MINISTRY OF EDUCATION AND TRAINING DA NANG UNIVERSITY OF ECONOMICS REPORT INTERNATIONAL ECONOMICS WTO Agreement on Technical Barriers to Trade (TBT) Supervisor Phạm Hồ Hà Trâm Class 46K01 1 Group 1 Da Nang, November, 2022 Table of Content Abstract 3 1 Overview of TBT 3 1 1 Definition 3 1 2 Three categories of TBT measures 3 1 3 Purposes 4 1 4 Scope 5 2 Notifications of technical regulations and conformity assessment procedures 5 2 1 Trends 5 2 2 Objectives of notifications 7 2 3 TBT measures by.
MINISTRY OF EDUCATION AND TRAINING DA NANG UNIVERSITY OF ECONOMICS REPORT INTERNATIONAL ECONOMICS WTO Agreement on Technical Barriers to Trade (TBT) Supervisor: Phạm Hồ Hà Trâm Class: 46K01.1 Group 1: Da Nang, November, 2022 Table of Content Abstract Vietnam is currently a major trading partner of numerous nations We have also had free trade agreement with countries throughout the world, which offers great opportunities for Vietnamese enterprises through preferential tariffs However, in order to capitalize on these opportunities, our products must conform to their requirements which are relatively complex and detailed and not all exporters know how to comply with, especially non-tariff measures such as Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) measures in WTO agreements This report set out to make a brief introduction of the WTO Agreement on TBT Then, we examine the trends of application of TBT of countries in the world and some TBT regulations for several main export products of Vietnam in major export markets, namely the EU, the US, Japan and Korea Furthermore, the report presents some responses of Vietnamese exporters in dealing with Technical Barriers to Trade Overview of TBT: 1.1 Definition: TBTs are mandatory technical regulations and voluntary standards that define specific characteristics that a product should have, such as its size, shape, design, labelling, marking, packaging, functionality or performance These regulations can act as trade barriers, especially when they are unnecessarily trade-restrictive and/or unjustifiably discriminatory TBTs are governed by the World Trade Organization’s Agreement on Technical Barriers to Trade and its Committee on Technical Barriers to trade 1.2 Three categories of TBT measures: 1.2.1 Technical regulations Pursuant to paragraph of Annex I of the TBT Agreement a “technical regulation” is a1: “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.” 1.2.2 Standards Pursuant to paragraph of Annex I of the TBT Agreement a “standard” is defined as a: “Document approved by a recognized body, that provides, for common and repeated use, rules, guidelines or characteristics for products or related processes and production methods, with which compliance is not 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.” 1.2.3 Conformity assessment procedures (CAPs) Pursuant to paragraph of Annex I of the TBT Agreement, a “conformity assessment” procedure is: “Any procedure used, directly or indirectly, to determine that relevant requirements in technical regulations or standards are fulfilled.” They include procedures for sampling, testing and inspection; evaluation, verification and assurance of conformity; and registration, Annex I.1 TBT, https://www.wto.org/english/res_e/publications_e/ai17_e/tbt_ann1_jur.pdf accreditation and approval 1.3 Purposes The TBT Agreement is intended to ensure that technical regulations, standards, and CAPs does not create unnecessary or discriminatory obstacles to international trade In the meantime, it recognizes WTO members' right to implement measures to achieve legitimate objectives, such as the protection of human health and safety, or protection of the environment and other undefined objectives Besides, this Agreement also encourages members to base their measures on international standards as a means to facilitate trade Through its transparency provisions, it also aims to create a predictable trading environment 1.4 Scope In terms of “type” of measure The TBT Agreement covers three types of defined measures: technical regulations, standards and conformity assessment procedures (CAPs)2 The TBT Agreement does not apply to services, SPS measures, government procurement specifications It probably does not apply to non-product-related processes and production methods (NPR-PMS) NPR-PPMs refers to manufacturing processes that are not detectable in the final product Notifications of technical assessment procedures 2.1 Trends Available at: https://wtocenter.vn/file/18398/tbt3rd_e.pdf regulations and conformity The trend of applying TBTs continues to rise over time In 2020, WTO Members notified about 2095 new or revised technical regulations and CAPs, as well as submitted 1257 addenda and corrigenda to previous notifications3 There are more than 3,000 notifications submitted annually to the TBT Committee for the past three years (Chart 1) This is synonymous with WTO