A cost-benefit framework for allocating SPS-related technical assistance

Sanitary and phytosanitary (SPS) measures designed to protect human, animal and plant health, constitute a significant barrier to exports of agricultural products from developing countries. Though the WTO Agreement on the Application of Sanitary and Phytosanitary Measures places restrictions on SPS measures, regulations in major import markets are extremely complex and compliance beyond the means of many exporting countries. This report argues that for technical assistance to effectively redress the undesirable consequences of SPS measures, a cost-benefit framework should govern the allocation of assistance. To map the major SPS-related problems of developing countries, a set of indicators is suggested, consisting of reported problems and needs, inspection reports and third country lists, and detentions and alerts. For the capacity building needs thus uncovered, funds should be allocated to projects where the effect per dollar spent is the greatest, i.e. where the ratio of benefits to costs is the highest. Given the focus of SPS-related technical assistance, it is appropriate to measure benefits as export revenue generated, adjusted for differences in development. For compliance costs, suitable methods of calculation are reviewed.