5. Discourse and Status: ALLEGATION AND IN PROGRESS

Experts in the vanilla industry identify quality as the key feature for the trade of this commodity. Despite the absence of a particular dispute regarding vanilla from the agenda of most multi-lateral organizations, an emerging trend of using alternative products to natural vanilla foreshadows potential disputes. Indeed, with the increasing use in developed countries of synthetic vanilla, also known as “vanillin,” a legal issue might arise within the current framework of the World Trade Organization (WTO), particularly under the Agriculture Negotiations (Get more).

6. Forum and Scope: MADAGASCAR AND UNILATERAL

Vanilla producing countries are mainly developing countries and small island states, most of which lack of resources, economies of scale and are vulnerable to environmental problems. The Uruguay and Doha rounds in the WTO framework address this group of nations with specific “special and differential treatments.” For example, under the Uruguay round recommendations, developing countries have flexibility in committing to the WTO regulations regarding agriculture commodities.

The propensity of developing nations to regroup in order to maximize their interests in the framework of the WTO has been an important element in fostering support from developed nations for these special treatments in favor of nations in the South. The Cairns Group, for example, includes many WTO members both from developed and developing countries. At the same time, the rise of regional blocks such the COMESA in southern Africa, a group that aims at maximizing trade within their region, becomes an important asset for developing nations to succeed in the WTO negotiations.

(Find Law that covers vanilla in Madagascar)

7. Decision Breadth: 1 (MADAGASCAR)

If developing countries are being treated differently from most of the WTO members on the agriculture agenda, trade of commodities such a vanilla that are vital to their economies should have a special provision that would guarantee the quality of vanilla. In recent years, the price of vanilla and the prospects of increasing revenues of developing countries have led to the emergence of several vanilla producing countries such as Uganda, India, Mexico, Papua New Guinea, posing a threat to the vanilla from Madagascar and the Comoros, which is said to have a better quality.

8. Legal Standing: LAW

This leads to some concerns including the competition that vanilla faces with cheap synthetic products such as synthetic vanillin and other “natural flavours.” In absence of specific regulations, this could have serious consequences on vanilla producers in the future. As one analysis concludes, “Despite regulations which currently restrict replacement by synthetic products, biotechnology is also threatening all or part of the world vanilla market - assuming that legislation concerning the use of the word "vanilla" develops and consumers are prepared to accept the new products proposed. The issue of quality was also raised specifically in the USA, one of the two main vanilla consumers, in trade issues with Mexico. Indeed, it is believed that vanilla extract from Mexico can have tonka bean extract added. The tonka bean extract smells like vanilla, but contains coumarin, a substance banned by the US Food and Drug Administration (FDA) as a food additive after studies showed a link between coumarin and liver and other organ damage. Get more on these two sections Given that Madagascar and the Comoros are members of the Africa, Caribbean and Pacific (ACP) group, thus benefiting special trade preferences through the European Union market, and given the specific quality of its vanilla (different from the Mexico’s vanilla), the quality of their vanilla should be protected.

Similar Cases in International Disputes

There have been no disputes at the WTO regarding vanilla. However, few disputes on agricultural commodities provides some lessons to learn if any disputes concerning the quality of vanilla is to be raised. The WTO disputes include the following: IMPORT PROHIBITION ON CANNED TUNA WITH SOYBEAN OIL- Introduced by Thailand against EGYPT: Under the General Agreement on Tariffs and Trade 1994 (GATT), and Article 11 of the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement), the dispute was about the prohibition imposed by the Arab Republic of Egypt on importation of canned tuna with soybean oil from the Kingdom of Thailand.   CERTAIN MEASURES PREVENTING THE IMPORTATION OF BLACK BEANS FROM NICARAGUA-Introduced by Canada against MEXICO: Under the General Agreement on Tariffs and Trade 1994 (GATT), and Article 11 of the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement), and Article 6 of the Agreement on Import Licensing Procedures, Article XXII of the General Agreement on Tariffs and Trade 1994 and Article 4 of the DSU, the dispute was about certain measures preventing the importation of black beans from Nicaragua.

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: Africa

b. Geographic Site: East Africa

c. Geographic Impact: Madagascar

10. Sub-National Factors: NO

11. Type of Habitat: Tropical

IV. Trade Clusters

12. Type of Measure: CULTURE

There are no known WTO disputes on vanilla or claims of Cultural Geographic Indicators for this product. However, vanilla from Madagascar, according to the European Commission, got a "national label of origin and quality" that is to be registered at the international level. Trade of vanilla falls under the Harmonized Commodity Description and Coding System (Harmonized System or H.S.-# AND DESCRIPTION). Vanilla trade is also covered under TRIPs because artificial vanilla produced in developed countries might close the global market to the South.

