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PRACTICAL TRADE & CUSTOMS STRATEGIES
January 31, 2013 Volume 2, Number 2

Customs’ Centers of Excellence and Expertise: What to Expect
By BJ Shannon (Alston & Bird LLP) U.S. Customs and Border Protection (CBP) has undertaken a new initiative that has the potential to change the way U.S. importers interact with CBP. An importer’s primary CBP contact traditionally has been determined geographically, by the port where the importer enters merchandise. Recently, though, CBP has established Centers of Excellence and Expertise (CEEs or Centers), each of which is focused on a particular industry, rather than a particular location. A participating importer will be assigned to one Center that services its industry, regardless whether the importer files entries at one port or many ports, and regardless where the importer or those ports are located. The resulting question is not whether the Centers offer potential benefits; they undeniably do. The question is how importers will utilize the Centers and how importers should expect the Centers, which currently operate only as a test program, to evolve over time.
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In This Issue
CBP’s New IndustryBased Import Centers
In an effort to improve import processing, the U.S. Customs and Border Protection (CBP) has entered a test phase of replacing port-based hubs with industry-based Centers for Excellence and Expertise (CEEs). As this new initiative develops, importers should understand what to expect and how to navigate this new change. Page 1

Technical Barriers to Trade of the WTO

Standards of the WTO Agreement on Technical Barriers
By Renato Antonini and Eva Monard (Jones Day)1 Introduction There are several types of barriers companies can encounter when exporting goods. When imposing such barriers, importing (or exporting) countries have to comply with the rules of the World Trade Organization (“WTO”). Wellknown barriers that are subject to WTO law include import duties and quotas or quantitative restrictions. Many exporting companies are also well aware of so-called ‘standards’, which lay down the technical characteristics products have to comply with before they can be put on the market. Such so-called ‘standards’ are often only dealt with by technical experts within a company, which have to ensure compliance with these requirements. However, also the imposition of such product requirements is subject to strict limitations under WTO law. Under certain circumstances, so-called ‘standards’ can be inconsistent with countries’ obligations under WTO law, in which case, action can be taken. Companies that spend a lot of time and efforts in ensuring compliance
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Strategies experts explain the relevant conditions of the Agreement on Technical Barriers to Trade (TBT Agreement) for importers and exporters. From a legal standpoint, the difference between a “technical regulation” and a “standard” can reveal widely different obligations for compliance officials. Page 1

How to Protect Brands in Foreign Markets

Failing to take the proper steps to protect a company’s brand in foreign markets can result in the lack of access to a foreign market or the payment of royalties to another company. A hypothetical case analysis shows how to potentially prevent this problem. Page 7

Information Sharing Rules in Canada’s Customs Act

Canada’s Customs Act prohibits the disclosure of customs information; however, a number of exceptions exist which allows for the transfer of confidential information to a foreign treaty partner under certain conditions. Page 3

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program, and they should consider whether, or perhaps simply when, they will begin to engage with the Centers. o
1 U.S. Customs and Border Protection, Fact Sheet: Centers of Excellence and Expertise (Aug. 2012); U.S. Customs and Border Protection: Centers of Excellence and Expertise: Overview (Nov. 2012), at 9. 2 U.S. Customs and Border Protection, Announcement of Test Providing Centralized Decision-Making Authority for Four CBP Centers of Excellence and Expertise, 77 Fed. Reg. 52048, 52048-50 (Aug. 28, 2012). 3 77 Fed. Reg. at 52049. 4 Id. 5 Centers of Excellence and Expertise: Overview, at 5. 6 Fact Sheet: Centers of Excellence and Expertise. 7 U.S. Customs and Border Protection, Centers of Excellence and Expertise Frequently Asked Questions, at 1. 8 77 Fed. Reg. at 52050; Centers of Excellence and Expertise: Overview, at 5. 9 Centers of Excellence and Expertise Frequently Asked Questions, at 1, 3, and 4. 10 Centers of Excellence and Expertise: Overview, at 6. 11 Centers of Excellence and Expertise Frequently Asked Questions, at 3-4. 12 77 Fed. Reg. at 52049. 13 77 Fed. Reg. at 52048. 14 Centers of Excellence and Expertise Frequently Asked Questions, at 3.

