After reading the article in your newspaper – July 17, 2016 edition – under the title “Modjo Dry Port flicks switch to release solar products”, as an expert in this field and as a concerned citizen, I decided to write about the current import-export process handled by the Ministry of Trade compared to the rationale for exercising technical regulations and against international practice on the enforcement of technical regulations.
The Ministry of Trade (MoT) by virtue of Proclamation 691/2010 (definition of Powers and Duties of the Executive Organs of the Federal Democratic Republic of Ethiopia) is mandated to control the quality of export and import goods; prohibit the importation and exportation of goods that do not comply with the requirements of the national mandatory standards, and work in collaboration with the concerned organs. It is also mandated to cause coordinated enforcement of standards applied by other enforcement bodies.
The Ministry to dispose this responsibility deployed its inspectors at each customs gate for import-export management and used different modalities to verify the quality of goods. Despite these efforts, it was apparent to see a huge market failure in controlling substandard imported goods, which flooded into the majority of the country’s markets. This can be attributed to many factors; prominently, goods reach the market via contraband, prevalence of inadequate law enforcement, prevalence of a system that accepts incompetent third party inspection service providers, etc.
The Ministry, to address this challenge and to facilitate an efficient trade regime – with the objective of expediting the release of imported goods at the customs gate, while ensuring that products are safe for consumers – announced on its website that all imported goods, under the list of Mandatory Ethiopian Standards, must be accompanied by a Laboratory test certificate from an authorised ISO/IEC 17025 accredited third party inspection body. Hence, these goods would be released by the Ministry of Trade to enter the local market, without further intensive inspection, sampling and testing. But if the shipments are being imported without the necessary test certificate of inspection it will be subject to the existing protracted import inspection procedures.
In this regard, the Ministry informed importers that it will not take any responsibility for delays at the customs gate. Here in this communication, the Ministry emphasised that this process enhances the competitiveness of the importer in the market. Furthermore, the Ministry warned that inspection service providers, if they are found guilty of providing fraud certificates, will be seriously penalised. I believe this practice was in line with the international practice despite its implementation limitations.
However, the Ministry recently decided that all imported goods that fall under the mandatory inspection regime are to be inspected by the local Government-owned conformity assessment service provider (Ethiopian Conformity Assessment Enterprise (ECAE), regardless of whether the goods in question have a third party certificate or not, claiming the former process contributed to the entry of substandard goodz to the local market.
This decision was communicated in a letter dated 29th May 2016 to all inspection officers at each custom gate. However, the decision created its own problem when it was implemented, as it was made without adequate analysis of the situation. It led to some goods not being able to leave the customs gate, as they could not be tested by local capacity in time. Then the Ministry, realising the problem, soon reverted its decision and passed another circular in a letter dated 15th April 2016, that instructed inspectors to accept third party certificates for the products that cannot be inspected by the ECAE.
I observed a number of pitfalls in this decision-making of the Ministry. One, it misses the essence of technical regulation practice; two, it lacks economic advantage analysis; three, it overestimates the local capacity, and fourthly, it neglects the free market policy of the nation.
The essence of technical regulation emanates from the protection of the health and safety of human beings and animals, protection of the environment and facilitation of fair trade. Most countries avoid bottleneck situations at the arrival port. This is an extra delay and added costs that could easily be avoided. Imagine goods that are found to be substandard while inspected at destination, where the buyer has already made payment and the seller received payment for the delivered goods; it is costly to resend them to the origin or to destroy them locally.
Besides, who is going to be responsible for the additional cost of the disposal of the substandard goods? If it is the importer, the cost bore by the importer could be huge: price of the consignment, plus the price of destruction, plus all additional costs due to delays. Furthermore, mitigating the impact on the environment issues related to the disposal of substandard products is a huge challenge, as some of the goods can be of a toxic nature or with radioactive elements. Hence, health and safety of the public, animals and the environment shall be at risk provided substandard goods are disposed here. On top of all these limitations in relaying on inspection at destination points, there is still a risk that the goods may reach the market.
In the era of globalisation, nations are focusing on the production and sale of goods and services where they have economic advantage. The global trend indicates that many nations are relaying on third party inspection service providers for the realisation of their technical regulation practice. Here, I question what would be Ethiopia’s advantage in using only one local conformity assessment service provider compared to credible local and international service providers?
Here I am not opposing the development of local capacity. But I believe the paramount interest of the Ministry to be protecting the flora and fauna on the nation and facilitation of fair trade. I also believe that local capacity can develop by maintaining the international practice and operating with credible international conformity assessment service providers – where they can have a lot to share, while at the same time protecting substandard goods from entering the country. Besides, the local capacity can focus on supporting the nation’s exports as well as local production and service industries.
The volume of imported goods to Ethiopia mainly comprises of foodstuffs, textile, machinery and fuel, with main trading partners China, Saudi Arabia, the United States, Russia and India (47 percent of total imports). Main imports include oil and mineral fuels, industrial machineries, electrical machineries, motor vehicles and parts, iron and steel articles, plastics, cereals, fertilisers, fats and oils. Currently, over 120 products, including cereals, fertilisers, fats and oils, chemicals and electrical appliances, are subjected to mandatory inspection. Then, with this much trade volume to relay on only one conformity assessment service provider looks irrational.
Ethiopia is in pursuit of the right mix of policies that will enable it to achieve its Growth and Transformation Plan and the long-term goal of reaching middle-income country status by 2025 within a more open economy. Ethiopia applied to join the World Trade Organisation (WTO). In addition, Ethiopia is currently pursuing new multilateral trade agreements and numerous bilateral and regional trade pacts. It is also a member of the Common Market for Eastern and Southern Africa (COMESA) trade bloc. Taking these facts in to account, many international companies are coming to Ethiopia to use the market opportunity. For Example, in the conformity assessment service sector, multinational companies like Bureau Veritas, SGS, show an interest to operate in Ethiopia and open offices in Addis Abeba.
Therefore, the Ministry’s decision to select a single conformity assessment service provider contradicts the country’s policy direction and suppresses those who would like to operate in this business.
Almost all countries in the world have closed their doors to substandard products by implementing consignment-based conformity assessment programmes, which in effect leaves very few destinations for substandard products. Ethiopia should enhance its technical regulation practice to protect substandard goods from reaching its market by implementing consignment-based conformity assessment programme using internationally credible third-party service providers that have many years of good track record in the business.
The Name of the Writer Is Withheld Upon Request.