SCOPE OF THE TBT AGREEMENT TRADE IN GOODS GATT 1994 TBT Agreement - - PowerPoint PPT Presentation

TRAINING PROGRAMME FOR THE GOVERNMENT OF INDONESIA The TBT Agreement

Jogjakarta, Indonesia 26-29 March 2019

SCOPE OF THE TBT AGREEMENT

TBT Agreement GATT 1994

TRADE IN GOODS lex specialis

SCOPE OF THE TBT AGREEMENT

The TBT Agreement applies to the following measures: ▪ Technical Regulations ▪ Standards ▪ Conformity Assessment Procedures

▪ 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. DEFINITION OF A TECHNICAL REGULATION

SUMMING UP

Technical regulation

Applies to an identifiable product Product characteristics

• r their related

processes and production methods May deal exclusively with packaging, labelling Mandatory compliance

▪ View 1: Only if non-compliance leads to inability to market the product. ▪ View 2: If , for any given activity or type of statement, it must be complied with; but you can still market the product.

Example: US – Tuna II (Mexico) → If you want to say anything about dolphin safety, you must follow certain conditions. But you can still market tuna that is not dolphin-safe.

WHEN IS A TECHNICAL REGULATION MANDATORY?

EXERCISE

▪ A measure that imposes a labelling requirement on sardines. ▪ A measure that bans asbestos fibres. ▪ A measure that bans cigarettes that contain flavours. ▪ A subsidy to agricultural products. ▪ A dolphin-safe label on tuna products. ▪ A measure that bans products that contain asbestos. ▪ A measure that imposes a country-of-origin label on meat. ▪ A tariff on bread. ▪ A measure that imposes that meat products must be produced from animals that have been humanly killed.

EXERCISE

• A measure that imposes a labelling requirement on

sardines EC – Sardines

• A measure that bans cigarettes that contain flavours

US – Clove Cigarettes

• A dolphin-safe label on tuna products

US – Tuna II (Mexico)

• A measure that bans products that contain asbestos

EC – Asbestos

• A measure that imposes a country-of-origin label on meat

US – COOL

WTO CASE LAW

If a measure is a technical regulation, then it falls under the scope of the TBT Agreement. ▪ Article 2.1 → Non-discrimination obligations ▪ Article 2.2→ Prohibition of unnecessary restrictions ▪ Article 2.4 → Use of international standards

MAIN OBLIGATIONS UNDER THE TBT AGREEMENT

Article 2.1 of the TBT Agreement Non-discrimination obligations

Article 2.1 of the TBT Agreement: Members shall ensure that in respect of technical regulations, products imported from the territory of any Member shall be accorded treatment no less favourable than that accorded to like products of national origin and to like products originating in any other country.

most-favoured-nation national treatment

NON-DISCRIMINATION OBLIGATIONS

▪ The measure must be a "technical regulation"; ▪ Imported and domestic products must be "like products"; and ▪ Imported products must receive "less favourable treatment" than like domestic products. Elements of Article 2.1 of the TBT Agreement:

NON-DISCRIMINATION OBLIGATIONS

NON-DISCRIMINATION OBLIGATIONS

Imported and domestic products must be like products: ▪ Same 4 criteria traditionally followed under Art. III:4 of the GATT (physical characteristics, end-uses, consumer tastes and habits, and tariff classification). Competition-based approach.

NON-DISCRIMINATION OBLIGATIONS

NON-DISCRIMINATION OBLIGATIONS

Less favorable treatment

There is a detrimental impact

• n

the conditions

• f

competition of imported products. However: what if there is a legitimate reason? Under the GATT → Article XX general exceptions Under the TBT Agreement → No exceptions provision Appellate Body: Article 2.1 of the TBT Agreement does not prohibit a detrimental impact on imports that "stems exclusively from a legitimate regulatory distinction".

NON-DISCRIMINATION OBLIGATIONS

US – Clove Cigarettes:

• Objective: to reduce youth smoking.
• Flavoured

cigarettes are appealing to young people.

• Clove cigarettes are banned.
• Menthol cigarettes are also flavoured and appeal to

young people.

