FUND FOR RESEARCH INTO INDUSTRIAL DEVELOPMENT, GROWTH & EQUITY

ISO Type 1 Eco-Labels

Global Review of Eco-Labels: Implications for South Africa

PHASE TWO REPORT

January 2003

Trade Implications for South Africa of Foreign Eco-Labelling Schemes: A Socio-Economic Assessment

Methodology

In meeting the above objectives, this report undertook a detailed analysis of trade flows between South Africa and the EU, as well as analysing the potential implications for local businesses in complying with the labelling criteria of the different product categories for the EU Eco-label.

The assessment of the EU Eco-labels was based on the detailed criteria that are contained in the relevant Decisions of the European Commission. These Decisions are listed in Appendix 5, along with a detailed summary of their key requirements.

The analysis of trade flows between South Africa and the EU was undertaken using data based on the internationally accepted Harmonised System (HS) nomenclature. While the FRIDGE study makes use mostly of data based on the Standard Industrial Classification (SIC), there are some concerns with regard to its reliability and comparability in that it uses Statistics Canada data as contained in the World Trade Analyser (WTA) database. A number of adjustments have been performed on that data, and there is also a significant risk of inaccuracies (fluctuating exchange and inflation rates etc.) owing to the fact that the data is originally reported in US dollars. There are numerous advantages with regard to undertaking the detailed trade analysis using HS data, including but not limited to the following:

• The SIC data used by the NTB report is outdated (1998)
• The South African Revenue Services (SARS) and the Department of Trade and Industry (DTI) publish the aggregated trade data based on HS codes (SIC data published to a limited extent, but is rarely disaggregated)
• SIC data that is available from Statistics South Africa is of little use for this project, since it is unavailable in a readily usable form, has limited coverage with regard to the purposes of this project, and is frequently very outdated. SIC classifies establishments by their primary type of activity, and records economic data on that basis.
• HS data is specifically geared toward capturing trade flows between countries, and is recorded by countries in a disaggregated format.
• HS data is widely used by all the world's major trade countries
• HS data is readily available to the researchers on a disaggregated (4-digit) level right up to early 2002
• HS data has found increasing application and benefit in South Africa due to its international compatibility (and statistical harmonisation), and enjoys high levels of integrity and thus reliability

In addition to this analysis of primary data, a brief literary review was undertaken. Details of the key sources are provided in the bibliography.