InternationalCh 2017 Chapter4NonTariffBarr BusinessGuideToTradeA

BUSINESS GUIDE TO TRADE AND INVESTMENT | INTERNATIONAL TRADE
3.1 TBT Measures

The TBT Agreement covers technical regulations, standards and conformity assessment
procedures (testing). All three are important for businesses that manufacture and trade
goods. The TBT rules applicable to all three are similar.

3.1.1 Technical Regulations and Standards
As defined in Annex 1.1 of the TBT Agreement, technical regulations are mandatory,
written rules applying to identifiable products that set out product characteristics or
their related processes and production methods. They include rules dealing with
terminology, symbols, packaging, marking and labelling requirements. The definition
of a standard is broadly similar, with one important difference – the Agreement
defines standards as “not mandatory”. The terminology is somewhat confusing, as in
common parlance mandatory regulations are often referred to as “standards”.
Until recently the distinction seemed clear-cut. However, a recent decision by the
under U.S. or applicable copyright law.
Appellate Body, described in the text box below, blurred the distinction, and many
measures that were regarded as standards because they were voluntary may now be
classified as technical regulations. While an interesting issue for lawyers to debate, the
change of categorisation makes little difference in practice, as the TBT rules applicable
to standards are generally the same as those applicable to technical regulations.
THE US – TUNA II CASE

Mandatory labelling schemes, such as a requirement that food products be
Contents
labelled with their nutritional content, are clearly technical regulations within
the meaning of the TBT Agreement. But what about a labelling system that
permitted
allows, but does not require statements to be made about the product if it
meets certain criteria? US – Tuna II determined that a US programme
uses of
Table
establishing criteria which if met allowed a manufacturer to affix a “dolphin-

safe” label on canned tuna was a technical regulation within the meaning of
All rights reserved. May not be reproduced in any form without permission from the publisher, except fair
the TBT Agreement, even though the label was not required.39 The decision
was based on the following factors:
The US programme established a single and legally required means of

addressing a matter (the definition of “dolphin-safe”) and disallowed use of
other labels that do not satisfy the definition;
The US programme prescribed in a broad and exhaustive manner the
conditions that apply for making the dolphin-safe assertion; and
The US programme covered the entire field in relation to the product (which
tuna is harvested in a manner that at dolphin-safe).
Business interests may find it useful to lobby governments to enact label-

ling schemes that differentiate their products based on manufacturing
characteristics that local consumers will appreciate – for example, “This
product was not produced with child labour”. In doing so, business
should be mindful that TBT rules will apply, in particular the requirement
that TBT measures be non-discriminatory.
Copyright 2017. ICC Services.
102 | INTERNATIONAL CHAMBER OF COMMERCE (ICC)

EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 8/24/2022 8:33 PM via ADVENTIST UNIV OF THE PHILIPPINES
AN: 2745614 ; International Chamber of Commerce.; Business Guide to Trade and Investment - Volume 1
Account: ns004409.main.ehost
CHAPTER 4 | NON-TARIFF BARRIERS
3.1.2 Conformity Assessment

Conformity assessment procedures determine whether a product satisfies the
requirements of a technical regulation or a standard.40 The rules in the TBT
Agreement (discussed below) applicable to technical regulations and standards are
generally applicable to conformity assessment procedures. As with the SPS
Agreement, the TBT Agreement permits conformity assessment to take place abroad
in foreign facilities – in other words it authorises foreign inspections.41
Conformity assessment procedures can themselves pose important obstacles to

international trade – particularly in instances when for logistical or cultural reasons
domestic manufacturers find it easier than foreign producers to satisfy conformity
assessment requirements. For example, at the behest of its domestic toy industry, one
Latin American country dramatically increased inspection requirements for doll safety.
More onerous inspection requirements discouraged potential foreign entrants and
served to protect domestic manufacturers in a market already facing strong
competition from Chinese imports.
Business should not underestimate the importance of technical regulations

and conformity assessment procedures as barriers to international trade.
Businesses seeking protection sometimes lobby receptive governments to
fashion well-crafted technical regulations and conformity assessment
procedures designed to protect local business interests.
3.2 TBT Agreement: Principal Obligations

Table of Contents
The TBT Agreement requires that technical regulations, standards and conformity
assessment procedures:
Do not discriminate (most-favoured-nation and national treatment);42
Do not create unnecessary obstacles to international trade (“necessity”);43
Are based on international standards when they exist and when they are
effective and appropriate (“harmonisation”);44 and
Are transparent.45
GATT AND THE TBT AGREEMENT

The first two of these requirements – non-discrimination and necessity –
are similar to the obligations under the GATT.
The harmonisation obligation is not found in the GATT, but is unlikely to

be invoked by a Member unless discrimination against a Member’s exports
is present.
The transparency obligations go beyond those present in the GATT, but

transparency issues are also unlikely to result in formal WTO disputes absent
a transparency requirement that discriminates against a Member’s exports.
Most challenges under the TBT Agreement also invoke the GATT. This
strategy proved successful in the EC – Seal Products dispute,46 where the
AB found a violation of Article XI of the GATT after ruling that the TBT
Agreement did not apply.47
INTERNATIONAL CHAMBER OF COMMERCE (ICC) | 103
EBSCOhost - printed on 8/24/2022 8:33 PM via ADVENTIST UNIV OF THE PHILIPPINES. All use subject to https://www.ebsco.com/terms-of-use
The principal TBT obligations are discussed below from the perspective of technical
regulations, but similar rules apply to standards and conformity assessment procedures.