• Like product, but not banned.
• No legitimate regulatory distinction.
• Violation of 2.1

CASE LAW

CASE LAW

US – Tuna II (Mexico):

• Objective: discouraging the purchase of certain tuna

caught in a harmful way for dolphins.

• Tuna caught in the Eastern Tropical Pacific Ocean

(ETP) may bear the label if there is certification that no dolphin was killed. Tuna caught outside the ETP may bear the label without certification.

• The measure is not "calibrated" to the risks in

different areas of the ocean.

• No legitimate regulatory distinction → violation of 2.1

Article 2.2 of the TBT Agreement Prohibition of "unnecessary restrictions"

Article 2.2 of the TBT Agreement:

• Members shall ensure that technical regulations are not prepared,

adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade.

• 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.

• Such legitimate objectives are, inter alia: national security

requirements; the prevention of deceptive practices; protection of human health or safety, animal or plant life or health, or the

• environment. […]

PROHIBITION OF "UNNECESSARY" RESTRICTIONS

Elements of Article 2.2 of the TBT Agreement:

▪ The measure must be a technical regulation ▪ Identification of the objective; ▪ Whether the objective is legitimate; ▪ Whether the measure is more trade-restrictive than necessary.

PROHIBITION OF "UNNECESSARY" RESTRICTIONS

Identification of the "legitimate objective" ▪ Article 2.2 provides examples of legitimate objectives: national security requirements; the prevention of deceptive practices; and the protection of human health or safety, animal or plant life

• r health, or the environment.
• US – Tuna II (Mexico): give information to consumers on how

tuna was caught and protect dolphins by discouraging the purchase of certain tuna caught in a harmful way for dolphins.

• US – COOL: provide consumer information on where the

animal from which the meat is derived was born, raised and slaughtered.

PROHIBITION OF "UNNECESSARY" RESTRICTIONS

"More trade-restrictive than necessary" Degree of trade-restrictiveness of the measure Degree of contribution made by the measure to its objective Nature of risks and gravity of non-fulfilment of the objective Is there a less trade-restrictive alternative measure? If not, the measure is consistent with Article 2.2.

PROHIBITION OF "UNNECESSARY" RESTRICTIONS

Comparative analysis

PROHIBITION OF "UNNECESSARY" RESTRICTIONS

▪ It is for the complainant to propose an alternative measure. ▪ The alternative measure must make an equivalent contribution to the objective pursued. ▪ In US – Tuna II (Mexico), the AB reversed the Panel's finding of inconsistency with Article 2.2 because the alternative contributed to the

• bjectives "to a lesser degree than the measure at

issue" → No inconsistency with Article 2.2.

CASE LAW

AGENDA

▪ Use of international standards – Article 2.4 of the TBT Agreement ▪ Standards ▪ Are private standards disciplined under WTO law? ▪ Conformity Assessment Procedures ▪ Relationship of the TBT Agreement with the GATT 1994 and the SPS Agreement

Use of international standards Article 2.4 of the TBT Agreement

BASIC IDEA OF HARMONIZATION

BASIC IDEA OF HARMONIZATION

USE OF INTERNATIONAL STANDARDS

Article 2.4 of the TBT Agreement Where … relevant international standards exist or their completion is imminent, Members shall use them, or the relevant parts of them, as a basis for their technical regulations ... Except if: such international standards or relevant parts would be an ineffective or inappropriate means for the fulfilment of the legitimate

• bjectives

pursued, for instance because

• f

fundamental climatic or geographical factors or fundamental technological problems.

USE OF INTERNATIONAL STANDARDS

Elements of Article 2.4 of the TBT Agreement:

• 1. Does a relevant international standard exist?
• 2. If yes: has the relevant international standard been used as

a basis for the measure?

• 3. If not used as a basis: is the relevant international standard

"inappropriate or ineffective" to achieve the legitimate

• bjective pursued?

IS THERE AN INTERNATIONAL STANDARD?

INTERNATIONAL STANDARD ▪ Annex 1.2 of the TBT Agreement defines "standard" as a "document … that provides, for common and repeated use, rules, guidelines … with which compliance is not mandatory. ▪ Annex 1.5 to the TBT Agreement defines an "international body" as a body "whose membership is open to the relevant bodies of at least all Members". EC – Sardines: Codex Stan 94 – YES. US – Tuna II (Mexico): Agreement on the International Dolphin Conservation Program – NO. States had to be invited to join.

