The emergence of a concept
2. Quasi-states? The unexpected rise of private food law
2.4 Rise of the Tripartite Standards Regime (TSR)
Another aspect of the growth in global trade was a major shift in its governance.
While neoliberal and other proponents of ‘free trade’ were of the opinion that merely reducing and eventually eliminating tariffs and quotas would be sufficient to create a trade explosion, this left questions about specifications, standards, quality and safety unanswered. In short, even the most scrupulous firms engaged in trade needed to know, among other things, that (a) the terms they used in contracts (even those in a single language) had ‘the same’ meanings for both parties, (b) that a set of standards was shared by both seller and buyer, (c) that standards were adhered to by the seller, (d) that various legally-mandated quality and safety measures were taken, and (e) some recourse for breach of contract was available.
Given that all contracts are incomplete,48 these were hardly matters to be taken lightly. The result was the creation of a new governance structure, what we call the Tripartite Standards Regime (TSR)49 consisting of standards, certifications, and accreditations. Let us examine each of these in turn.
2.4.1 Standards development organisations
Standards development organisations (SDOs) began to form in the late nineteenth century. Many were initially highly specialised, focused on specific problems found in a given industry. In addition, by the 1930s nearly every industrial nation had a general national SDO, partially the result of mishaps during World War I that were attributable to non-standard parts. However, in the last third of the 20th century, the number and scope of SDOs appears to have expanded, such that nearly every nation on the planet now has a national general SDO and many specialised ones. In the agro-food sector specifications and standards [(a) and (b) above] were delegated to this ever-expanding list of SDOs. These included both specialised and general international organisations established in mid-century [e.g. Codex
47 Contract law is also essential to the ‘success’ of large-scale food animal processing companies in shifting risks and dictating management styles to their suppliers. It has been arguably most successfully used in the broiler industry.
48 Williamson, O.E., 1975. Markets and hierarchies. Free Press, New York, NY, USA.
49 Loconto, A. and Busch, L., 2010. Standards, techno-economic networks, and playing fields: performing the global market economy. Review of International Political Economy 17(3): 507-536.
Alimentarius, International Organization for Standardization (ISO), Organization for Economic Cooperation and Development (OECD)], a few individual buyers large enough to set their own standards,50 as well as a wide range of newly established SDOs including GlobalGAP, COLEACP, the International Federation of Organic Agriculture Movements (IFOAM), the British Retail Consortium (BRC), and Safe Quality Food (SQF). Importantly, these SDOs include industry consortia, private voluntary associations, and quasi-public organisations.51 In short, they blur the distinction between public, state agencies and non-governmental organisations.
2.4.2 Third party certifiers
In the past it was commonplace for relations between buyer and seller to be based largely on the buyer’s trust in the seller and the seller’s expectations for future sales. Moreover, in those instances where the trust was found to be misplaced, it was possible for the buyer to take the seller to court. However, the massive increase in global food trade combined with the withdrawal of the state from direct action posed a new set of problems. A buyer might be in the position of dealing with hundreds of sellers, who could offer goods at lower prices than domestic producers, but all of whom were located in other nations, had considerably different expectations as to quality than the buyer, and were – for reasons of cost, time, and/
or inadequate means for legal redress in that jurisdiction – impossible to bring to court in cases of non-compliance with the terms of a contract. The most common solution to this problem was the introduction of various forms of certification.
This appeared to address points (c) and (d), and to remove the need for (e) above.
There are essentially three forms of certification.52 First party certification occurs when the producer certifies that products meet the standards in question. This works well in the case of products bearing the brand of the first party, since there are reputational issues at play. Second party certification involves the continuous inspection of the delivered product by the buyer. In short, it requires that the buyer police the seller continuously. Finally, third party certification involves the use of an allegedly neutral third party, i.e. not a party to the exchange in question,
50 For example, Wal-Mart is sufficiently large that it can and does specify package sizes for many of the products it stocks.
51 Fulponi, L., 2006. Private voluntary standards in the food system: the perspective of major food retailers. Food Policy 31(1): 1-13.
52 See, for example: Busch, L., Thiagarajan, D., Hatanaka, M., Bain, C., Flores, L.G. and Frahm, M., 2005. The relationship of third-party certification (TPC) to sanitary/phytosanitary (SPS) measures and the international agri-food trade: Final report. Development Alternatives, Inc., Washington, DC, USA.