3.2.1 Non-discrimination
Like the GATT, the TBT Agreement contains both national treatment and most-
favoured-nation obligations. Unlike the GATT, the TBT Agreement does not set forth
exceptions. This drafting oversight poses a problem for the business community. The
Appellate Body had to find a way to reconcile the need to fulfil a Member’s legitimate
regulatory objectives with the need to assure that a Member does not apply technical
regulations for protectionist purposes. The Appellate Body solved the problem by
“creating” the concepts of a “legitimate regulatory distinction” and “even-handedness”
as part of the four-part test set out below.48 Although the formal analysis may be
somewhat different, it is likely that the result in a TBT dispute alleging a violation of
the non-discrimination obligation would be the same as the result in a GATT dispute
predicated on a non-discrimination violation (MFN or national treatment) were a party
to invoke Article XX to justify the discrimination.
DISCRIMINATION UNDER THE TBT AGREEMENT:

WHAT BUSINESS SHOULD CONSIDER
1. Are the products “like”? If not, a Member may subject the products to
different regulatory treatment. The traditional “like product” test applies.49
2. If the products are like products, does the imported product(s) receive less
favourable treatment (i.e. does the measure alter the conditions of
Table of Contents
competition), either when compared to domestic like products (national

treatment), or as between imported like products (MFN treatment)?
3. If a given product is subject to less favourable treatment, is the less
favourable treatment based on a “legitimate regulatory distinction” (LRD)?
For example, assuming for the sake of argument that all automobiles are
like products, a regulation stating that all automobiles operated within a
particular Member must be zero emission vehicles discriminates in favour
of electric and hydrogen cars and against gasoline-powered cars, but
would probably be based on a legitimate regulatory distinction –
protection of the environment.
4. Is the LRD applied even-handedly? Look at how the regulation is designed
and applied. If the above measure only authorises zero emission electric
automobiles to the exclusion of zero emission hydrogen vehicles and the
regulating state is an efficient producer of such electric vehicles, this would
suggest that the regulation is not even-handed as there would not appear to
be a legitimate regulatory distinction between the treatment of electric
and hydrogen vehicles.50 The measure as applied would appear designed
to discriminate de facto in favour of domestically produced electric automobiles.
All recent TBT decisions have found that there was no legitimate regulatory distinction
behind the discrimination, and that there was therefore a violation of Article 2.1 – the
TBT Agreement’s non-discrimination obligation.
RECENT TBT CASES ON DISCRIMINATION51
US – Clove Cigarettes: The Appellate Body struck down as discriminatory

a US ban on the sale of cigarettes containing flavoured tobacco, except
menthol cigarettes. The Appellate Body found that clove, menthol and
other flavoured cigarettes were like products and that the US measure
resulted in less favourable treatment for Indonesian clove cigarettes than
for US-produced menthol cigarettes.
US – Tuna II: Dolphins swim with tuna in certain parts of the Pacific Ocean.
The United States regulates the use of a “dolphin-safe” label that manu-
facturers can apply to tuna products to indicate that the tuna is caught
in a manner that avoids dolphin deaths. The Appellate Body found that
the US labelling regulations discriminated against Mexico. The US label-
ling scheme applied to tuna caught with purse-seine nets in the eastern
tropical Pacific Ocean where the US and Mexico both fish. Tuna coming
from the western tropical Pacific Ocean where Mexico does not fish were
subjected to laxer requirements (despite the fact that tuna also swim with
dolphins in that region).
US – COOL: The COOL case dealt with a US “country of origin labelling”

(COOL) scheme that the United States applied to certain cuts of meat
produced in Canada, Mexico and the United States. The scheme was
purportedly designed to provide consumers with information as to where
Table of Contents
livestock were born, raised and slaughtered. The Appellate Body found
that the COOL programme discriminated against Canadian and Mexican
livestock by imposing increased costs on their livestock, both in in the
slaughtering process, and through the collection of information that was
never provided to consumers. This case is discussed in Chapter 13, Case
Study A.
Businesses seeking government support to challenge a technical

regulation, standard or conformity assessment procedure should focus
their effort on identifying discrimination that is not justifiable based on
an even-handedly applied legitimate regulatory distinction. This route has
proven the most successful in WTO dispute settlement.
3.2.2 Necessity
Pursuant to the TBT Agreement, technical regulations, standards and conformity
assessment procedures must not create “unnecessary” obstacles to international trade
(as explained above, measures based on international standards are presumed to
meet this requirement). This language is clarified in Article 2.2: “For this purpose,
technical regulations shall not be more trade-restrictive than necessary to fulfil a
legitimate objective, taking account of the risks non-fulfilment would create.”52
THE “NECESSITY TEST”

As with recent WTO Appellate Body decisions interpreting the term
“necessary” in Article XX(a), XX(b) and XX(d) of the GATT,53 the Appel-
late Body decisions in the three recent TBT cases summarised above
also applied a relaxed interpretation of the “necessity test”. Instead of
looking for the “least trade-restrictive measure reasonably available”,
the Appellate Body looked instead at the degree of contribution a TBT
measure makes toward furtherance of a legitimate objective. None of
these three TBT decisions found that the US measure was not necessary.
All three decisions were instead based on a violation of the non-discri-
mination provision discussed above.
3.2.2.1 The Role of a Science-Based Risk Assessment in TBT Cases