members’ commitment to increasing transparency about trade measures A great majority of these procedures and regulations have been introduced by developed nations such as the US, Uganda and EU.4 Chart Number of TBT notification since 1995 Notifications are a form of advance notice They give an opportunity for the WTO membership to comment on the draft measures before they come into force 4http://tbtims.wto.org/en/PredefinedReports/NotificationReport? Year=2021&YearFrom=1995&YearTo=2021&FilterType=0 Source: WTO, Reports on TBT Chart Ten members submitted most notifications during 2020 African Members were amongst the most active in submitting TBT notifications in 2020, with four East African Community Members in the top ten The US submitted the most notifications of any Member in 2020.(Chart 2) Chart Ten members submitted most during 1995-2020 According to the data from 1995-2020, it is obvious that the US is again the top notifier among the members of the WTO, followed by Brazil and Uganda (Chart 3) 2.2 Objectives of notifications The primary objective stated in new notifications submitted in 2020 was "Protection of human health or safety" "Quality requirements" was the second most cited objective, followed by "Consumer information, labelling", "Prevention of deceptive practices and consumer protection", and "Protection of the environment" When comparing this with the most cited objectives for the period from 1995 to 2020, the top five objectives remain unchanged, despite in a different order Chart Notification by objective, 1995-2020 2.3 TBT measures by sectors in 20195 TBTs are widely used to regulate international trade in most economic sectors The presence of TBT is largely linked to performance and safety requirements in terms of energy products and motor vehicles For other sectors these measures often take the form of conformity assessments or registration requirements This is the case for most TBT applied to textiles and apparel, as well as many agricultural products https://unctad.org/system/files/official-document/ditctab2020d3_en.pdf, p.30 Source: UNCTAD secretariat calculations based on UNCTAD TRAINS data Some TBT regulations that Vietnamese exporters face in major export markets for some key export products I will discuss footwear exported to the EU market and fruits and vegetable in China market Firstly we come to footwear exported to the EU 3.1.1 The EU The EU is a choosy market Consumers have high demands on product quality Mandatory requirements on food safety, labeling, environment… of the EU are very stringent and difficult to meet SMEs in Vietnam confront various challenges meeting the technical regulations of the EU market Here are several common technical barriers: First one is Product safety: All products consumed in Europe, including footwear, are required to conform to the regulations of the Directive No twenty oh one ninety-five EC National governments will check whether or not product imported meets the applicable safety requirements If it is considered unsafe, it will be withdrawn or rejected from the European market.6 The second one Labeling Regulations: According to the EU Directive No ninety-four eleven EC, footwear exported to the EU market must conform to the regulations on labeling of the materials used in the main components (uppers, in-soles, outer soles) The label must be stuck, printed, legible, , embossed, or affixed to at least one of each pair of shoes https://www.cbi.eu/market-information/footwear/buyer-requirements Next CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora): According to the Council Regulation No three hundred thirty-eight on the protection of wildlife, exporters of footwear to the EU need to check the list of animals and plants restricted from use fruits and vegetable in China market Fresh fruit or vegetables 3.1 3.1.1 China Largest export market of VN is China Good Manufacturing Practices: The haɪˈdʒen.ɪk hygienic requirements for food production and operation, or good manufacturing practices (GMP), compose one of the four pillars of China’s national food safety standard Traceability Food producers and operators are requested to establish food safety traceability systems to record information such as incoming inspection, pre-delivery inspection, and food sales China has pledged to establish a unified edible agricultural food traceability platform and to develop standards and /prəˈsiː.dʒɚ for the traceability of agricultural products and foods Solutions applied by Vietnam exporters to overcome TBT regulations: 4.1 Government: Government involved in disputes concerning TBT in the WTO when necessary This involvement includes attending TBT cases as the third party to have experience in TBT cases or taking legal actions concerning SPS and TBT to the WTO By doing this, Vietnam can make other WTO members understand that Vietnam is aware of TBT issues and can use the WTO dispute