Deaton, B., 2004. A theoretical framework for examining the role of third-party certifiers. Food Control 15: 615-619.
Gibbon, P. and Ponte, S., 2008. Global value chains: from governance to governmentality? Economy and Society 37(3): 365-392.
Hatanaka, M., Bain, C. and Busch, L., 2005. Third-party certification in the global agrifood system. Food Policy 30(3): 354-369.
Quasi-states? The unexpected rise of private food law
whose job it is to engage in ‘conformity assessment,’ i.e. to determine to what extent the seller’s products conform to the standards upon which an agreement had been reached. Given that the costs of this last form of certification can be imposed on the seller, and that it separated the policing role from that of the seller, it has become the most favoured form of certification worldwide.
It has also given rise to a vast, largely new, industry – that of certification. While certifiers were initially focused on particular industries and many still are, today many certifiers are more than happy to certify across industries. Hence, the largest certifying firms, e.g. Société Générale de Surveillance (SGS), and Det Norske Veritas (DNV), certify everything from food products to steelworks. In contrast, medium and small certifying firms tend to stick with one domain such as food products (e.g. Quality Assurance International, NSF International).
However, the certification industry can hardly be said to be disinterested. Although there is no evidence of widespread fraud or deceit, certifiers find themselves between the proverbial rock and a hard place. Demand for certification services almost always originates with buyers of food products, but it is the firm that is to be certified that pays the certifier. Thus, failing to give a firm a passing score on a certification is tantamount to losing a customer. I return to this dilemma in section 2.5.2 below.
2.4.3 Accreditors
The increased interest by retailers in purchasing only goods certified to a given standard opened a global market for certification services. Initially, virtually anyone could hang out a sign that said that they were a certifier. Indeed, even today in most nations nothing prohibits one from so doing. However, it soon became apparent that some certifiers were more trustworthy than others. To resolve this problem, numerous national accreditation bodies were created; these national bodies range from public agencies to public-private partnerships, to private entities.53 Furthermore, two non-governmental organisations were developed that now accredit the national accreditors. Put differently, they certify (through peer evaluation) that accreditors can be trusted to certify that certifiers do their job correctly.
The International Laboratory Accreditation Cooperation (ILAC) is, as the name suggests, a cooperation among national laboratory accreditors.54 It attempts to ensure that national accreditors employ the same standards of testing, specification,
53 For a recent list, see Donaldson, J.L., 2005. Directory of National Accreditation Bodies. National Institute of Standards and Technology, Gaithersburg, MD, USA.
54 International Laboratory Accreditation Cooperation, Welcome to ILAC, http://www.ilac.org/home.
html.
accuracy, and precision in certifying the competence of national testing laboratories, ensuring that they meet minimum standards. The International Accreditation Forum (IAF), as it notes on its website, ‘is the world association of Conformity Assessment Accreditation Bodies in the fields of management systems, products, services, personnel and other similar programmes of conformity assessment’.55 Importantly, neither of these organisations is a governmental body, although there is little doubt that they engage in governance activities.
2.4.4 The new private governance: TSRs
Together, SDOs, certifiers, and accreditors have formed a TSR, or perhaps more accurately, an assortment of TSRs, which – through markets – collectively govern global production and trade in agrifood and other goods and services. TSRs are perhaps best seen as a plethora of new law-making and enforcing entities. Although participation in a given TSR is nominally voluntary, each TSR produces/enforces its own private (i.e. non-state) codes, laws, rules, standards, specifications, and regulations that are binding on adherents to the TSR. Failure to comply is generally dealt with by market sanctions, by barring access to a particular (and usually lucrative) market. Moreover, TSRs extend beyond the borders of nation-states;
indeed, they are not, at least in principle, geographical in scope. Hence, a given TSR may involve growers in Guatemala, Mexico, and Ghana, supermarket chains operating in Thailand, France, and Canada, and transporters shipping goods from growers’ farms to those supermarkets.
At the same time, it is important to note that all TSRs are ultimately dependent on the state. States provide vital services to TSRs including, most obviously, (1) corporate, contract, intellectual property, and anti-fraud laws, (2) appropriate enforcement mechanisms (beyond market sanctions) such as civil and criminal courts, police, and prosecutors, and (3) international agreements and organisations (e.g. the WTO). Without these state-sponsored and supported institutions, TSRs would be powerless to discipline errant participants.