As we have seen, all SPS measures that do not conform to international standards
must be based on a science-based risk assessment. The role of science and risk
assessment is not as clear-cut in the case of the TBT Agreement. Clearly there is no
need for scientific backing for a measure based on public morality (EC – Seal
Products) or prevention of consumer deception. However, the necessity test requires
account to be taken “of the risks non-fulfilment would create”, and “relevant elements
of consideration” include “available scientific and technical information”. The Appellate
Body has not spoken on the role of science in TBT cases, but it might be more difficult
to defend a science-based measure, such as an environmental regulation, if it did not
Table of Contents
have scientific backing in the form of a risk assessment.
3.2.3 Harmonisation with International Standards

The TBT Agreement requires Members to base their technical regulations, standards
and conformity assessments on international standards where they exist or are
imminent, unless they are ineffective or inappropriate.
3.2.3.1 International Standards

The TBT Agreement mentions two standardisation organisations by name: the
International Standardization Organization and the International Electrotechnical
Commission, which together account for a large majority of international standards.
Although the list of international standardising bodies is open-ended, as affirmed in
the US – Tuna II case, to qualify a body must:
Have recognised activities in standardisation;
Be open to relevant bodies of at least all WTO Members; and
Be open at every stage of standards development.54
In many industrial sectors businesses play a role in the international

standard-setting process. For example, when the International Telecom-
munications Union, a UN specialised agency that develops technical stan-
dards to assure the interconnectivity of networks and technologies, holds
meetings in Geneva, industry representatives are present on the side-lines
lobbying government officials to have standards that are favourable to their
business adopted as international standards.
Nevertheless, in some fast moving areas, for example the development of

Wi-Fi standards, companies agree private standards amongst themselves
and bring products to market well before international standards are adopted.
These standards would not of course be covered by the TBT Agreement.
3.2.3.2 Presumption of Necessity

If a Member bases its measures on an international standard, there is a presumption
that the regulation is “necessary” (see Section 3.2.2).
3.2.3.3 Ineffective or Inappropriate International Standards

Members are free to enact regulations that are not based on international standards
when international standards do not exist or when they are ineffective or inappropriate.
“INEFFECTIVE OR INAPPROPRIATE”
Table of Contents
In EC – Sardines,55 the EC attempted (unsuccessfully) to justify a measure

that only permitted one species of sardine (that happened to be caught in
the Mediterranean) to be labelled “sardines” arguing that the Codex Alimen-
tarius standard was ineffective or inappropriate as it permitted other species
to be so labelled.56 Peru was able to demonstrate that the Codex standard at
issue was an effective and appropriate means of satisfying the EC’s objec-
tives of market transparency, consumer protection and fair competition.
3.2.4 Transparency
3.2.4.1 General Provisions
The transparency provisions of the TBT Agreement are similar to those in the SPS
Agreement, although as will be seen below, they are more business friendly. TBT
transparency requirements take several forms. Most apply when a relevant
international standard does not exist or a proposed technical regulation is “not in
accordance with the technical content of relevant international standards” and “may
have a significant effect on trade”. They can be broken down into measures applicable
pre-adoption and post-adoption.
TBT TRANSPARENCY REQUIREMENTS57

Pre-adoption:
• Publish a notice that they propose to publish a particular regulation
• Notify WTO Members through the WTO Secretariat at an “early
appropriate stage” of the products to be covered, and the objectives and
rationale of the proposed regulation;58
• Upon request provide Members with copies of the proposed regulation;
• Identify where the regulation deviates from international standards;
• Allow a reasonable time for other Members to comment in writing on the
proposed regulation and take these comments into consideration; and
• Identify a central government authority to be responsible for TBT
notifications.
Post-adoption: Publish promptly all adopted technical regulations, with
(except in cases of urgency) a reasonable interval before entry into force to
give producers time to adapt.
3.2.4.2 Enquiry Points

In addition to the transparency provisions outlined above, as with the SPS Agreement,
the TBT Agreement mandates that Members establish “enquiry points” to respond to
questions from other Members. Unlike the SPS Agreement, TBT enquiry points must
Table of Contents
be able to respond to questions from interested parties, such as the business

community, as well as Member enquiries. TBT enquiry points are required to provide
relevant documents regarding proposed or adopted technical regulations, standards
and conformity assessment procedures.
3.2.4.3 Urgent Problems

The TBT Agreement permits Members to derogate from pre-adoption notification
requirements when urgent matters related to safety, health, environmental protection
or national security arise or threaten to arise. For example, if Members discover that a
certain brand of imported mobile phone contained batteries that were prone to
explode, the Member would be permitted to ban importation of that brand of phone,
provided that upon adoption of the technical regulation prohibiting import, it notifies
Members through the WTO Secretariat of the regulation and products covered, the
rationale behind the regulation, and the nature of the urgent problem.59
3.2.4.4 Transparency Resources

Section 6 of Chapter One provides details of available Internet resources, including EU
and US TBT resources, that will help keep the business community up-to-date with
respect to TBT developments.60
The WTO website provides important TBT-related information that can be

of assistance to the business community, including a searchable TBT
Information Management System with all TBT notifications,61 as well as
a training course and a detailed guide explaining the TBT Agreement.62
Derestricted official documents are also available.63
3.3 Responsibility of Members for Subnational

