wto rules on technical barriers to trade

 1   2  Allrightsreserved. Nopartofthispapermaybereproducedinanyform withoutthepermissionoftheauthor(s).          ThisWorkingPaperseriesfromtheFacultyofLaw,UniversityofMaastricht,aimstofurther excellenceinscholarship.ItallowsMaastricht-basedauthorstobringtheirwork-in-progress toawideaudience,facilitatingfruitfuldiscussionandcriticalinputonnascentideasand projectstothebenefitofbothauthorandreader.Tothisend,readersareencouragedtotreat theseriesasinteractiveandtocontactauthorswiththeircomments.   Thosewishingtosubmitpapersforconsiderationareinvitedtosendworkto working.papers@law.unimaas.nl.   Oursubmissionguidelinesandfurtherinformationareavailableat http://www.unimaas.nl/maastrichtworkingpapers            ©PeterVandenBossche,DenisePrévostandMariëlleMatthee PublishedinMaastricht,October2005  FacultyofLaw UniversiteitMaastricht Postbox616 6200MD Maastricht TheNetherlands  Authoremails: p.vandenbossche@ir.unimaas.nl,d.prevost@ir.unimaas.nl&m.matthee@asser.nl  ThispaperistobecitedasMaastrichtFacultyofLawWorkingPaper2005/6  3  WTORulesonTechnicalBarrierstoTrade  PeterVandenBossche, DenisePrévostandMariëlleMatthee 1    TABLEOFCONTENTS 1. Introduction 4 2. TheTBTAgreement 5 2.1. ScopeofApplicationoftheTBTAgreement 5 2.2. RelationshipwithOtherWTOAgreements 13 2.3. BasicSubstantiveProvisionsoftheTBTAgreement 14 2.4. OtherSubstantiveProvisions 21 2.5. InstitutionalandProceduralProvisions 24 2.6. SpecialProvisionsforDevelopingCountries 26 3. TheSPSAgreement 27 3.1. ScopeofApplicationoftheSPSAgreement 28 3.2. RelationshipwithOtherWTOAgreements 31 3.3. BasicPrinciplesoftheSPSAgreement 33 3.4. RiskAnalysisObligations 44 3.5. OtherSubstantiveProvisions 62 3.6. InstitutionalandProceduralProvisions 69 3.7. SpecialProvisionsforDevelopingCountries 75 4. Summary 77   ABSTRACT Inmodernsociety,productsareoftensubjecttorequirementsrelatingtotheircharacteristics and/orthemannerinwhichtheyareproduced.Thepurposeoftheserequirementsmaybethe protection oflife or health, the protection ofthe environment, theprevention ofdeceptive practicesortoensurethequalityofproducts.Theserequirementsmayconstituteformidable barriers to trade. Moreover, procedures set up to verify whether a product meets certain requirementsmayobstructtrade.Thesebarrierstotradearereferredtoastechnicalbarriers totrade.Onemustdistinguishbetween: • thegeneralcategoryoftechnicalbarrierstotrade,forwhichruleshavebeensetoutin theTBTAgreement;and • a special category of technical barriers to trade, namely sanitary and phytosanitary measures,forwhichrulesareprovidedintheSPSAgreement. The rules of the TBT Agreement and the SPS Agreement are of great importance to internationaltrade.TheygosignificantlybeyondtheGATTobligationsnottodiscriminate  1 PeterVandenBosscheisProfessorofInternationalEconomicLawandHeadoftheInternationalandEuropeanLawDepartment attheFacultyofLawofMaastrichtUniversity.From1997to2001,hewasCounsellortotheAppellateBodyoftheWTO.In2001 heservedasActingDirectoroftheAppellateBodySecretariat.DenisePrévostisalecturerininternationaleconomiclawatthe FacultyofLawofUtrechtUniversity,MariëlleMattheeisadoctoralresearcherattheFacultyofLawofMaastrichtUniversity. TheauthorswishtothankMaikelBeckersandJillRochefortheirableassistanceinpreparingthisworkingpaperforpublication.  4  amongoragainstimportedproductsornottoimposequantitativerestrictionsbutalsoimpose certain international disciplines on national regulation regarding products, their characteristics and production. This working paper gives an overview of the scope of application as well as the substantive and institutional/procedural provisions of the TBT AgreementandtheSPSAgreement. Keywords: WTOlaw, MarketAccess,TechnicalBarriersto Trade,TBTAgreement,SPS Agreement.   