TBT & SPS
SANITARY & PHYTOSANITARY MEASURES, TECHNICAL BARRIERS to TRADE AGREEMENT:
1. WTO: The World Trade Organisation is a Global International Organisation overlooking and dealing with rules of trade between nations. Agreements which are multilateral in nature, negotiated, signed and ratified by nations form the core of WTO. With the aim of helping and guiding all matters relating to trade, the WTO acts as a forum and offers a platform to member countries for dealing with and sorting out matters pertaining to trade. Simplification of legal texts that abound the WTO along with putting out the fundamental principles as found in these legal documents is performed at the WTO. Also, keeping checks and balances to the multi lateral trading systems between member nations is an important aspect of the WTO.
2. Under the umbrella of WTO, operate two largest areas of trade being goods and services. These areas have three common spheres with varying specifics which are:
- General Agreement on Tariffs and Trade – GATT
- General Agreement on Trade in Services – GATS
- Agreement on Trade Related Aspects of Intellectual Property – TRIPS
3. Of the many treaties relating to the above, two are of context that deal with the Law of Plant Variety Protection and Breeders Rights. They are:
(i) Sanitary and Phyto Sanitary Measures – SPS Measures
(ii) Technical Barriers to Trade Agreement – TBT Agreement
The above treaties came into force on January 1st 1995, with the foremost aspiration of creating and sustaining customer confidence toward product integrity and credibility thereby creating and boosting a healthy and vibrant economy. Nonetheless, the purposes were Regulatory and Protective in nature.
4. Scope of SPS measures and TBT Agreement:
Technical Barriers to Trade Agreement: TBT agreement is part of a broader category of WTO Agreements dealings with Non Tariff Measures (NTMs) which include:
- Technical Regulations
– Compliance is Mandatory
– Technical Regulations lay down product characteristics or their related processes and production methods.
– Compliance is Not Mandatory
– Standards are approved by a recognized body which is responsible for establishing rules, guidelines or characteristics for products or related processes and production methods.
- Conformity Assessment Procedures – are used to determine that relevant requirements in technical regulations or standards are fulfilled. They include procedures for sampling, testing, inspection, evaluation, verification, assurance of conformity, registration, accreditation and approval.
Both Technical Regulations and Standards deal with terminology, symbols, packaging, marking and labelling requirements. However, compliance requisites differ as aforementioned.
Aims of the Agreement are to:
• Prevent creation of unnecessary technical barriers to International Trade. • Prevent adoption of protectionist measures. • Encourage global harmonization and mutual recognition • Enhance transparency
Benefits of the Agreement are:
Most importantly, advance knowledge. Member countries that are parties to the Agreement gain notification of new technical regulations, conformity assessment procedures as envisioned and put out by the other member countries before hand and prior to the adoption of the same.
Which means, that trade and businesses can use these notification procedures as prior knowledge so as to fine tune their products and services to be in compliance with these conditions hence, adequately prepared to access and play the market with better insights resulting in improved outcomes.
5. Origins: When GATT came into being, it was noticed that certain contracting parties began misusing technical regulations and inspection requirements as trade barriers, entailing a stricter regime governing the application of technical regulations and standards leading to the ‘Standards Code’. The TBT Agreement strengthened and clarified the provisions of the ‘Standards Code’-the original plurilateral 1979 Tokyo Round Agreement on Technical Barriers to Trade governing regulations and standards. TBT is administered by WTO.
6. Assurance: Though the inbuilt meaning of the phrase ‘Technical Barriers to Trade’ comes across laden with emphasis on the word ‘Barriers’, the TBT Agreement strives and seeks to assure that the components of the treaty which are:
- Mandatory Product Regulations
- Voluntary Product Standards
- Conformity Assessment Procedures (Products’ conformity with regulations and standards)
Do not end up shackling international trade and are not used as a means to obstruct trade.
7. Application: TBT agreement is applied to, implemented and executed at various Governmental and Non-Governmental Organisations at different levels, as all the components of the TBT Agreement which are technical regulations, standards and conformity assessment procedures are administered across the spectrum by regional, local, national, international and non-governmental authorities
8. Rules and Principles: The following common rules and principles bind the three separate components of the TBT being technical regulations, standards and conformity assessment procedures thereby rendering them not disparate:
- Non Discrimination Prevention of unnecessary obstacles to international trade
– Legitimate Objectives
– Changed circumstances
- Use of International Standards
- Equivalence and Mutual Recognition
- Derogation in the event of Urgent Measures.
The above rules and principles are expanded as below:
Non Discrimination: has two elements to it which are:
(i.) Most Favoured Nation Treatment (MFN) – is an obligation not to discriminate between ‘like products’ imported from different WTO members.
(ii.) National Treatment – (NT) – is an obligation not to discriminate between domestic and imported ‘like products’.
Prevention of unnecessary obstacles to international trade: is self explanatory and aspires to prevent obstacles in the guise of technical regulations, standards and conformity assessment procedures, which must be prepared and applied to further trade and not hamper the same.
Harmonisation: forms the axis of the TBT Agreement. Emphasis and encouragement are provided to members to align themselves toward the international harmonization of standards as a basis for implementing domestic technical regulations and standards. The importance of harmonization is to minimize trade disruption and passing on benefits from the same to consumers, producers and traders.
Use of International Standards: is expected of member countries as a way to overcome the barriers to trade which could be imposed otherwise.
