31 - Nepal: exports of ayurvedic herbal remedies and SPS issues

Summary

The problem in context

When his company received a hefty order from a Swedish importer in August 2000, Prem Raj Tiwari rejoiced with much enthusiasm at a relatively big business deal. The single largest export order the company ever had for ayurvedic products – processed medicinal herbs – had strengthened his aim of reviving the company's languishing export trade by cashing in on the flourishing world demand for herbal products. But Tiwari's enthusiasm was soon dashed when he received an e-mail from hisNarkayrd-based Swedish counterpart withdrawing the order. The mail stated that the company's product samples did not pass the ‘satisfactory and sufficient’ sanitary and quality standard tests for access to the Swedish market. Moreover, Tiwari was astonished to learn of the requirement for a certificate of good manufacturing practices (GMP) for each consignment.

Until this incident, Tiwari had not been aware of the requirements for such a specific test and the GMP certificate in order to be able to export the company's products. The GMP is a system of quality assurance and quality control not only for the products themselves but also for the pre- and post-manufacturing processes to ensure sanitation and the minimization of the risks inherent in food and medicinal production, processes which cannot be assessed by only testing the final products.

Tiwari's company, the Gorkha Ayurved Co. – a joint venture between Nepalese and French investors – had gained about 6% of the domestic market for herbal products.