1. INTRODUCTION TVsets, toys,cosmetics, medical equipment,fertilisers,meatand cheese areall subject to requirementsrelatingtotheircharacteristicsand/orthemannerinwhichtheyareproduced. Thepurposeoftheserequirementsmaybetheprotectionoflifeorhealth,theprotectionof theenvironment,thepreventionofdeceptivepracticesortoensurethequalityofproducts. These requirements may be mandatory, set and enforced by governments. More often, however,theserequirements areruleslaid downbynationalstandardisation bodies,which arenotmandatorybutareneverthelessgenerallyadoptedinbusinesstransactionsinagiven country. Inbothcases,theserequirements may constituteformidable barrierstotrade.TV setsandcheese madeaccordingto therequirements ofcountryAmaybebannedfrom, or difficult to market in, country B when the requirements of country B relating to the characteristics or the manner of production are different. Furthermore, procedures used to verify whether a product meets certain mandatory or voluntary requirements may obstruct trade. Measuresof thiskindarecommonlyreferredto as‘technicalbarrierstotrade’.Thispaper dealswiththeWTOlawonsuchbarriers.Onemustdistinguishbetween: • thegeneralcategoryoftechnicalbarrierstotrade,forwhichruleshavebeensetoutin the Agreement on Technical Barriers to Trade, commonly referred to as the TBT Agreement;and • a special category of technical barriers to trade, namely sanitary and phytosanitary measures, for which rules are provided in the Agreement on the Application of SanitaryandPhytosanitaryMeasures,commonlyreferredtoastheSPSAgreement.  The rules of the TBT Agreement and the SPS Agreement are of great importance to international trade. As discussed below, these rules go significantly beyond the GATT obligations not to discriminate among or against imported products. They impose certain  5  internationaldisciplines onnational regulationregarding products,their characteristics and production.  2. THETBTAGREEMENT Asnotedabove,theWTOrulesonthegeneralcategoryoftechnicalbarrierstotradeareset outintheTBTAgreement.Thissectiondiscusses: • thescopeofapplicationoftheTBTAgreement; • the relationship between the TBT Agreement and other WTO agreements, in particular,theSPSAgreementandtheGATT1994; • thesubstantiveprovisionsoftheTBTAgreement • theinstitutionalandproceduralprovisionsoftheTBTAgreement;and • specialprovisionsfordevelopingcountryMembers.  2.1. ScopeofApplicationoftheTBTAgreement With respect to the scope of application of the TBT Agreement, this section distinguishes between the substantive scope of application, i.e., the types of measures to which the agreementapplies,thepersonalscopeofapplication,i.e.,theentitiestowhomrulesofthe TBTAgreementapply,andthetemporalscopeofapplicationoftheagreement. 2.1.1.  Substantivescopeofapplication TherulesoftheTBTAgreementapplyto: • technicalregulations; • standards;and • conformityassessmentprocedures.  AstheAppellateBodystatedinEC-Asbestos,theTBTAgreementthusappliestoa‘limited classofmeasures’. 2 Thethree typesof measurestowhichthe TBTAgreementapplies, are definedinAnnex1oftheTBTAgreement. InAnnex1.1,atechnicalregulationisdefinedas:  2  AppellateBodyReport,EC–Asbestos,para.80.  6  … [a] 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. For example, a law requiring that batteries of 9 Volts or more be rechargeable, or a law requiringthatwinebesoldingreenglassbottlesaretechnicalregulationswithinthemeaning oftheTBTAgreement.Alawrequiringthattheproductionofpharmaceuticalproductsmeet certain requirements regarding manufacturing practices and plant cleanliness is also a technicalregulationfallingwithinthescopeofapplicationoftheTBTAgreement. Annex1.2oftheTBTAgreementdefinesastandardas: …[a]documentapprovedbyarecognised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. Contrarytotechnicalregulations,standardsareofavoluntarynature,meaningcomplianceis notmandatory. The voluntary standards set by CENELEC (the  European Committee for Electrotechnical Standardisation), such as standards for mobile phones