Government and Non-Governmental Bodies
The TBT Agreement requires Members to take “reasonable measures” to ensure
compliance with the Agreement by local government and non-governmental bodies64
that have been given regulatory authority (for example, inspection companies such as
SGS), and makes Members responsible for breaches of the TBT Agreement
committed by such bodies. This provision is important for the business community,
particularly when exporting to federal states like the United States, Germany and
Brazil. For example, a WTO Member could bring a dispute settlement proceeding
against the United States if an automobile emissions regulation established by the
state of California violated the TBT Agreement.
3.4 Non-Binding Provisions

The TBT Agreement contains several non-binding provisions that may indicate the
future direction of regulations and regulatory agreements. They are discussed below.
3.4.1 Equivalence
A WTO Member is required to give “positive consideration” to accepting the technical
regulations of other Members as equivalent, even if different from its own, if the
Member is satisfied that the foreign regulation adequately fulfils the objectives of its
own regulation. As this “requirement” gives members discretion to determine when a
foreign regulation is equivalent, its enforceability may be difficult. Nevertheless,
equivalency agreements do exist. For example, since 2014, the United States and
Japan have recognised the equivalence of their organic food regulations, and as a
Table of Contents
result “all certified organic plant and plant based processed products that are
produced in the United States and Japan, or which have final processing, packaging,
or labelling in the United States or Japan, may access either market.”65
3.4.2 Mutual Recognition of Conformity Assessments

Members are required to ensure, “whenever possible”, that they accept the results of
testing procedures (conformity assessment procedures), even if such procedures
differ from their own, if they are “satisfied” that the testing procedures assure a result
equivalent to their own testing procedures. This provision vests substantial discretion
in individual Members. This provision encourages consultations between Members, as
well as consideration of the relevant international recommendations of international
standardising bodies. For example, the United States and the European Union have
mutual recognition agreements in place to recognise the test results of specified
conformity assessment bodies operating in the areas of telecommunications
equipment and electromagnetic compatibility.

3.4.3 Design of Technical Regulations
“When appropriate”, Members are to specify technical regulations based on
performance characteristics as opposed to design characteristics. For example, the
regulation of a fire door should be specified based on its ability to withstand a certain
temperature for a specified length of time, as opposed to its physical characteristics,
which could be defined more easily in a way that favours domestic products over
imports. WTO Members intended that regulations based on performance
characteristics would unleash the creativity of the business community by allowing
space for new means of solving problems – for example the development of new
materials to design a fire door. In fact, the trend in developed countries is to base
regulations increasingly on performance characteristics, unless the matter is so vital
(for example automobile safety) that regulations based on design characteristics are
necessary (such as mandatory airbag and seatbelt requirements).
Unfortunately, by qualifying the preference for performance requirements with the

phrase “when appropriate”, the TBT Agreement allows plenty of room for a
protectionist approach. A Member could, for example, base its regulation for a fire
door on a design used by its own manufacturers, which would give them an
advantage over foreign competitors, and could probably come up with reasons why a
performance-based approach would not be appropriate.
3.5 Does the TBT Agreement Cover Non-Product-Related Measures?

An important but so far unresolved issue is whether a government can ban the import
of a product based on production methods that are not detectable in the product
itself; for example when a manufacturer does not comply with international labour or
environmental standards. The TBT defines a technical regulation as a measure that
sets out product characteristics or their “related” processes or production methods. A
narrow reading of the language would suggest that failure to comply with international
labour or environmental standards is not “related” to product characteristics. However,
the Appellate Body has not yet ruled on this issue. It is however known from US –
Shrimp (Article 21.5)66 that Article XX of the GATT permits a Member to legally ban
the import of a product not manufactured in accordance with that Member’s
environmental standards provided that the Member does not apply the ban in a
manner that results in arbitrary or unjustifiable discrimination or a disguised restriction
on international trade.67 As the Appellate Body appears to be striving for consistency
between the TBT and GATT Agreements, it would be somewhat surprising if a trade
measure based on product characteristics that are not detectable in the final product
could pass muster under the GATT but not the TBT Agreement.
Table of Contents
Business interests should be prepared to deal with import restrictions

based on product characteristics that are not detectable in the product
itself – such as a manufacturer’s failure to meet core labour standards or
environmental norms.
A related question is whether a government can require products to be labelled with

characteristics associated with a product’s production but not detectable in the final
product (for example, carbon emissions produced when a product is manufactured;
whether the manufacturer complies with labour, environmental or human rights
agreements, etc.). As described above, a 2012 WTO Appellate Body decision held that
a US programme that established criteria which if met allowed a manufacturer to affix
a “dolphin-safe” label on canned tuna was a technical regulation within the meaning of
the TBT Agreement,68 although obviously the means by which the tuna were caught
had no effect on the characteristics of the tuna itself.
As a result of the Appellate Body decision in US – Tuna II, Members can

require the labelling of product characteristics not detectable in the final
product – such as whether production of a product is in compliance with
environmental, labour or human rights norms. Of course, the labelling
programme must meet the requirements of the TBT Agreement, in
particular Article 2.1 (non-discrimination), as well as the GATT.
3.6 Private Standards

