Standards and Market Access

This Viewpoint Paper examines legitimate concerns of the developing (including the least developed) countries regarding the SPS and TBT Agreements. The purpose of the paper is to generate further debates highlighting the need for a comprehensive evaluation of the SPS and TBT Agreements and also to introduce suitable modifications.  

Introduction

During the initial years of the functioning of the World Trade Organisation, many countries, especially the poor ones, are of the opinion that WTO rules on sanitary and technical standards are more often than not creating market access barriers for their exports to the industrialised countries. In this context, there have been demands by them to review and change these rules by taking into consideration the Special and Differential Treatment (S&DT) provisions enshrined in the WTO Agreements on Sanitary and Phyto-sanitary Measures (SPS) and Technical Barriers to Trade (TBT). The moot point is: should the WTO rules only acknowledge the importance of health and technical standards and not heed to livelihood concerns in poor countries?

WTO Agreements on Standards

The Uruguay Round of the multilateral trade negotiations brought several new areas into the ambit of the General Agreement on Tariffs and Trade (GATT), the predecessor of the WTO. The Agreement Establishing the WTO (the Marrakesh Agreement) has several provisions on rule making vis-à-vis the multilateral trading system. They are aimed at facilitating trade among countries by providing guidelines.  However, not withstanding the positive motives behind these rules, the experiences of the developing countries regarding these rules, especially those on standards, have not been good.

The Marrakesh Agreement contains two specific categories of rules on standards. They are a) Agreement on the Application of Sanitary and Phyto-sanitary Measures (SPS) and b) Agreement on Technical Barriers to Trade (TBT). The former provides disciplines for members imposing sanitary and phytosanitary measures that might affect international trade. The latter provides disciplines regarding the setting up and enforcement of technical standards for reducing associated hurdles on international trade. 

Objectives of the SPS and TBT Agreements

In general, SPS measures are for protecting human, animal or plant life or health from risks arising from the entry or spread of pests and diseases, or contamination in food, beverages or feedstuff. Members of the WTO must follow SPS rules in enacting legislation and implementing regulations that fall within the scope of the Agreement.

Although the Agreement has been enacted to bring in proper discipline on sanitary and phyto-sanitary measures, the operation of the Agreement has come under scrutiny, not only from developing and least developed countries but also consumer and environmental groups. Furthermore, it has also been argued that certain sections of the Agreement can affect the ability and rights of governments to introduce health related safeguards.

Similarly, the TBT Agreement established guidelines for  ensuring that technical regulations and standards, including packaging, marking and labelling and procedures for assessment of conformity with technical regulations and standards do not create unnecessary obstacles to international trade.

However, experiences of many countries reveal a different picture. Many provisions of the TBT Agreement are affecting the competitiveness of developing countries’ products.

Operational Aspects

Article 10.1 of the SPS Agreement stipulates that during the preparation and the application of SPS measures, WTO Members shall take into account the special needs of the developing and in particular the least developed countries. In setting national standards, the Members are expected to work in collaboration with relevant international organisations.

However, contrary to the above, many developing countries are facing difficulties in gaining better market access, especially in the developed countries, because they fail to satisfy certain national standards.

Moreover, many rich countries are not giving due consideration to the special needs of the poor countries such as technical and financial assistance for capacity building, sufficient information and adequate time span for complying with standards, etc.

The Agreement on TBT attempts to foster harmonisation of technical regulations by using international standards. However, in many instances, these regulations are creating non-tariff barriers for products originating from developing countries.

A Brief History on Negotiations  

In order to explain the nature of SPS measures and their effects on market access, it would be useful to take a look at the negotiations during the Uruguay Round.

It was in the context of liberalisation of agriculture trade that the SPS issues came up for negotiations. Argentina, Australia, Canada, the EC, Japan, New Zealand, the Nordic countries and the United States led the negotiations. The US and the European Commission (EC) proposed broad harmonisation efforts, based on the expertise of international organisations.

While the EC called for all standards to be based on scientific evidence, the developing countries supported international harmonisation of SPS measures to prevent industrialised countries from imposing arbitrarily strict standards.

Concerns of Developing Countries

SPS Measures

• Imposition of standards by many developed countries are either beyond the technical competence of developing countries to adhere, or do not take into account the special development, financial and trade needs of developing countries, or fundamental climatic or geographical factors, or technological problems.

• Developing countries are not in a position to convey their concerns on SPS measures initiated by many countries as mandatory notifications in most cases do not provide sufficient information regarding the proposed standards. This is especially with regard to the risk assessment methodology and other factors, which may have been taken into account for determining the appropriate level of sanitary protection.

• Developing countries are not getting reasonable time to adopt their products to the requirements of new legislation/rules, which are evolving.

• Though the Agreement stipulates countries to base their measures on international standards, guidelines and recommendations, participation of developing countries in the standard setting process are to be made effective. 

TBT Regulations

• Technical cooperation between the developed and developing countries are inadequate in upgrading conformity assessment procedures in developing countries.

• Developing countries are often compelled to modify technical regulations to conform to those of the developed countries, regardless of the impact and actual need for them.

• Absence of any positive link between transfer of technology at fair and reasonable cost while introducing new regulations.

• Absence of proper distinction between mandatory and voluntary regulations.

The Road Ahead

Both the SPS and TBT Agreements are part of the multilateral trading system under the auspices of the WTO whose aim is to facilitate trade among countries in a non-discriminatory manner.

However, in actual practice, SPS measures and TBT regulations are resulting in actual and potential barriers to exports of developing countries’ products, mainly agricultural and other primary commodities.

It has been recognised that, many a times, many provisions of SPS and TBT Agreements seriously undermine market access opportunities provided for developing countries.

Therefore, necessary modifications are to be made in these agreements for strengthening the multilateral trading system and helping developing countries to share greater benefits from the WTO regime.

And, in order to do so the following aspects need to be considered:

• Identification of lacunae in SPS and TBT Agreements;

• Analyses of problems of developing countries in implementing provisions of these Agreements;

• Identification of special needs of developing countries for technical and financial assistance for capacity building; and

• Setting up of international price commissions for developing countries to get better price for their products while adhering to internationally harmonised standards and regulations.

This Viewpoint Paper is written by Mr. K. S. Sajeev of and for the CUTS Centre for International Trade, Economics & Environment.

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