13. Direct v. Indirect Impacts: INDIRECT

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product YES, Products that use vanilla
b. Indirectly Related to Product : YES, Vanilla
c. Not Related to Product : NO
d. Related to Process : YES, Deforestation, Habitat Loss

15. Trade Product Identification: Vanilla

16. Economic Data

A major component of the labor force in Madagascar and Comoros is found in the agricultural sector. In 2000, the vanilla production line in Madagascar employed about 20,000 growers and 5,000 producers. Although we lack data to estimate the population involved in vanilla production in the Comoros, a significant portion of the more than 70% of the active population which works in rural areas, is active in the production of vanilla, one of the country's two export crops. Labor force and industry output for the two countries are summarized below. In both countries, vanilla export is monopolized by the government and the associations of vanilla exporters. Likewise, the government sets the final prices, both for the green bean and the final product. Vanilla export represents a large portion of government revenues, thus monitoring vanilla production and vanilla trade in the world became some of the priorities of the governments of Comoros and Madagascar. Policy makers of these countries recognize the effects that a cyclone or a disease on vanilla in disrupting the social safety nets in these developing countries. Yet, all actors in the vanilla production are equally concerned by the increasing use of synthetic vanilla in the industrialized world. Additional concerns have also been raised from emerging cooperatives of vanilla farmers. These particularly address fairness on the price of green and processed vanilla to the farmers. Indeed, in a move to improve fair-trade in the industry, farmers have been organizing and getting support from union activists in vanilla import countries. For example, COVADEC ( Coopérative de Vanille des Comores) a vanilla cooperative that claims about 400 members in the Comoros has been receiving support from the Confederation Francaise Du Travail (CFDT), a French workers union based in the North-Western city of Dunkerque (source: http://asso.nordnet.fr/aice/pour_un_monde_solidaire.htm).

Production of green vanilla beans in the Comoros between 1997 and 2000 decreased from 815 tons to 685 tons while export of processed vanilla although reached a spike of 184 tons in 1999, declined to 159 tons in 2000.

Source: Economist Intelligence Unit 2003

Export of vanilla in Madagascar, on the other hand shows an increasing trend in vanilla production.

Source: “IMF-Madagascar-Selected Issues and Statistical Appendix, December 2002,”via: http://www.coi-info.org/francais/quest.asp

Source: “Global Spice Markets: Imports-1996-2000” International Trade Centre UNCTAD/WTO

Source: “IMF-Comoros-Recent Economic Developments-December 2001 ,” via: http://www.coi-info.org/francais/quest.asp

Source: “IMF-Madagascar-Selected Issues and Statistical Appendix, December 2002,” via: http://www.coi-info.org/francais/quest.asp

Population Data

Source: World Bank: http://www.worldbank.org/data/countrydata/aag/mdg_aag.pdf

Population Data

Source: World Bank, http://www.worldbank.org/data/countrydata/aag/com_aag.pdf

17. Impact of Trade Restriction: LOW

According to the WTO, Madagascar has liberalized its trade regime in recent years with a trade policy framework essentially based on tariffs. In addition, export restrictions have been eliminated. Although this category seems to be absent in the vanilla production and trade, few elements are noteworthy. The Madagascar's share in the international market of vanilla during the past 20 years has fallen due to policies of increasing export prices and excessive taxation by the Government of Madagascar. This, according to policy-makers has resulted in an increased impoverishment of the workforce and a constant price fluctuation. Accordingly policy-makers and Western donors initiated a set of reforms by 1999 geared at liberalizing the vanilla market. The rise in recent years of vanilla robbery and smuggling in Madagascar has resulted in tax evasions (via neighboring islands such as Reunion and the Comoros) and the loss in quality of green vanilla beans. Experts contend that government's failure to control this smuggling also has effects on the vanilla price in the international market. A final concern is the competition that vanilla faces with cheap synthetic products such as synthetic vanillin and other "natural flavours." In absence of specific regulations, this could have serious consequences on vanilla producers in the future. As one analysis concludes, ", “Despite regulations which currently restrict replacement by synthetic products, biotechnology is also threatening all or part of the world vanilla market - assuming that legislation concerning the use of the word "vanilla" develops and consumers are prepared to accept the new products proposed.” [see Note]

18. Industry Sector: Foods [FOOD]

 

 

19. Exporters and Importers: MADAGASCAR and MANY

Case Exporters : Madagascar, Comoros, and emerging producer countries in
Africa and Asia.

Case Importer : USA and Europe

Leading Exporters (US $): See tables

Leading Importers (US $): See tables

V. Environment Clusters

20. Environmental Problem Type: CULTURE

Thanks to a favorable maritime tropical climate, the islands of the South-Western part of the Indian Ocean are home of some of the expensive spices in the world. For example, in addition to vanilla, Ylang-Ylang, a flower whose extract is used in perfumes, is the second labor-intensive and expensive cash crop of these islands. When market forces encourage export, these crops can sometimes represent an important income for farmers who engage in the vanilla production line. Yet, the geographic location of the islands has also some inconveniences that impact on the production of these crops. The region is home of cyclones, cyclonic winds and strong rainy seasons. For example, in 2000, cyclone Hudah hit Madagascar and destroyedmore than 20 percent of its vanilla crop and the beans that were in storage. This resulted in the sky-rocketing of the price vanilla in the world market. Cyclones are frequent in that region of the Indian Ocean, thus producers are constantly faced with the danger of loosing their precious commodity. Some vanilla experts also blame global warming as having a direct impact on the climatic changes in the region (get more). The curing process, which consists of heating the vanilla beans in hot water for three minutes at a particularly selected temperature of 65 degrees Celsius is the phase that engenders the most environmental devastation in these countries. Wood is the main source of energy and trees from the primary rainforest are the most exposed to deforestation. Years of tree cutting and the failure to develop alternative sources of energy, such as using heavy fuel burners, have led to the use of coconut palm trees in the vanilla production. Indeed, the envelope of the dry coconut (more) is highly volatile and producers have found in it a cheaper and better source of energy.

