling measures.
Barbados has shown leadership in raising and seeking to address NCDs at national, regional and international levels. It has indicated further that it fully intends to promulgate FOPL based on the CROSQ standard in order to raise consumer awareness and influence behaviour, and ultimate advance healthier lifestyles. It is in the interest of both health and trade to work together to ensure that any proposed legislation is implemented in a way that benefits the people of Barbados while respecting its obligations under international trade agreements.
Dr. Arthur Phillips is Senior Medical Officer of Health (NCDs) (Ag) in the Barbados Ministry of Health and Dr. Jan Yves Remy is the Deputy Director of the Shridath Ramphal Centre for International Trade Law, Policy & Services of The University of the West Indies, Cave Hill. Read more of our Trading Thoughts at www.shridathramphalcentre.com.