EU's Shift to 'Compliance Regime' Poses Potential Burden on Indian Organic Exports

The European Commission has recently released a draft note outlining its plan to implement rigorous measures starting in January 2025 to ensure compliance with organic product standards in third world countries.

This decision comes as a response to the Commission's observation that certain governments in various countries had relaxed regulations during the Covid-19 pandemic, leading to concerns about the accreditation bodies' ability to guarantee the compliance of these products. While this move aims to strengthen the integrity of organic products, it raises concerns about the potential impact on certification costs in countries such as India. In the fiscal year 2021-22, India exported over $300 million worth of organic products to the European Union (EU), and the new regulations could potentially increase the expenses associated with obtaining certifications.

The draft amendment issued by the Commission focuses on specific procedural requirements for the recognition of governing authorities and bodies responsible for conducting inspections on certified organic operators and groups of operators, as well as on organic products originating from third countries. The amendment also outlines certain requirements related to their supervision. The Commission emphasized that the relaxation of national measures in response to the pandemic had negatively impacted the ability of accreditation bodies and competent authorities to conduct witness audits required for recognition by control authorities and control bodies under the compliance regime. To facilitate a smooth transition and prevent trade disruptions, the validity period of the witness audits will end in December 2023.

In a previous audit report on India conducted by the EU in November, it was acknowledged that the country had established a comprehensive structure with all the necessary elements for controlling organic products, including a sophisticated IT system for supervising controls and ensuring traceability.

However, the report also identified several weaknesses in the supervision and implementation of controls at various levels, citing non-compliance with the National Programme for Organic Production (NPOP) at producer groups and poor quality of inspections. The Agricultural and Processed Food Products Export Development Authority (APEDA) under the NPOP regulates the quality standards for the export of organic products and is recognized by the EU as equivalent for certain products. The proposed shift from a process certification to a product authenticity regime by the EU is seen by some experts as a significant change that could disrupt the organic agriculture ecosystem.

S Chandrasekaran, a trade policy expert, expressed concerns about the potential increase in costs for exporters and emphasized the need for confidence-building measures to achieve a bilateral understanding, particularly considering the EU audit report's mention of lax enforcement and supervision mechanisms within APEDA.

The current rules and procedural requirements in the EU came into effect on January 1, 2022, and are set to expire on December 31, 2024. To ensure a smooth transition and avoid trade disruptions, the Commission has proposed temporarily extending the period within which witness audits may be carried out before their submission by control authorities and control bodies applying for recognition under the compliance regime. Control authorities and control bodies can commence operations under the compliance regime only upon receiving recognition from the Commission. The Commission aims to establish a timeframe for notifying the Commission of the updated technical dossier, including new witness audits conducted based on their performance under the compliance regime.

However, they also raise concerns about potential cost burdens on exporters, especially in countries like India. As stakeholders assess the implications and work towards compliance, it remains essential to strike a balance between ensuring product authenticity and supporting the export market's sustainability.