Another important non-tariff barrier for developing country agricultural products, are
buying requirements established by supermarket chains and other large importers,
such as sustainability standards set forth by GlobalG.A.P.,69 or supermarket buying
requirements relating to size, colour, flavour, and production standards. US – Tuna II,
discussed above, makes clear that such standards are outside the WTO Agreement as
they are set by private parties whose standard-setting activities are not open to all
WTO Members at all stages of their activity.
4.0 Mega-Regional Free Trade Agreements

Increasingly regional trade agreements incorporate provisions governing SPS and TBT
measures – in particular provisions related to equivalence and mutual recognition. This
is also true for the mega-regional agreements now under negotiation or awaiting
ratification. “Mega-regional” free trade agreements have the potential to greatly affect
international trade as they are intended to eliminate tariffs and reduce non-tariff
barriers, as well as reduce or eliminate barriers to services trade, among countries that
are already deeply integrated into global value chains. It was estimated that (i) if ever
ratified the Trans-Pacific Partnership (TPP) would have affected more than a quarter
of world goods and services trade, and (ii) the Trans-Atlantic Trade and Investment
Partnership (TTIP) could affect more than 40% of such trade.70 Likewise, the Regional
Comprehensive Economic Partnership agreement (RCEP), which would bring
together the members of the Association of Southeast Asian Nations (ASEAN)71 and
the six countries with which ASEAN has free trade agreements,72 would profoundly
affect regional trade in East and Southeast Asia. Free Trade Agreements are discussed
in Chapter Two.
Businesses from countries that are in the process of negotiating or

ratifying one or more mega-regional agreements should factor in the
Table of Contents
economic implications of such agreements on their business activities.

In some cases, mega-regional agreements will make it easier to enter
business relationship with companies active in countries that have ratified
the same agreement. However, as a result of complex rules of origin, they
may also serve to provide a layer of protection from competitors outside a
particular mega-regional agreement.
Mega-regional agreements are expected to contain provisions dealing with non-tariff

barriers, in particular TBT and SPS regulations. At the time of writing (April 2017) the
future of TPP was very much in doubt. The United States had withdrawn from the
Agreement and it was unclear whether the other eleven signatories would proceed
without the United States. Nevertheless, TPP provides a good example of how mega-
regional agreements are likely to treat SPS and TBT measures, as it reflects the most
up-to-date thinking and may be a good model for future RTAs. The SPS and TBT
obligations in the TPP, sometimes referred to as “SPS+” and “TBT+”, go beyond those
set forth in the WTO SPS and TBT Agreements.
4.1 The Trans-Pacific Partnership’s SPS Provisions

The TPP contains a specific SPS chapter. It provides that SPS measures that exceed
international standards must be based on documented and objective scientific
evidence rationally related to the particular SPS measure. TPP also requires that
measures taken to manage SPS risks (“risk management”) be the least trade
restrictive measure reasonably available to reach the desired level of SPS protection.73
This may serve to limit excessive SPS responses to minimal SPS risks.
To the extent feasible, TPP focuses in large part on equivalence – both product-
specific equivalence, and also equivalence on a system-wide basis (for example use of
accredited laboratories). The goal is to prevent parties from relying on small
differences that would prevent a party’s recognition that a SPS measure or an SPS
system is equivalent. TPP also tries to accelerate the import inspection process and
requires prompt justification of rejections – which can be critical when agricultural

products are traded.
TPP also curbs potential abuse of the precautionary approach provided for in Article
5.7 of the SPS Agreement by requiring that precautionary measures be reviewed
within six months, instead of the reasonable period of time specified in Article 5.7.
TPP also seeks to limit a party’s ability to restrict trade in animal and animal products
by setting forth strict disciplines that are applicable to the veterinary certificates used
for trade in such products.
With respect to pest-free and disease-free zones, TPP requires greater respect for
regional and local conditions than that set forth in the WTO SPS Agreement. It favours
trade from “compartments” (zones) with high levels of bio-security. An importing
party must provide a rationale when it refuses to recognise a “compartment” as
disease or pest-free.
Similar transparency requirements are required for risk assessments. In order to

prevent abuse by an importing country, the importing country must upon request
state whether it has conducted a risk assessment and provide supporting data. The
exporting country has a right to review and comment on the data and seek an
explanation of the data’s relevance. The TPP also provides for science-based audit
procedures whereby an importing country can audit the practices of the exporting
country. The audit can include an assessment of a country’s SPS system, as well as the
practices of the competent authorities. TPP specifically authorises on-site inspections.
Finally, TPP establishes a Cooperative Technical Consultation (CTC) mechanism that

Table of Contents
parties must utilise before resorting to the TPP’s formal dispute settlement system.
4.2 The Trans-Pacific Partnership’s TBT Provisions