21. Name, Type, and Diversity of Species

Bourbon vanilla: named after the islands in the Western Indian Ocean comprised of Reunion, Mauritius, Madagascar, and the Comoros. Similar to Mexican vanilla.

Tahitian vanilla Scientific Name

Mexican vanilla: from the birth place of vanilla

22. Resource Impact and Effect: LOW and PRODUCT

Cyclones are frequent in that region of the Indian Ocean, thus producers are constantly faced with the danger of loosing their precious commodity. As a result of a cyclone in 2000, the price of vanilla in the world market has the sky-rocketing since then. Vanilla growing does not requires the clearance of virgin land because it needs shade and is usually inter-planted among others crops such as coffee and bananas (source VSurvey). However, years of tree cutting and the failure to develop alternative sources of energy, such as using heavy fuel burners, have led to the use of coconut palm trees in the vanilla production. The process is putting more pressure of impoverished populations whose diet is heavily dependent on coconut (see more under "culture" below). The emergence of a "disease" that hits coconut palm trees especially in the Comoros [2] is also hitting the vanilla beans. As a result the quality of vanilla beans is decreasing, coconut trees are diseappearing since the disease also destroys the protective vegetation around coconut trees.

© Ya.Ha.Na. SARL

23. Urgency and Lifetime: LOW and SEVERAL YEARS

Research about the vanilla "disease" is only starting and its outcome remains uncertain since resources for conducting such researches are scarce.

24. Substitutes: LIKE PRODUCTS

There is a noted increase in the use of cheap synthetic products such as synthetic vanillin and other “natural flavours” as substitutes to vanilla. However, the issue of quality is being raised by both vanilla industries and consumers in most vanilla consuming countries [3].

VI. Other Factors

25. Culture: YES

In the Comoro Islands and Madagascar, where vanilla is one of the main cash crops, the labor-intensive industry of vanilla involves both men and women. In the French colonial times, a vanilla producer typically consisted of someone of a high social status, who had ties with the local elite and the colonial administrators, and who easily accessed to bank loans that enabled him/her start the vanilla business. Another condition for that person was to have a large piece of land where processed vanilla beans had to be dried for months before they could be consumed and packed for export. A final condition was to have the necessary storage capacity for the processed beans.

The various phases involved in the production of vanilla beans include growing, picking, curing, drying, and sorting. Most stakeholders, from vanilla gowers to exporters, are all involved at one or more of the stages.

26. Trans-Boundary Issues: NO

The harvesting season of green vanilla usually takes place during the cool and dry season between May and September in Madagsacar and the Comoros. Months prior to the picking season peasants spend many nights in their plantations watching after their vanilla. Indeed, due to the high cost of vanilla, robbery has grown in recent years and some growers, for example in Madagascar, started to brand their individual green beans, by pricking them with a pin [4] with the marking remaining on the dried beans. The theft problem also highlighted another issue with the early picking of the green beans. The green vanilla bean looses its quality when picked too early before its maturation. This, together with the discovery of a mysterious disease that hit vanilla, can have a repercussion on the overall economic revenues and can be devastating for the vanilla producing countries. For example, the Comoros' vanilla production has plummeted from 200 tons in 1994 to 100 tons in 2002.

27. Rights:

TRIPs:

Vanilla is covered under the TRIPs agreement (How?). However, TRIPs also covers trade in agriculture and life forms which bears heavily on sustainable development. However, agricultural research and innovation, mainly in the North, have found new techniques which enable Northern firms to artificially produce southern export goods such as vanilla, which is favoring developed countries from the North and closing the market from the South.

European Union's framework:

The European Union encourages diversity in agricultural production, protect them from misuse and imitation, and help consumers by informing them on the specific characters of the products under the EU's PDO, PGI, and TSG. Given that Madagascar is member of the Africa, Caribbean and Pacific (ACP) group, thus benefiting special trade preferences through the European Union market, and given the specific quality of its vanilla (different from the Mexico's vanilla) can Madagascar claim an CGI claim?

28. Relevant Literature

The research uses a wide range of documents from various web sites including the WTO, World Bank, USTR, European Union, FAO, The Coalition for Intellectual Property Rights, The Indian Ocean Commission. It also draws input from interviews by government officials and professional officers in the vanilla industry.

Notes:

[Note] on Section 17:“Vanilla: an endangered flavouring” African News Service - Bulletin d'Information Africaine, ISSUE/EDITION Nr 348 - 15/06/1998, accessible at http://www.peacelink.it/anb-bia/nr348/e02.html