Private standards

Standards may be classified in numerous ways, and often the different terminologies used can be confusing. Classifying them by how they are developed allows us to look at the implications on developing country exporters:

  • At the national level, government standards, which are often called technical regulations, are developed and promulgated by Federal, State, and local agencies to address health and safety concerns. Technical regulations differentiate from the rest, as they are by law mandatory.
  • International standards are developed and disseminated by international governmental and non-governmental standards development organizations, such as International Standardization Organization, International Electrotechnical Commission, the International Telecommunication Union or Codex Alimentarius. These international standards are voluntary standards. At the international, regional or sub-regional level, harmonization of standards is done through regional standards bodies or sub-regional standards organizations.
  • Industry/private/buyer standards can be broken down into three categories:
  1. Consortia standards – which are often developed by a sector-specific consortium (ie. GlobalGAP)
  2. Civil society standards – established as an initiative by an non-profit organization usually as a response to concerns over social and environmental conditions (e.g. Forest Stewardship Council)
  3. Company-specific standards – which are developed internally and apply to the whole supply chain of a company (i.e. codes of conduct)

While private sector firms and consortia have often been the driving force behind the formulation of management and product standards in industrialized countries for more than a century, there is an emerging sense that the multitude of private standards and retailer requirements have a growing impact on developing country firms’ ability to participate in global production and supply chains, essentially acting as an another barrier to entry.

There are probably a variety of reasons for this growing concern. Firstly, there is increasing awareness about standards and technical regulations in general due to the World Trade Organization agreements on Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary Measures (SPS). Secondly, and probably most importantly, the building-up of health and safety concerns in industrialized countries (such as food safety, use of chemicals, working conditions, etc.) resulted in an environment where not only the government regulations have become stricter, but the retailers/supermarket chains have started to drive the trend for stringent standards due to consumer awareness. Of course, reputation and brand protection, global sourcing, differentiation in the marketplace, and control and rationalisation of supply have been important drivers for private standards.

As a development agency with a clear mandate to provide technical assistance in the area of industrial development and trade capacity building, UNIDO initiated a research project in 2008 to help to bridge this gap by identifying the obstacles faced by developing country suppliers and exporters through the publication of a guidebook on private standards and good practices required by international buyers.