or handheld computers, are clearly standardswithinthemeaningoftheTBTAgreement. Inadditiontotechnicalregulationsandstandards,conformityassessmentproceduresalsofall withinthescopeofapplicationoftheTBTAgreement.Conformityassessmentproceduresare definedinAnnex1.3oftheTBTAgreementas: …anyprocedureused,directlyorindirectly,todeterminethatrelevantrequirementsintechnicalregulationsor standardsarefulfilled. Examples of conformity assessment procedures include, for example, procedures for sampling,testingandinspection. TheTBTAgreementappliestotechnicalregulations,standardsandconformityassessment proceduresrelatingto: • products(bothindustrialandagricultural);and  7  • processesandproductionmethods(PPMs). 3  Itisasubjectofmuchdebate,however,whethertheprocessesandproductionmethods, to whichtheTBTAgreementapplies,includetheso-callednon-productrelatedprocessesand productionmethods(NPR-PPMs).Thistermreferstoprocessesandproductionmethodsthat do not affect the characteristics of the final product put on the market. An example of a technicalregulationconcerningaNPR-PPMistheprohibitionoftheuseofenvironmentally unfriendly sources of energy in the production of a product. Another example is the prohibition to market beef from cattle fed with genetically modified fodder. During the negotiationsontheTBTAgreement,discussiontookplaceonwhetherthisgroupshouldbe included in the scope of the agreement.  This discussion, however, did not result in consensus. 4  The definitions in Annex 1, paragraphs 1 to 3,seem to indicatethat technical regulations,standardsandconformityassessmentproceduresrelatingtoNPR-PPMsdonot fallwiththescopeofapplicationoftheTBTAgreement. 5  Intwodisputestodate,EC– AsbestosandEC –Sardines,panelsandtheAppellate Body had occasion to examine whether the measures at issue were technical regulations falling withinthescopeoftheTBTAgreement.InEC–Asbestos,themeasureatissueconsistedof, ononehand,ageneralbanonasbestosandasbestos-containingproductsand,ontheother hand,limitedexceptionsreferringtosituationsinwhichasbestos-containingproductswould beallowed.ThePanelconcludedthatthebanitselfwasnotatechnicalregulation,whereas theexceptionstothebanwere. 6 Onappeal,theAppellateBodyreversedthePanel’sfinding thatthebandidnotconstituteatechnicalregulation.Inaddressingthisissue,theAppellate Body first firmly rejected the Panel’s approach of considering separately the ban and the exceptionstotheban.AccordingtotheAppellateBody,the‘properlegalcharacter’ofthe measure cannot be determined unless the measure is looked at as a whole. The Appellate Bodystated:  Article 1 of the Decree contains broad, general prohibitions on asbestos and products containing asbestos. However,thescopeandgeneralityofthoseprohibitionscanonlybeunderstoodinlightoftheexceptionstoit which, albeit for a limited period, permit, inter alia, the use of certain products containing asbestos and,   3  Article1.3andtheexplanatorynotetoAnnex1,paragraph2,oftheTBTAgreement.NotethattheTBT Agreementdoesnotapplytotechnicalregulations,standardsandconformityassessmentproceduresthat dealwithservices. 4  CommitteeonTechnicalBarrierstoTrade,‘NegotiatingHistoryoftheCoverageoftheAgreementon TechnicalBarrierstoTradewithregardtoLabellingRequirements,VoluntaryStandardsandProcesses and Production Methods Unrelated to Product Characteristics’, Note by the Secretariat, G/TBT/W11, dated29August1995. 5  Note that the definitions in Annex 1.1 and Annex 1.2 state: ‘ …products and related processes and productionmethods’.[Emphasisadded] 6  PanelReport,EC–Asbestos,paras.8.63and8.70  8  principally,productscontainingchrysotileasbestosfibres.Themeasureis,therefore,notatotalprohibitionon asbestos fibres, becauseit also includesprovisions thatpermit, fora limited duration, the use of asbestos in certainsituations.Thus,tocharacterizethemeasuresimplyasageneralprohibition,andtoexamineitassuch, overlooksthecomplexitiesofthemeasure,whichincludebothprohibitiveandpermissiveelements. 