BJ Shannon (bj.shannon@alston.com) is a counsel at Alston & Bird LLP based in Washington, DC. She focuses her practice on international trade regulation and policy and has experience in customs, export controls, trade remedies, product safety, and tax and customs transfer pricing. 

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of their products with these so-called ‘standards’ may have an interest in verifying whether they are not being subjected to illegitimate trade barriers. The substantive and procedural obligations that have to be taken into account are laid down in the Agreement on Technical Barriers to Trade (“TBT Agreement”) of the WTO. Below, we will provide a very concise description of some of the main conditions laid down in the TBT Agreement. Afterwards, we will address the conceptual distinction between “technical regulations” and “standards”, from a legal point of view. The relevant obligations are significantly different depending on whether a measure should be considered a “technical regulation” or a “standard”. Below we will analyze both concepts, in the light of the case law of the WTO. Some of the Main Conditions Laid Down in the TBT Agreement The national treatment obligation is one of the core principles of the WTO. Under the WTO agreements, countries cannot normally discriminate between their trading partners. This principle prohibits discrimination between domestic products and imported “like products”. This obligation is also explicitly laid down in the TBT Agreement. As such, imported products should in principle not be subject to different product requirements than domestic products. Also a de facto discrimination is covered by this prohibition.

In addition, standards/technical regulations cannot be prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. The Appellate Body found that the reference to “unnecessary obstacles” implies that some trade-restrictiveness is allowed and, further, that what is actually prohibited are those restrictions on international trade that “exceed what is necessary to achieve the degree of contribution that a technical regulation makes to the achievement of a legitimate objective”.2 In order to assess consistency with this requirement, the necessity of the measure should thus be analyzed. If less burdensome product requirements exist than those provided for by the standard/technical regulation at issue, and if these alternative requirements also achieve the objective pursued, there are good chances that this requirement is violated. In principle, when relevant international standards exist, these have to be used as a basis for the technical regulations/standards imposed by WTO Members. For instance, if the technical regulation/standard imposed by a certain country differs from a relevant ISO, this could be a violation of this obligation. The Distinction Between Technical Regulations and Standards While companies often refer to ‘standards’ in general, the TBT Agreement provides for an important conceptual distinction between “technical regulations”, on the one hand, and “stanTrade Barriers, continued on page 12 © Thomson Reuters/WorldTrade Executive 2013 11

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dards”, on the other hand.3 The obligations with respect to “technical regulations” are more stringent than those applicable to “standards”. As stated by a WTO Panel, “[t]he TBT Agreement establishes clear thresholds that define the type of measures that fall within the scope of each of these three categories of measures, and attach different types and levels of obligations to each one. These thresholds are embodied by the definitions of “technical regulation”, “standard” and “conformity assessment procedure” contained in Annex 1 of the TBT Agreement.”4 According to paragraph 1 of Annex 1 of the TBT Agreement, a “technical regulation” is defined as: “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” (emphasis added). According to paragraph 2 of Annex 1 of the TBT Agreement, a “standard” is defined as: “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” (emphasis added). At several occasions, the Appellate Body held that, in order to fall under the definition of “technical regulation”, a document must apply to an identifiable product or group of products, it must lay down one or more characteristics of the product, and compliance with the product characteristics must be mandatory.5 One important criterion therefore relates to the mandatory (technical regulation) or voluntary (standard) nature of the measure. The Appellate Body, however, recognized that the distinction between a technical regulation and a standard is not always straightforward: “[c]ertain features exhibited by a measure may be common to both technical regulations falling within the scope of Article 2 of the TBT Agreement and, for example, standards falling under Article 4 of that Agreement. Both types of measure could, for instance, contain conditions that must be met in order to use a label. In both cases, those conditions could be “com-