mechanism to protect its exports Vietnam has made more efforts to sign agreements or treaties which harmonize TBT measures This is to reduce conformity costs and give Vietnamese exports more opportunities to export to other markets In addition, the government has supported enterprises, especially SMEs ones, by developing and implementing programs and projects investing in technological innovation, enhancing equipment and new techniques, and applying international standards For example: the government supported the application of models and tools to improve labor productivity at Ha Nam Textile and Garment Joint Stock Company, such as: ISO 9000, 5S, TPM, Lean, KPI, Lean Sigma, Kaizen, overall productivity of the company has increased by 23% compared to the previous one 4.2 Enterprises In order to survive and develop in highly demanding and competitive markets, they have proactively done research on the required criteria and procedures, and invested in technology Moreover, encountering the technical barriers posed by import nations has made them pay high attention to the quality of the product and production process They also make efforts to balance consumers’ interests and economic profits Enterprises in Vietnam have enlisted the support of relevant agencies and organizations, including the Vietnam TBT Office and the TBT network, for overseas Vietnamese deals, the Vietnam Chamber of Commerce and Industry, consulting organizations, to improve their capacity to meet and overcome technical barriers Besides, enterprises have participated in international standard-setting activities to understand the content of standards, learn from the experiences of relevant parties, and ensure the legitimate interests of Vietnamese enterprises For example, in recent years, thanks to cooperation programs between Vietnam and Japan, Japan has helped Vietnam with upgrading training facilities for agricultural officials, sponsoring technique-improving programs for cooperatives of agriculture, cooperatives of fruit crops, and supporting rice seed proposals, etc References Benson, L M & Reczek, K., 2016 A Guide to United States Footware Compliance Requirements, U.S: National Insitute of Standards and Technology Duc Anh Dang & Vuong Anh Dang, 2021 The Effects of SPSs and TBTs on Innovation: Evidence from Exporting Firms in Viet Nam ERIA Discussion Paper Series, June.Issue 383 European Commission, 2016 Japan - A Practical Guide to the Market in Japan for European Agri-food Products, Japan: The Food and Beverage Market Entry Handbook hmi102, 2017 assets.publishing.service.gov [Trực tuyến] Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attach ment_data/file/633289/hmi102 ver_9.0_jul_2017_final.pdf [Đã truy cập 24th November 2021] Netherlands Enterprise Agency, không ngày tháng Business.gov.nl [Trực tuyến] Available at: https://business.gov.nl/regulation/cites-permit-certificate/ [Đã truy cập 24 November 2021] Ngoc Ho, Nguyen Ha & Ngan Vu, 2013 Implementation of SPS/TBT Agreements Experiences from Other Countries and Lessons for Vietnam SECO/WTI Academic Cooperation Project Working Paper Series, March.Issue 01 Nguyen Anh Thu & Dang Thanh Phuong, 2014 Study on Sanitary Phytosanitary Measures (SPS) abd Technical Barriers to Trade (TBT) faced by Vietnamese exporters in major export markets, Ha Noi: EU-Mutrap Nguyễn Minh Huệ & Tơn Nữ Thanh Bình, 2021 Báo cáo Xuất nhập Việt Nam 2020, Hà Nội: NXB Công Thương Nguyen Quoc Thai & Pham Thi Thuy Trang, 2021 Some impacts of the EU's TBT on Vietnam's footware exporting enterprises Industry and Trade Magazine, 25 09 The Directorate-General for Communication, không ngày tháng European Commission [Trực tuyến] Available at: https://ec.europa.eu/info/food-farming-fisheries/plants-and-plantproducts/fruits-and-vegetables#marketingstandards The Working Party, 2020 Minimum Quality Specifications for Fresh Fruit and Vegetables 2020, New York and Geneva: United Nations U.S Fish & Wildlife Service, 2012 CITES Permits and Certificates International Affairs, December, pp 1-2 United Nations Economic Commission for Europe, không ngày tháng UNECE [Trực tuyến] Available at: https://unece.org/trade/wp7/FFV-Standards [Đã truy cập 24th November 2021] World Trade Organization, 2020 Trade and Environment Division 3rd biên tập viên Switzerland: The WTO Agreements Series ... World Trade Organization’s Agreement on Technical Barriers to Trade and its Committee on Technical Barriers to trade 1.2 Three categories of TBT measures: 1.2.1 Technical regulations Pursuant to. .. measures such as Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) measures in WTO agreements This report set out to make a brief introduction of the WTO Agreement on TBT Then,... ensure that technical regulations, standards, and CAPs does not create unnecessary or discriminatory obstacles to international trade In the meantime, it recognizes WTO members' right to implement