7   The Appellate Body thus concluded that the measure at issue was to be examined as an integrated whole, taking into account as appropriate the prohibitive and the permissive elementsthatarepartofit. 8   TheAppellateBodythenexaminedwhetherthemeasureatissue,consideredasawhole,was a technical regulation within the meaning of the TBT Agreement. On the basis of the definitionofa‘technicalregulation’ofAnnex1.1,quotedabove,theAppellateBodysetout anumberofconsiderationsfordeterminingwhetherameasureisatechnicalregulation.This sectiondiscussestheseconsiderations.  First, for a measure to be a ‘technical regulation’, it must ‘lay down’ – i.e., set forth, stipulate,orprovide–‘productcharacteristics’.Withrespecttotheterm‘characteristics’,the AppellateBodynoted:  … the “characteristics” of a product include, in our view, any objectively definable “features”, “qualities”, “attributes”, or other “distinguishing mark” of a product. Such “characteristics” might relate, inter alia, to a product’s composition, size, shape, colour, texture, hardness, tensile strength, flammability, conductivity, density,orviscosity.Inthedefinitionofa“technicalregulation”inAnnex1.1,theTBTAgreementitselfgives certain examples of “product characteristics” – “terminology, symbols, packaging, marking or labelling requirements”. Theseexamplesindicatethat “product characteristics” include,not only featuresand qualities intrinsic to the product itself, but also related “characteristics”, such as the means of identification, the presentationandtheappearanceofaproduct. 9   TheAppellateBodyalsonotedthatatechnicalregulationmaybeconfinedtolayingdown onlyoneorafewproductcharacteristics.  Second,a‘technicalregulation’mustregulatethecharacteristicsofproductsinabindingor compulsoryfashion.AccordingtotheAppellateBody,itfollowsthat:    7  AppellateBodyReport,EC-Asbestos,para.64. 8  Ibid. 9  Ibid.,para.67.  9  … with respect to products, a “technical regulation” has the effect of prescribing or imposing one or more “characteristics”–“features”,“qualities”,“attributes”,orother“distinguishingmark”. 10   Product characteristics may be prescribed or imposed with respect to products in either a positiveoranegativeform.Thatis,thedocumentmayprovide,positively,thatproductsmust possesscertain‘characteristics’,orthedocumentmayrequire,negatively,thatproductsmust notpossesscertain‘characteristics’.Inbothcases,thelegalresultisthesame:thedocument ‘laysdown’certainbinding‘characteristics’forproducts. 11   Third, a ‘technical regulation’ must be applicable to an identifiable product, or group of products. Otherwise, enforcement of the regulation will be, in practical terms, impossible. Clearly,compliancewiththisobligationrequiresidentificationoftheproductcoverageofa technicalregulation. ThePanelinEC –Asbestosinterpretedthis tomeanthata‘technical regulation’mustapplyto‘given’productswhichareactuallynamed,identifiedorspecified intheregulation.TheAppellateBodydisagreed.NothinginthetextoftheTBTAgreement suggeststhattheproducts concerned needbenamedor otherwiseexpressly identifiedin a ‘technicalregulation’.TheAppellateBodynotedthat:  …theremaybeperfectlysoundadministrativereasonsforformulatinga“technicalregulation”inawaythat doesnot expresslyidentifyproductsbyname,butsimplymakesthemidentifiable–forinstance, throughthe “characteristic”thatisthesubjectofregulation. 