TPP also contains a separate chapter that deals with TBT provisions. TPP largely
builds on existing WTO TBT disciplines, in particular in the area of conformity
assessment (testing). For example, parties are required to accord national treatment
to recognised conformity assessment bodies outside their territory and to recognise
their testing results. The goal is to avoid duplicative testing (both within and outside
the importing state). The TPP also prohibits members from requiring that a conformity
assessment body be located within the territory of the importing party – in other
words it anticipates that testing will be undertaken in the exporting country and the
results recognised by the importing country.
As with the SPS chapter of TPP, the TBT chapter mandates transparency. It requires
public consultations before new TBT measures are adopted. This allows both businesses
and consumers (“stakeholders”) time to comment on draft measures. In most cases,
TPP also requires a six-month waiting period between publication and entry into force
of new TBT measures so that the business community has time to adapt its products.
TPP parties are also required to make regulatory decisions public. This includes
disclosure of the criteria employed by a conformity assessment body when it refuses
to recognise the decision of a foreign body.
TPP limits the fees assessed for conformity assessment to the cost of the service
provided. It also provides for increased protection of proprietary information in the
processed food sector. In general, all information disclosure requirements are limited
to what is necessary to achieve a legitimate objective.
Finally the TBT chapter of the TPP Agreement includes a series of sectoral annexes
that business should consult, assuming ratification, if operating in a covered sector.
TPP TBT ANNEXES74

The TPP Agreement contains the following important TBT Annexes that
could affect specific business sectors:
• Wine and Distilled Spirits

• Information and Communications Technology Products
• Pharmaceuticals
• Cosmetics
• Medical Device
• Proprietary Formulas for Pre-packaged Foods and Food Additives
• Organic Products
Table of Contents
1 See Report (2015) of the Committee on Sanitary and Phytosanitary Measures, G/L/1129 (28 October 2015); Committee on
Technical Barriers to Trade, Twenty-First Annual Review of the Implementation and Operation of the TBT Agreement, Report
by the Secretariat, G/TBT/38/Rev.1 (24 March 2016).
2 See http://www.iso.org/iso/home/standards.htm.
3 See http://www.iec.ch/about/annual_report/pdf/IEC_Annual_Report_2015.pdf at pp. 7 and 2 respectively.
4 See Okun-Kozlowicki, “Standards and Regulations: Measuring the Link to Goods Trade”, US Department of Commerce (2016), at p.3.
5 See Alisson, “The Nontariff Trade Barrier Challenge: Development and Distortion in the Age of Interdependence”, 12 Tulsa Law
Journal 1, at p.3, n.10 (1976), available at http://digitalcommons.law.utulsa.edu/tlr/vol12/iss1/1/.
6 The SPS Agreement also allows a Member to prevent or limit other damage within its territory from the entry, establishment
or spread of pests, such as weeds.
7 SPS Measures are defined and examples are provided in Annex A(1) of the SPS Agreement.
8 See SPS Agreement, Annex C, para. 2.
9 Article XX(b) of the GATT permits exceptions to the GATT rules where “necessary” for the protection of human, animal, or
plant life or health. See Chapter Two, Secton 8.1.
10 EC – Measures Concerning Meat and Meat Products (Hormones), WT/DS26,48/AB/R (1998) (EC – Hormones), para. 170.
11 Canada/United States – Continued Suspension Of Obligations in the EC – Hormones Dispute, WT/DS320,321/AB/R (2008), para. 591.
12 Japan – Measures Affecting the Importation of Apples, WT/DS245/AB/R (2003) (Japan-Apples).
13 Japan – Measures Affecting Agricultural Products, WT/DS76/AB/R (1999).
14 Japan – Apples, paras. 147, 162-168.
15 European Communities – Measures concerning Meat and Meat Products (Hormones), DS26, para. 8.107.
16 Article 5.2 SPS.
17 EC – Hormones, paras. 207-209.
18 Id. para. 193.
19 Id. para. 190.
20 Article 5.6 and footnote 3 SPS (emphasis added).
21 Australia – Measures Affecting Importation of Salmon (Article 21.5 – Canada), WT/DS18/R/W (2000), para 7.111.
Table of Contents
22 See Section 3.2.2 of this Chapter.

23 See Denise Prévost, “National Treatment and the SPS Agreement: A Sui Generis Obligation”, p.140, appearing in The Principle
of National Treatment in International Economic Law – Trade, Investment and Intellectual Property, Anselm Kamperman Sand-
ers, ed., (2014).
24 In EC – Hormones the Appellate Body did however note that a difference in levels of protection is only one element of
“indirect proof” demonstrating arbitrary or unjustifiable discrimination. EC – Hormones, para. 240. In Australia – Salmon, the
Appellate Body examined whether the risks at issue for the entry of the same disease were comparable across different fish
species (comparable risk). Australia – Measures Affecting Importation of Salmon, WT/DS18/AB/R (1988), para. 146; see also
Prévost, supra note 23, at 142.
25 See SPS Article 6.
26 India – Measures Concerning the Importation of Certain Agricultural Products, WT/DS430/AB/R (2015).
27 United States – Measures Affecting the Importation of Animals, Meat and Other Animal Products from Argentina, WT/DS447/R (2015).
28 Bovine spongiform encephalopathy.
29 See SPS Article 5.7.
30 Japan – Measures Affecting Agricultural Products, WT/DS76/R (1999), para. 8.57; WT/DS76/AB/R paras. 92-93.
31 See SPS Article 4.1.
32 Under Article 4.1 the exporting Member must give access to the importing Member for inspection and testing procedures.
33 “An Example of Equivalence”, Statement by Australia at the [WTO] Meeting of 14-15 March 2001, G/SPS/GEN/243, 9 April 2001.
34 See European Communities - Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291,292,293/R (2006).
35 The training course is available at: https://ecampus.wto.org/search.asp?lang=En. The Guide, WTO Agreements Series: Sanitary
and Phytosanitary Measures (2010), is available at: https://www.wto.org/english/res_e/booksp_e/agrmntseries4_sps_e.pdf.
36 https://www.wto.org/english/tratop_e/sps_e/sps_e.htm.
37 Article TBT 2.2.
38 If neither Agreement applies, the measure may still fall under the GATT.
39 United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products (US – Tuna II), WT/
DS381/AB/R (2012).
40 Examples include “procedures for sampling, testing and inspection; evaluation, verification and assurance of conformity;
registration, accreditation and approval….” Annex 1.3.
41 See TBT Article 5.1.1.
42 TBT Articles 2.1, 5.1.1 and Annex 3:D.
43 TBT Articles 2.2, 5.1.2 and Annex 3:E.
44 TBT Articles 2.4, 5.2.2 and Annex 3:G.
Editors comment: We tried to harmonize the references here by putting the name of the Agreement first.
45 TBT Articles 2.9, 5.6 and Annex 3:J-Q.

