Agreement on Technical Barriers to Trade

Alka Associate Professor Amity International Business School

Tariff Vs. Non - Tariff Barriers

%

1947

2004

Differences Between SPS and TBT Measures

TBT measures typically deal with: labelling of composition or quality of food, drink and drugs quality requirements for fresh food volume, shape and appearance of packaging packaging and labelling for dangerous chemicals and toxic substances, pesticides and fertilizer regulations for electrical appliances regulations for cordless phones, radio equipment etc. textiles and garments labelling testing vehicles and accessories regulations for ships and ship equipment safety regulations for toys etc.

SPS or TBT ?
Which agreement does a measure come under Is its objective to protect one of these ?
Human Health Animal Health Plant Life A Country

Yes
Is it a technical regulation a standard, or a procedure for assessing whether a product conforms with a technical requirement ?

SPS TBT

NO

SPS or TBT ?
Containers for shipping grain Fumigation, disinfectant, etc. to prevent disease spreading SPS Size, construction/structure, safe handling TBT Fruit Treatment of imported fruit to prevent pests spreading SPS Quality, grading and labelling of imported fruit TBT Bottled water: specifications for the bottles Materials that can be used because safe for human health SPS Requirement that no residues of disinfectant, so water not contaminated SPS Permitted sizes to ensure standard volumes TBT Permitted shapes to allow stacking and displaying TBT

Technical Barrier to Trade

Technical Regulations Vs Standards

Agreement on TBT
Recognises the importance of international standards and conformity assessment system Encourages the development of such international standards and conformity assessment systems Ensures that such regulations and standards do not create unnecessary obstacles to international trade

Conformity assessment procedures

Technical procedures to be followed such as testing, verification, inspection and certification

Technical Regulations Vs Standards

The difference between a standard and a technical regulation lies in compliance.
technical

regulations
are by nature mandatory

conformity
with standards is voluntary

If an imported product does not fulfil the requirements of a technical regulation, it will not be allowed to be put on sale.

If an imported product does not fulfil the requirements of a technical regulation, it will not be allowed to be put on sale.

Objectives
Protection of human safety or health Protection of animal and plant life or health Protection of the environment Prevention of deceptive practice
protect consumers through information, mainly in the form of labelling requirements

Agreement on TBT : Principles

Avoidance of unnecessary obstacles to trade Non-discrimination and national treatment
Both for Technical regulations and conformity asssessment procedure

Harmonization
the International Standardization Organization (ISO) the International Electrotechnical Commission (IEC) International Telecommunication Union (ITU)

Need for Agreement on TBT

Divergent regulations costs for exporters Loss of economies of scale
diverse technical requirements in individual markets, production costs per unit are likely to increase

Conformity assessment costs

testing, certification or inspection by laboratories or certification bodies, usually at the company's expense.

Information costs
evaluating the technical impact of foreign regulations, translating and disseminating product information, training of experts, etc.

Surprise costs
adjustments costs, if confronted with new regulations.

Agreement on TBT : Flexibility

The TBT Agreement takes into account the existence of legitimate divergences of taste, income, geographical and other factors between countries. For these reasons, the Agreement accords to Members a high degree of flexibility in the preparation, adoption and application of their national technical regulations.

 preparation, adoption and application of different technical regulations and conformity assessment procedures vary from country to country
countries with areas prone to earthquakes might have stricter requirements for building products countries facing serious air-pollution problems might want to impose lower tolerable levels of automobile emissions. High levels of per capita income in relatively rich countries result in higher demand for high-quality and safe products.

Few Examples
Australia - new draft bill regulating the appearance and features of tobacco packaging. According to the draft legislation, all tobacco products sold in Australia would have olive-coloured plain packaging as of 1 July 2012 No logos or brand images would be permitted on the packaging The product brand name would appear in uniform font on the front, top and bottom of the package graphic health warnings would continue to be displayed.

 Fourteen Members raised trade concerns with Australias measure not provided sufficient scientific evidence linking tobacco plain packaging to a reduction in tobacco consumption Australia - eliminate one of the last remaining forms of tobacco advertising: packaging

The Technical Barriers to Trade Agreement (TBT) tries to ensure that Regulations Standards testing and certification procedures

do not create unnecessary obstacles.

Technical Barrier to Trade

National Standards which try to restrict trade EU Sardine Case

EC Sardines (2002) This dispute concerns the name under which certain species of fish may be marketed in the European Communities.

Adopted by the Council of the European Communities on 21 June 1989 and became applicable on 1 January 1990.

