Professor Dr' M' Hilf Summer 2003

1
Professor Dr. M. Hilf Summer 2003

• Introduction to the GATT/WTO Legal System
• Section 3
• Goods Rules on Non-Tariff Measures (NTMs) SPS,
  TBT

2
Sect. 3 Goods Rules on NTMs

• Technical barriers to trade
• Sanitary and phytosanitary measures
• Customs and trade administration (cf. Sect. 1,
  slide 15)
• Customs valuation
• Rules of origin
• Pre-shipment inspection
• Import licensing

3
TBT Why an Agreement?

• High and rising number of technical regulations
  and standards
• Impact on international trade rise of
  transaction costs
• From the plurilateral Tokyo Round Standards Code
  (1979) to the WTO TBT Agreement

4
TBT Definitions

• Technical regulations and standards set out
  specific characteristics of a product, e.g.,
  size, shape, function, labelling.
• Difference between a technical regulation and a
  standard
• technical regulation voluntary, no obstacle for
  market access
• technical standard compliance precondition for
  market access
• Conformity assessment procedures, e.g., testing,
  verification, inspection possible additional
  protective tool

5
TBT Objectives and Examples

• Protection of human safety or health Seat belt
  requirement in cars sockets with protection from
  electric shocks
• Protection of the environment, animal and plant
  life or health re-cycling requirements, max.
  level of motor emissions, min. fish length for
  commercial fishing
• Prevention of deceptive practices labelling
  requirements
• Other objectives quality (e.g., min. fruit
  size), technical harmonisation, trade facilitation

6
TBT Divergent regulations - costs for exporters

• Loss of economies of scale increase of
  production cost per unit
• Conformity assessment costs
• Information costs
• Adjustment costs after change of regulations

7
TBT Principles

• Avoidance of unnecessary obstacles to trade
• Non-discrimination and national treatment
• Harmonization
• Equivalence of technical regulations and mutual
  recognition of conformity assessment procedures
• Transparency

8
TBT Avoidance of unnecessary obstacles to trade

• What are the sources of technical barriers to
  trade?
• Different technical regulations because of
  divergences in taste, income geographical factors
  among countries
• flexibility that TBT accords to Members (preamble
  TBT) limited by the requirement of avoiding
  unnecessary obstacles to trade (Art. 2.2 TBT)
• Regulations shall not be more trade-restrictive
  than necessary to fulfil the legitimate objective
  (Art. 2.2, 2.8 TBT)
• TBT provisions on conformity assessment
  procedures (Art. 5 TBT)

9
TBT Non-discrimination and national treatment

• MFN and NT requirement
• Technical regulations Art. 2.1. TBT
• Conformity Assessment Procedures Art. 5.1.1 TBT

10
TBT Harmonization (1)

• Lack of technical compatibility generates
  barriers to trade (e.g., colour TV formats,
  right-/left-hand drive)
• Consumers' benefits harmonisation enables
  competition

11
TBT Harmonization (2)

• Harmonisation efforts outside WTO ISO, IEC, ITU
• TBT Agreement encourages Members to use existing
  international standards unless use would be
  ineffective or inappropriate (Art. 2.4 TBT)
• Participation in international standardizing
  bodies (Art. 2.6, 5.5)
• Special and differential treatment (Art. 12 TBT)

12
TBT Equivalence

• What is equivalence?
• Complementary approach to harmonisation (Art.
  2.7 TBT, cf. ECs new approach to
  standardisation, 1985)
• How does equivalence work?
• Mutual recognition of different means to achieve
  a regulatory objective and of conformity
  assessment procedures (Art. 6.3 TBT)

13
TBT Transparency

• Obligation to notify national standards and
  conformity assessment procedures
• Non-existence of or divergence from international
  standards, and
• significant trade effect of national regulation
  (Art. 2.9, 5.6 TBT)
• Code of Good Practice to co-ordinate work of
  standardising bodies (Annex 3 TBT)
• National enquiry points (Art. 10 TBT)
• The Committee on Technical Barriers to Trade
  (Art. 13 TBT)