46 European Communities - Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400,401/AB/R (2014).
47 From a business perspective, the Appellate Body’s reasoning for the inapplicability of the TBT Agreement may not have
made much difference in the ultimate outcome of the Seal Products dispute as under either agreement the EU was likely
to lose. Nevertheless, from a strictly legal perspective the decision is questionable. The Appellate Body ruled that the TBT
Agreement did not apply because the EU’s ban on pure seal products does not lay down “product characteristics”. However,
it also ruled that the EU ban on “seal-containing products” laid down product characteristics, but that this was not sufficient
for the TBT Agreement to apply as this was not the main feature of the regulation.
48 The Appellate Body has defined non-discrimination both in terms of Article I and Article III of the GATT, and based on its
definition of “arbitrary and unjustifiable discrimination” in Article XX’s chapeau which is discussed in Chapter Two. See US –
Tuna II (Mexico); United States – Measures Affecting the Production and Sale of Clove Cigarettes (US – Clove Cigarettes), WT/
DS406/AB/R (2012); and United States – Certain Country of Origin Labelling (COOL) Requirements (US – COOL), WT/DS384,
386/AB/R (2012).
49 Look to (i) the physical characteristics of the product (its properties, nature & qualities), (ii) its customs classification based
on the Harmonised System, (iii) the end uses of the product, and (iv) consumer preferences. See Section 6.1 of Chapter Two.
50 Assuming that both are like products.
51 See supra note 48.
52 It is also clarified in Article 5.1.2 of the TBT Agreement: “This means, inter alia, that conformity assessment procedures shall not
be more strict or be applied more strictly than is necessary to give the importing Member adequate confidence that products
conform with the applicable technical regulations or standards, taking account of the risks non-conformity would create.”
53 See Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161,169/AB/R (2001); and Brazil – Measures
Affecting Imports of Retreaded Tyres, WT/DS332/AB/R (2007). See also Chapter Two.
54 Decision on Principles for the Development of International Standards, Guides and Recommendations with Relation to
Articles 2, 5, and Annex 3 to the Agreement, G/TBT/1/Rev.10 (9 June 2011). Participation in a Body's standardising activities is
evidence suggesting that the Body is engaged in recognised standardisation activities. Recognition is by WTO Members and
national standardising bodies, and the greater their participation the greater the likelihood of recognition. Recognition of a
body can flow from recognition of its standards and recognition can flow from recognition of one single standard. See EC –
Tuna II, paras. 349-379.
55 EC – Trade Description of Sardines, WT/DS231/AB/R (2002).
56 The Appellate Body agreed with the Panel that “ineffective” means unable to accomplish the legitimate objective pursued,
Table of Contents
and “inappropriate” means not suitable for the fulfilment of the legitimate objective pursued. Id. para. 285.
57 Article 2.9 – 2.11 TBT Agreement.
58 Transparency provisions for standardising bodies are somewhat different. In particular, Paragraph J of Annex 3:C of the
Agreement requires that standardising bodies notify their work programmes to the ISO/IEC Information Centre rather than
the WTO. Annex 3:C also requires standardising bodies that have accepted or withdrawn from the Code of Good Practice (an
Annex that sets forth the requirements applicable to standardising bodies) to notify the ISO/IEC Information Centre.
59 The Member must also provide copies of the regulation upon request to other Members, allow Members to comment in
writing, discuss the comments with other Members, and take the comments into consideration.
60 See http://ec.europa.eu/growth/tools-databases/tbt/en/, and https://tsapps.nist.gov/notifyus/data/index/index.cfm.
61 http://tbtims.wto.org/.
62 The training course is available at: https://ecampus.wto.org/search.asp?lang=En. The Guide, entitled WTO Agreements Series:
Technical Barriers to Trade (2014), is available at: https://www.wto.org/english/res_e/publications_e/tbttotrade_e.pdf.
63 https://www.wto.org/english/tratop_e/tbt_e/tbt_work_docs_test_e.htm.
64 Van den Bossche and Zdouc list the Associação Brasileira de Normas Técnicas, the American National Standards Institute and
the European Committee for Standardization as examples of non-governmental standardising bodies. The Law and Policy of
the World Trade Organization (Cambridge University Press, 3rd ed. 2013), at p. 860. This point has, however, never been tested
in a WTO dispute.
65 See https://www.ams.usda.gov/services/organic-certification/international-trade/Japan.
66 See generally United States – Import Prohibition of Certain Shrimp and Shrimp Products (Recourse to Article 21.5 of the DSU
by Malaysia), WT/DS58/AB/RW (2001).
67 In the US – Shrimp case, the Appellate Body required the United States to first try to negotiate a multilateral agreement in
good faith that would protect endangered sea turtles.
68 US – Tuna II (Mexico).
69 See http://www.globalgap.org/uk_en/who-we-are/about-us/.
70 See World Economic Forum, “What are Mega-Regional Trade Agreements?” https://www.weforum.org/agenda/2014/07/
trade-what-are-megaregionals/. As noted earlier, at the time of writing there was considerable doubt as to whether the TPP
or the TTIP would come into effect.
71 Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
72 Australia, China, India, Japan, South Korea and New Zealand.
73 The SPS Agreement does not use the term “risk management”.
74 The USTR has provided a brief summary of the annexes on its website: https://ustr.gov/sites/default/files/TPP-Chapter-Sum-
mary-Technical-Barriers-to-Trade.pdf. The full text of the TPP is also available on the United States Trade Representative’s
website: https://ustr.gov/trade-agreements/free-trade-agreements/trans-pacific-partnership/tpp-full-text. Despite US with-
drawal from TPP, these documents were still available at the time of writing (April 2017).
115 | INTERNATIONAL CHAMBER OF COMMERCE (ICC) INTERNATIONAL CHAMBER OF COMMERCE (ICC) | 115