pulsory” or “binding” and “enforceable”. Such characteristics, taken alone, cannot therefore be dispositive of the proper legal characterization of the measure under the TBT Agreement. Instead, it will be necessary to consider additional characteristics of the measure in order to determine the disciplines to which it is subject under that Agreement.”6 De Jure Mandatory Technical regulations must be mandatory. However, the case-law of the WTO suggests that, in certain circumstances, a standard and seems voluntary could be qualified as de jure mandatory and consequently, a “technical regulation”. WTO case law in particular reveals that, even in situations where the compliance with certain measures is considered voluntary in the relevant legal system, the fact that there is a prohibition on the use of the label associated with compliance with the measure (labeling requirements), can have, under certain circumstances, an effect on the ‘mandatory’ or ‘voluntary’ nature under the TBT Agreement. In the WTO dispute United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, the Panel found that, in the specific circumstances of that case, the fact that access to a label reflecting compliance with a particular standard was reserved for products that complied with the specific requirements of that standard, resulted in the labeling requirements being considered as a mandatory technical regulation.7 In this respect, the Panel considered that: “In the context of a labeling requirement, therefore, the question we must consider is not only whether the document lays down certain conditions for the use of a label, or prescribes a certain content for a given label, but whether the document at issue regulates in a binding fashion these conditions or content.”8 And: “We see a difference, in this respect, between the fact that compliance with the underlying standard that provides access to the label (i.e. the use of certain fishing methods to harvest tuna) is not obligatory, and the fact that the measures prescribe in a binding manner the conditions for the use of certain terms on labels for tuna products, on the basis of compliance or absence of compliance with that underlying standard.”9 The labeling requirements at hand did not oblige the use of a certain label. In this respect, the Appellate Body considered that “the mere fact that there is no requirement to use a par-