12   Onthebasisoftheabovethreeconsiderations,theAppellateBodyexaminedthemeasureat issue in EC – Asbestos, a French Decree, noting that the first and second paragraphs of Article1oftheDecreeimposedaprohibitiononasbestosfibres.AccordingtotheAppellate Body,prohibitiononthesefibresdoesnot,initself,prescribeorimposeany‘characteristics’ onasbestosfibresbutsimplybansthemin theirnaturalstate.Accordingly,if thismeasure consisted only of a prohibition on asbestos fibres, it might not constitute a ‘technical regulation’.TheAppellateBodythennoted,however: Anintegralandessentialaspectofthemeasureistheregulationof“productscontainingasbestosfibres”,which arealsoprohibitedbyArticle1, paragraphsIandIIoftheDecree. Itisimportanttonoteherethat,although formulatednegatively–productscontainingasbestosareprohibited–themeasure,inthisrespect,effectively prescribesorimposescertainobjectivefeatures,qualitiesor“characteristics”onallproducts.Thatis,ineffect, the measure provides that all products must not contain asbestos fibres. Although this prohibition against   10  Ibid.,para.68. 11  Ibid.,para.69. 12  Ibid.,para.70.  10  products containing asbestos applies to a large number of products, and although it is, indeed, true that the productstowhichthisprohibitionappliescannotbedeterminedfromthetermsofthemeasureitself,itseemsto usthattheproductscoveredbythemeasureareidentifiable:allproductsmustbeasbestosfree;anyproducts containing asbestos are prohibited. We also observe that compliance with the prohibition against products containingasbestosismandatoryandis,indeed,enforceablethroughcriminalsanctions. 13   Theprohibitionofallasbestos-containingproductsisameasurewhicheffectivelyprescribes –althoughnegatively–certainobjectivecharacteristicsforallproducts.  Furthermore,theAppellateBodynotedthatArticles2,3and4oftheDecreecontaincertain exceptionstotheprohibitionsfoundinArticle1oftheDecree.Anypersonseekingtoavail oftheselimitedexceptionsmustprovideadetailedjustificationtotheauthorities,complete with necessary supporting documentation concerning ‘the state of scientific and technological progress’. Compliance with these administrative requirements is mandatory. Through the exceptions to the prohibitions, the measure at issue sets out the ‘applicable administrative provisions, with which compliance is mandatory’ for products with certain objective‘characteristics’.  TheAppellateBodythusconcludedinEC-Asbestos:  Viewing the measure asan integrated whole, we see that it lays down “characteristics” for allproducts that mightcontainasbestos,andweseealsothatitlaysdownthe“applicableadministrativeprovisions”forcertain products containing chrysotile asbestos fibres which are excluded from the prohibitions in the measure. Accordingly,wefindthatthemeasureisa“document”which“laysdownproductcharacteristics…including theapplicableadministrativeprovisions,withwhichcomplianceismandatory.”Forthesereasons,weconclude thatthemeasureconstitutesa“technicalregulation”undertheTBTAgreement. 14   ConfirmingitsrulinginEC–Asbestos,theAppellateBodyinEC–Sardinesestablisheda three-tiertestfor determining whetherameasure isa‘technical regulation’ undertheTBT Agreement: • themeasuremustapplytoanidentifiableproductorgroupofproducts; • themeasuremustlaydownproductcharacteristics;and • compliance with the product characteristics laid down in the measure must be mandatory.  13  Ibid.,para.72. 14  Ibid.,para.75. [...]... ‘weighing and balancing’ the above mentioned and other factors and elements 2.3.3 Use of international standards The harmonisation of national technical regulations and standards around international standards greatly facilitates the conduct of international trade. 38 Harmonisation around international standards diminishes the trade restrictive effect of technical barriers to trade by minimising the variety... proposed technical regulation, to discuss these comments upon request, and to take the comments and the resulting discussion into account when eventually deciding on the technical regulation When a technical regulation is adopted to address an urgent problem of safety, health, environmental protection or national security, a Member may set aside the notification (and consultation) requirements set out... specified risks The negotiators of the WTO agreements considered that these measures merited special attention due to their