14
EC-Hormones Case (WT/DS 26, 48 adopted 13/2/1998)

• In the USA, certain hormones are legally
  administered to cattle to fasten their growth.
  Contrary to international recommendations of the
  Codex Alimentarius Commission, the EC holds that
  the consumption of such hormones poses a threat
  to human health. In the EC, these hormones are,
  therefore, prohibited and beef containing such
  hormones must not be imported. The EC bases its
  decision on its sovereign right to decide over
  the appropriate level of protection and a wide
  interpretation of the precautionary principle as
  a rule of customary international law.
• The USA contained, inter alia, a violation of
  Art. 3.1 and 5.1 SPS. Furthermore, the
  precautionary principle in Art. 5.7 SPS could not
  justify an import ban because the measures were
  founded on inconclusive scientific evidence.

15
SPS Introduction

• SPS Agreement and Agreement on Agriculture are
  complementary
• SPS lex specialis to TBT and Art. XX (b) GATT
• SPSObjectives
• Preserve Members' rights but
• Reduce arbitrariness

16
SPS Definitions

• sanitary relating to human and animal
  health
• phytosanitary relating to plant health

17
SPS Scope

• All measures aiming at food safety and animal and
  plant health protection (no restrictions as to
  the type of measure, i.e., products, processes,
  and production methods covered)
• not measures to protect the environment per se
  and animal welfare
• Case 1 Protection from risks arising from food
  additives, toxins etc.
• Case 2 Protection of human life from plant- and
  animal carried diseases
• Case 3 Protection of animals/plants from
  introduction of pests etc.
• Case 4 Protection of a country from damage
  caused by a pest
• Examples for measures process/product criteria,
  labelling, certification

18
SPS Main features

• Harmonization
• Equivalence
• Risk assessment
• Transparency

19
SPS Harmonization (Art. 3 SPS)

• Definition Establishment of national SPS
  regulations consistent with international
  standards
• The Three Sister standard-setting Organisations
• FAO/WHO Codex Alimentarius
• Office International des Epizooties (OIE)
• International Plant Protection Convention (IPPC)
• Use of international standards

20
SPS Equivalence (Art. 4 SPS)

• Different ways of reducing risk
• bilateral or regional mutual recognition
  agreements in the absence of international
  standards
• Burden of proof of equivalence rests with
  exporting country

21
SPS Risk assessment (Art. 5 SPS)

• Justification of SPS measures
• if compliant with international standards (Art.
  3 SPS) or
• if scientific evidence on the basis of risk
  assessment according to Art. 5 SPS is available
  (Art. 3.3 SPS)
• Consistency in risk management decisions
• Selection of an SPS measure
• Exceptions preliminary precautionary measures
  without scientific evidence (Art. 5.7 SPS)

22
SPS Transparency

• National Notification Authority
• National Enquiry Point
• Notification of changes in SPS measures (Art. 7
  SPS)

23
SPS Dispute settlement

• Unified WTO dispute settlement procedures
• Technical and scientific advice, e.g., from
  standard-setting bodies
• Alternative dispute settlement procedures of,
  e.g., IPPC or NAFTA
• Cases

24
SPS The Committee

• Role
• Regular tasks
• Reviewing implementation
• Checking compliance
• Specific tasks
• Monitoring the harmonization process
• Drafting guidelines on consistency
• Liaison and coordination
• Recommendations on the future of the Agreement

25
EC-Hormones Case (WT/DS 26, 48/AB/R adopted
13/2/1998)

• The Panel held that the import ban was not based
  on international standards (Art. 3.1 SPS) because
  Codex Alimentarius recommendations were not met.
  Furthermore, the EC failed to conduct proper risk
  assessment according to Art. 3.3, 5.1 SPS as the
  EC could not bring forward compelling scientific
  evidence for the potential health risks of growth
  hormones.
• The AB reversed the decision on Art. 3.1 SPS.
  Art. 3.1 SPS does not oblige WTO-Members to
  adhere to Codex Alimentarius Standards. Under
  SPS, no obligation to harmonise national
  standards yet exists.
• As to Art. 5.1., the AB upheld the Panels
  decision. Even though the AB lowered the
  requirements for risk assessment, the ECs
  evidence for the hormoneshealth risk was still
  insufficient.