Article 2 of the EC Regulation:

Only products meeting the following requirements may be marketed as preserved sardines and under the trade description referred to in Article 7:
they must be covered by CN codes 1604 13 10 and ex 1604 20 50; they must be prepared exclusively from fish of the species "Sardina pilchardus Walbaum";

Only products prepared exclusively from fish of the species "Sardina pilchardus Walbaum may be marketed as preserved sardines in the EC;

Peru

Peru exports preserved products prepared from Sardinops sagax sagax ("Sardinops sagax").
Is Regulation in EU correct?

Is it a technical regulation?

Technical Regulation

Document which lays down product characteristics or their related processes and production methods, including the applicable administrative provisions, with which compliance is mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a product, process or production method.
TBT Agreement, Annex 1, para 1

Why TBT Agreement

rules, guidelines or characteristics for products or related processes and production methods (provided for common and repeated use)

TBT Agreement
TBTA treats standards separately (voluntary) TBTC has focused on technical regulations (mandatory) TBTA disciplines standardizing bodies (4, CGP)

TBTC decided, in Nov 2000, on principles for international standardizing bodies

Differences Between SPS and TBT Measures

SPS measures typically deal with: SPS measures typically deal with additives in food or drink contaminants in food or drink toxic substances in food or drink residues of veterinary drugs or pesticides in food or drink certification: food safety, animal or plant health processing methods with implications for food safety labelling requirements directly related to food safety plant/animal quarantine declaring areas free from pests or disease preventing disease or pests spreading to or in a country other sanitary requirements for imports (e.g. imported pallets used to transport animals)

Special and differential treatment

Implementing and enforcing international standards may require technical and financial resources beyond the capabilities of developing countries. The TBT Agreement eases the impact of certain provisions whose full application would not be compatible with developing country Members' development, financial and trade needs. technological and socio-economic conditions, developing country Members may adopt technical regulations, standards or test methods aimed at preserving indigenous technologies and production methods and processes compatible with their development needs Finally, developing country Members may request international standardizing bodies to examine the possibility prepare international standards for products of special trade interest to them.

Agreement on TBT : Equivalence

process for preparing international standard can be lengthy and costly. Reaching consensus on technical details can take several years. The time gap between the adoption of an international standard and its implementation by national regulators can also be significant. For these reasons, negotiators introduced in the TBT Agreement a complementary approach to technical harmonization, known as equivalence. Technical barriers to international trade could be eliminated if Members accept that technical regulations different from their own fulfil the same policy objectives even if through different means.
high auto emission levels - cars be equipped with a catalytic converter OR use of diesel engines in motor vehicles

Agreement on TBT : Mutual recognition

Costs of multiple testing
Members to enter into negotiations with other Members for the mutual acceptance of conformity assessment results

Agreement on TBT : Transparency

Notifications of Technical regulations and conformity assessment procedures Enquiry Points

Agreement on TBT : Code of Good Practices (CGP)

The Code of Good Practice, contained in Annex 3 of the WTO TBT Agreement provides disciplines, including those related to transparency, for the preparation, adoption and application of standards by all central governmental, local government, nongovernmental and regional standardizing bodies.

Agreement on TBT : Technical Assistance

The coverage of technical assistance ranges from the preparation of technical regulations establishment of national standardizing bodies to the participation in international standardizing bodies and the steps to be taken by developing country

United States Measures Affecting the Production and Sale of Clove Cigarettes
On 7 April 2010, Indonesia requested consultations with the United States with respect to a provision of the Family Smoking Prevention Tobacco Control Act of 2009 that bans clove cigarettes. Indonesia alleged that Section 907, which was signed into law on 22 June 2009, prohibits, among other things, the production or sale in the United States of cigarettes containing certain additives (such as clove, strawberry, grape, orange, cinnamon, pineapple, vanilla, coconut, liquorice, cocoa, chocolate, cherry, or coffee), but does not prohibit regular or menthol cigarettes, but would continue to permit the production and sale of other cigarettes, including cigarettes containing menthol. Indonesia alleged that Section 907 is inconsistent

 Indonesia is the world's main producer of clove cigarettes, and the vast majority of clove cigarettes consumed in the United States prior to the ban were imported from Indonesia. Indonesia's main claims were that the ban on clove cigarettes is discriminatory, and that it is also unnecessary. Indonesia further claimed that the United States acted inconsistently with a number of procedural and/or other requirements under the TBT Agreement

 In one of its key findings, the Panel found that the ban is inconsistent with the national treatment obligation in Article 2.1 of the TBT Agreement because it accords clove cigarettes less favourable treatment than that accorded to menthol-flavoured cigarettes.