close link to agricultural trade, a sector of trade notoriously difficult to liberalise As a result, sanitary and phytosanitary measures are dealt with in a separate agreement, the Agreement on the Application of Sanitary and Phytosanitary Measures, commonly referred to as the SPS Agreement... proposed technical regulation can still be made and comments can be taken into account; • provide other Members, upon their request, with copies of and information on the proposed technical regulation, including information on how the proposed technical regulation deviates from relevant international standards; and • allow a reasonable time for other Members to make comments on the proposed technical. .. conformity assessment bodies Members are encouraged to enter into negotiations for the conclusion of agreements acknowledging mutual recognition of the results of each other’s conformity assessment procedures.48 Article 9 of the TBT Agreement encourages the adoption of, and participation in, international and regional systems for conformity assessment Such systems aim for cooperation between national... states to become acquainted with the proposed technical requirement; 48 See Article 6.3 of the TBT Agreement 22 • notify other Members through the WTO Secretariat of the products to be covered by the proposed technical regulation, together with a brief indication of the objective and rationale of the technical regulation This notification must be done at an early stage of the process, when amendments to. .. would constitute a violation of the national treatment obligation set out in Article 2.1 of the TBT Agreement 31 32 See Appellate Body Report, EC - Asbestos, para 80 Therefore, caution needs to be used when transposing interpretation given to these obligations under GATT 1994 to the similar provisions in the TBT Agreement The different context, structure and formulation of the TBT Agreement’s provisions... basis for their technical regulations …39 36 37 38 39 With regard to conformity assessment procedure, Article 5.1.1 states that risks of non-conformity shall be taken into account Annex 3.E (standards) does not contain the provision of risks to be taken into account As the TBT Agreement does not explicitly require a quantitative evaluation of risk, one could conclude, in line with the decision of the Appellate... information provided to the technical expert group is of a confidential nature, the parties to the dispute shall have access to that information.60 To date, panels have not yet made use of the possibility to establish a technical expert group As mentioned above, not only central government bodies but also local government and nongovernmental entities may adopt and apply technical regulations, standards... apply technical regulations, standards and conformity 55 56 57 58 59 60 See Article 15.4 of the TBT Agreement Committee on Techincal Barriers to Trade, Third Triennial Review of the Operation and Implementation of the Agreement on Technical Barriers to Trade, G/TBT/13, dated 11 November 2003 See Article 14.1 of the TBT Agreement For a detailed discussion of the WTO dispute settlement system, see P Van . certain requirementsmayobstruct trade. These barriers to trade arereferred to as technical barriers to trade. Onemustdistinguishbetween: • thegeneralcategoryof technical barriers to trade, forwhich rules havebeensetoutin theTBTAgreement;and •. requirements may obstruct trade.  Measuresof thiskindarecommonlyreferred to as technical barriers to trade .Thispaper dealswiththe WTO law on such barriers. Onemustdistinguishbetween: •. as technical barriers to trade .Thispaper dealswiththe WTO law on such barriers. Onemustdistinguishbetween: • thegeneralcategoryof technical barriers to trade, forwhich rules havebeensetoutin the Agreement on Technical Barriers to Trade,  commonly referred to as the TBT Agreement;and •