Equivalence and mutual recognition: Sets out that, upon fulfilling the same objectives, even when foreign technical regulations and conformity assessment procedures vary from domestic regulations, member countries ae excepted to accept the same.
9. Technical Assistance: Technical assistance is provided to developing countries by way of expert assistance through other members, the WTO Secretariat, and third parties, toward compliance of TBT requisites.
10. Special and Differential Treatment: TBT’s requisite is that members and particularly developed member countries provide more favourable treatment known as special and differential treatment to developing countries regarding several aspects of the TBT.
11. Dispute Settlement: The TBT agreement provides that the dispute settlement provisions can be invoked when a member is of the view that provisions under:
- Article 3 – technical regulations
- Article 4 – standards
- Articles 7, 8, 9 – conformity assessment procedures
Are not met and the concerned member country’s trade interests are impacted because of the same.
Sanitary and Phyto Sanitary Agreement:
SPS agreement deals mainly with safety concerning health in tandem with trade. International and cross-border trade has increased exponentially in the last few years. The era of virtual and e-commerce has greatly enhanced entry of such products into countries that may present health risks by way of pest and diseases which could be spread through such products.
12. Classification of SPS agreement: the SPS agreement is classified as:
- Sanitary – relating to human, animal life and health
- Phyto Sanitary – relating to plant life and health.
The SPS agreement gains significance via measures adopted by WTO members. Human, Animal and Plant health is equally sought to be protected by SPS agreement by minimized risks associated with imports as well as exports. Mainly these measures take the form of quarantine and safety requirements.
However, SPS agreement comes with a caution which is:
WTO member countries must not use SPS measures resulting in:
- Not Science based
- Which constitute a restriction in disguise on international trade.
13. The SPS agreement is administered by the committee on Sanitary and Phytosanitary measures known as the SPS committee in which all WTO members are encouraged to participate. The three main was in which risks could gain entry, and are sought to mitigate through SPS are:
- Import of food
- Plants including plant products
- Animals including animal products
However, the above mentioned risks are not restricted to food and agricultural commodities. These could come from both Imports and Exports such as:
– Animal life and health- the entry, establishment or spread of pests including weeds, diseases, disease- carrying organisms, disease-causing organisms.
– Additives, contaminants including pesticides, veterinary drug residues and extraneous matter, toxins or disease causing organisms in feedstuffs.
– Plant life and health
– the entry, establishment or spread of pests including weeds, diseases, disease-carrying organisms or disease
– causing organisms.
– Human life and health
– additives, contaminants, toxins, disease-causing organisms in foods or beverages, diseases carried by animals, plants or their products or the entry, establishment or spread of pests.
– Non-food, animal and agricultural commodities
– such as machinery, may then on their own cause risk but could be contaminated with and by soil, plant residues or the packaging material used therein such as saw dust, straw, wooden beams etc., which could carry contaminants.
The SPS agreement has three International standards setting bodies that are often referred to as ‘The Three Sisters’ and they are:
(i) The International Plant Protection Convention (IPCC) dealing with plant health.
(ii) The World Organisation for Animal Health (OIE) dealing animal health.
(iii) The Codex Alimentarius Commission (Codex) dealing with food safety.
15. Core aspects of SPS agreement covered by specific articles therein are:
- Appropriate level of protection (ALOP)
- Risk assessment
- Regional conditions
The above are expanded as below:
Harmonisation – WTO member states are at liberty to determine their own SPS measures provided they are aligned with the terms as laid down in the SPS agreement, however per the principle of harmonization, WTO members are persuaded to structure their SPS measures on international standards, guidelines and recommendations, where they exist.
Equivalence – Importing members are required to accept SPS measures of exporting WTO members as equivalent provided the exporting country objectively demonstrates to the importing country that its measures achieve the importing country’s appropriate level of protection. Equivalence is typically arrived at through bilateral consultations and sharing of technical information.
Appropriate Level of Protection – The ALOP is the level of protection deemed appropriate by the WTO member to protect human, animal, plant life and health within its territory. The determination of ALOP precedes SPS measures as the ALOP is an objective that the SPS measures strive to achieve. WTO members are required to apply the concept of ALOP consistently and must avoid arbitrary or unjustifiable distinction resulting in discrimination or disguised restriction on international trade.
Risk Assessment – is basically the exercise of collecting scientific evidence and associated factors concerning the risks involved in permitting a particular import to enter a country. The information essentially relates to pests and diseases that could be related with the import in question.
Regional Conditions – WTO members are required to recognize and establish pest/disease free areas and areas where pest/disease prevalence is at its lowest. This exercise is to be demonstrated at the time of exports as well as imports so that risks associated with regional conditions of a particular geographic region from where the import/export commodity originates that are posed to human, animal, plant life and health can be assessd.
Key requirements of SPS – are as under:
(i) Must be science based
(ii) Must not be more trade restrictive than required
(iii) Must not arbitrarily or unjustifiably discriminate
(iv) Must not constitute a disguised restriction on international trade.
CONCLUSION: SPS and TBT are powerful tools that contribute toward policy making. They play an important role in striking a working balance between national health safety and security concerns and unhindered, unhampered trade flow. To ensure this balance is maintained, engagement by all WTO members with each other on the concerned issues that arise owing to TBT and SPS is crucial. In overcoming protectionist approaches and help gain robust market inroads, timely participation by all WTO members is essential, thereby ensuring fairplay in the world of trade and economy.