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Trade Barriers
ticular label in order to place a product for sale on the market does not preclude a finding that a measure constitutes a “technical regulation””.10 Thus, it can be concluded that in situations where a certain standard is not mandatory, but there is a compliance label reserved to products meeting the requirements for that standard, the measure could be considered a technical requirement. However, this will largely depend on the circumstances of the case. Such. Also the Panel was aware of the risk that its interpretation could be considered as contradicting the conceptual and functional distinction between technical regulations and standards laid down in the TBT Agreement and stated the following: “[i]n this respect, we find it useful to highlight that we are not suggesting that any situation in which access to a label reflecting compliance with a particular standard is reserved for products that comply with the specific requirements of that standard would amount to a situation in which a mandatory technical regulation exists. In our view, the measures at issue in the present case go significantly beyond that.”11 The Appellate Body upheld the Panel’s conclusions, attaching significant importance to the fact that “the US measure establishes a single and legally mandated set of requirements for making any statement with respect to the broad subject of "dolphin-safety" of tuna products in the United States.”12 De Facto Mandatory The Appellate Body in European Communities – Measures Affecting Asbestos and Asbestos-Containing Products interpreted the term “mandatory” as follows: “The definition of a “technical regulation” in Annex 1.1 of the TBT Agreement  also states that “compliance “ with the “product characteristics” laid down in the “document” must be “mandatory “. A “technical regulation” must, in other words, regulate the “characteristics” of products in a binding or compulsory fashion. It follows that, 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””13 (emphasis added). This wording suggests that a voluntary standard that “has the effect” of a mandatory standard could also qualify as a technical regulation under the TBT Agreement. In other words, this wording reveals that there exists a concept as “de facto mandatory”. Subsequent Panel reports have also confirmed that the de facto mandatory nature of certain requirements will lead to the conclusion that the requirements constitute a technical regulation.14 So far, the Appellate Body did not provide conclusive guidance about this concept. In United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, for instance, the Appellate Body concluded that the measure at issue was de jure mandatory and therefore did not need to address the alternative argument that the measure was de facto mandatory.15 The interpretation of the concept of “de facto mandatory” has, however, been developed in somewhat more detail in a number of Panel reports. In United States – Certain Country of Origin Labelling (COOL) Requirements, the Panel examined whether compliance with a letter sent to industry representatives by the US Secretary of Agriculture, Thomas J. Vilsack (“the Vilsack letter”) was mandatory. It concluded that the measure was not de facto mandatory, considering that it lacked “the kind of across-the-board industry compliance that, taken together with other evidence, could demonstrate that compliance with the Vilsack letter is de facto mandatory”.16 In United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, the Panel concluded that the measure at issue was de jure mandatory and thus did not proceed to the assessment of the de facto mandatory nature. However, one of the panelists issued a separate opinion in which it examined exactly this aspect: “In summary, the “dolphin safe” label may be considered de facto mandatory in order to market tuna products in the United States, if doing otherwise becomes impossible, not because it would contradict a mandatory provision in the measures, but because it would be prevented by a factual situation that is sufficiently connected to the actions of the United States. Thus, this analysis is two-fold. First, the impossibility of marketing tuna products in the United States without the “dolphin safe” label must be established. Second, such impossibility must arise from facts sufficiently connected to the US dolphin safe provisions or to another governmental action of the United States.”17 Following this reasoning, a de facto mandatory nature seems to arise from two cumulative conditions, first, the impossibility of marketing products without compliance, and, second, a sufficient connection between this impossibility and governmental action by the country concerned.
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The panelist quoted above also described the difference between such a de facto mandatory nature and a voluntary nature, as follows: “Compliance with a voluntary technical document such as a standard may substantially increase the chances of a product being effectively sold in a given market. Conversely, failure to comply with such standard may have negative consequences for the competitiveness of a product in that market. However, this fact alone would not alter the voluntary or "not mandatory" nature of that standard, within the meaning of the TBT Agreement.”18 Conclusion Many exporting companies devote important resources, time and efforts at ensuring compliance with product requirements established by importing countries. For those companies which are facing burdensome requirements, it might be worthwhile to assess the consistency of these requirements with the TBT Agreement of the WTO. In order to do so, the first step is the qualification of the product requirements under the TBT Agreement. “Technical regulations” are subject to more stringent requirements than “standards”. The main distinctive element relates to the mandatory (technical regulation) or voluntary (standard) nature of the measure. However, the distinction is not straightforward, for two main reasons. First, because even in situations where the compliance with certain measures is considered voluntary in the relevant legal system, the fact that there is a prohibition on the use of the label associated with compliance with the measure (labeling requirements), can have, under certain circumstances, an effect on the ‘mandatory’ or ‘voluntary’ nature under the TBT Agreement. Second, because a voluntary standard that “has the effect” of a mandatory standard could also qualify as a technical regulation under the TBT Agreement. o
1 The views adopted in the present article represent the personal opinions of the author and not the position of Jones Day. 2 Appellate Body Report, United States - Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, para. 319. 3 The present article will not address conformity assessment procedures. 4 Panel Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, para. 7.110.

5 See for instance Appellate Body Report, United States - Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, para. 183. 6 Appellate Body Report, United States - Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, para. 188. 7 Panel Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, para. 7.145. 8 Panel Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, para. 7.117. 9 Panel Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, para. 7.132. 10 Appellate Body report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, para. 196. 11 Panel Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, para. 7.141. 12 Appellate Body report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, para. 193. 13 Appellate Body Report, European Communities – Measures Affecting Asbestos and Asbestos-Containing Products, para. 68. 14 See for instance, Panel Report, United States – Certain Country of Origin Labelling (COOL) Requirements, para 7.174; Panel Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, para 7.111. 15 Appellate Body report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, footnote 416. 16 Panel Report, United States – Certain Country of Origin Labelling (COOL) Requirements, para 7.191. 17 Panel report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, para 7.175. 18 Panel report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, para 7.177.

Renato Antonini (rantonini@jonesday.com) is a Partner and Eva Monard (emonard@jonesday.com) is an Associate in the Brussels office of Jones Day. Mr. Antonini focuses on EU trade and WTO laws relating to trade protection measures and dispute settlements. He has extensive experience in EU and Italian customs and export control law, including tariff classification, customs valuation, dual-use goods, and sanctions. Ms. Monard’s practice focuses on WTO law and EU trade, export controls, and customs law. She has assisted clients in EU trade defense investigations involving antidumping, anti-subsidy, safeguard, and anti-circumvention issues as well as in a full range of other trade matters. She also has successfully defended clients’ interests before EU institutions and EU courts.
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