InternationalCh 2017 Chapter4NonTariffBarr BusinessGuideToTradeA

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

InternationalCh 2017 Chapter4NonTariffBarr BusinessGuideToTradeA

Uploaded by

Copyright:

Available Formats

BUSINESS GUIDE TO TRADE AND INVESTMENT | INTERNATIONAL TRADE

3.1 TBT Measures

THE US – TUNA II CASE

establishing criteria which if met allowed a manufacturer to affix a “dolphin-

 The US programme established a single and legally required means of

Business interests may find it useful to lobby governments to enact label-

102 | INTERNATIONAL CHAMBER OF COMMERCE (ICC)

3.1.2 Conformity Assessment

Conformity assessment procedures can themselves pose important obstacles to

Business should not underestimate the importance of technical regulations

3.2 TBT Agreement: Principal Obligations

GATT AND THE TBT AGREEMENT

The harmonisation obligation is not found in the GATT, but is unlikely to

The transparency obligations go beyond those present in the GATT, but

INTERNATIONAL CHAMBER OF COMMERCE (ICC) | 103

DISCRIMINATION UNDER THE TBT AGREEMENT:

competition), either when compared to domestic like products (national

104 | INTERNATIONAL CHAMBER OF COMMERCE (ICC)

RECENT TBT CASES ON DISCRIMINATION51

US – Clove Cigarettes: The Appellate Body struck down as discriminatory

US – COOL: The COOL case dealt with a US “country of origin labelling”

Businesses seeking government support to challenge a technical

INTERNATIONAL CHAMBER OF COMMERCE (ICC) | 105

THE “NECESSITY TEST”

3.2.2.1 The Role of a Science-Based Risk Assessment in TBT Cases

have scientific backing in the form of a risk assessment.

3.2.3 Harmonisation with International Standards

3.2.3.1 International Standards

106 | INTERNATIONAL CHAMBER OF COMMERCE (ICC)

In many industrial sectors businesses play a role in the international

Nevertheless, in some fast moving areas, for example the development of

3.2.3.2 Presumption of Necessity

3.2.3.3 Ineffective or Inappropriate International Standards

In EC – Sardines,55 the EC attempted (unsuccessfully) to justify a measure

INTERNATIONAL CHAMBER OF COMMERCE (ICC) | 107

TBT TRANSPARENCY REQUIREMENTS57

3.2.4.2 Enquiry Points

be able to respond to questions from interested parties, such as the business

3.2.4.3 Urgent Problems

3.2.4.4 Transparency Resources

The WTO website provides important TBT-related information that can be

108 | INTERNATIONAL CHAMBER OF COMMERCE (ICC)

3.3 Responsibility of Members for Subnational

3.4 Non-Binding Provisions

3.4.2 Mutual Recognition of Conformity Assessments

INTERNATIONAL CHAMBER OF COMMERCE (ICC) | 109

Unfortunately, by qualifying the preference for performance requirements with the

3.5 Does the TBT Agreement Cover Non-Product-Related Measures?

Business interests should be prepared to deal with import restrictions

A related question is whether a government can require products to be labelled with

As a result of the Appellate Body decision in US – Tuna II, Members can

3.6 Private Standards

110 | INTERNATIONAL CHAMBER OF COMMERCE (ICC)

4.0 Mega-Regional Free Trade Agreements

Businesses from countries that are in the process of negotiating or

economic implications of such agreements on their business activities.

Mega-regional agreements are expected to contain provisions dealing with non-tariff

4.1 The Trans-Pacific Partnership’s SPS Provisions

INTERNATIONAL CHAMBER OF COMMERCE (ICC) | 111

requires prompt justification of rejections – which can be critical when agricultural

Similar transparency requirements are required for risk assessments. In order to

Finally, TPP establishes a Cooperative Technical Consultation (CTC) mechanism that

4.2 The Trans-Pacific Partnership’s TBT Provisions

The US programme established a single and legally required means of