IS THE INTERNATIONAL STANDARD RELEVANT?

RELEVANT EC – Sardines EC Regulation: products marketed as "preserved sardines" must be prepared exclusively from one particular species Sardina pilchardus. Codex Stan 94: Twenty sardine species can be referred to as "sardines". An international standard on the labelling of a broader category of sardines is relevant for a national regulation on labelling of a narrower category of sardines (Appellate Body).

IS THE MEASURE "BASED ON" THE RELEVANT INTERNATIONAL STANDARD?

BASED ON

▪ "Based on" is not equivalent to "in accordance with", but imposes the obligation to employ the international standard as the "principal constituent" of the technical regulation. ▪ "A thing is commonly said to be "based on" another thing when the former "stands" or is "founded" or "built upon" or is "supported by" the latter" (Appellate Body, EC – Hormones, para. 163). ▪ Not "based on" if the technical regulation contradicts the international standard.

IS THE MEASURE "IN ACCORDANCE WITH" A RELEVANT INTERNATIONAL STANDARD?

▪ Incentive to harmonize: Article 2.5 of the TBT Agreement Whenever a technical regulation … is in accordance with relevant international standards, it shall be rebuttably presumed not to create an unnecessary obstacle to international trade (consistency with Article 2.2). ▪ The legal significance of the rebuttable presumption in Article 2.5 is not clear. ▪ WTO Members' laws are presumed to be WTO-consistent unless proven otherwise in WTO dispute settlement proceedings. So what is the "value added" of the presumption of Article 2.5? ▪ Principle of effective treaty interpretation under the Vienna Convention.

IS THE INTERNATIONAL STANDARD INAPPROPRIATE OF INEFFECTIVE?

INAPPROPRIATE OR INEFFECTIVE

▪ Inappropriate: if the international standard is not suitable for the fulfilment of the objective pursued. ▪ Ineffective: if the international standard does not have the capacity to accomplish the

• bjective pursued.

CASE LAW

▪ EC – Sardines: Codex Stan was appropriate and effective as it dealt with the labelling of sardines. EC Regulation found to be inconsistent with Article 2.4 of the TBT Agreement. ▪ US – COOL: an international standard that considers "origin" the place where the meat was processed is not effective or appropriate to fulfil the US objective. US measure found to be consistent with Article 2.4

• f

the TBT Agreement.

Standards

WHAT IS A STANDARD? TBT AGREEMENT, ANNEX , PARA 2.

Standard

Applies to an identifiable product Product characteristics

• r their related

processes and production methods May deal exclusively with packaging, labelling Mandatory compliance

Not mandatory

WHAT IS A STANDARD? TBT AGREEMENT, ANNEX 1, PARA 2.

WHAT IS A STANDARD? TBT AGREEMENT, ANNEX 1, PARA 2.

STANDARD ▪ Annex 1.2 of the TBT Agreement defines "standard" as a "document … that provides, for common and repeated use, rules, guidelines … with which compliance is not mandatory. Explanatory Note: The terms as defined in ISO/IEC Guide 2 cover products, processes and

• services. This Agreement

deals

• nly

with technical regulations, standards and conformity assessment procedures related to products or processes and production methods. Standards as defined by ISO/IEC Guide 2 may be mandatory or voluntary. For the purpose

• f

this Agreement standards are defined as voluntary and technical regulations as mandatory

• documents. Standards

prepared by the international standardization community are based

• n consensus. This Agreement covers also documents that are not

based on consensus.

STANDARDS - SUBSTANTIVE DISCIPLINES - TBT

ARTICLE 4 – PREPARATION, ADOPTION & APPLICATION OF STANDARDS CODE OF GOOD PRACTICE (ANNEX 3)

▪ Non discrimination (Para. D) ▪ Not creating unnecessary obstacles to trade (Para. E) ▪ Basing standards on international standards (Para. F) ▪ Harmonization (Para. G) ▪ Publication, Transparency and Openness (Paras. J, L, M, N, O, P, Q)

Conformity Assessment Procedures

WHAT IS A CONFORMITY ASSESSMENT PROCEDURE? TBT AGREEMENT, ANNEX 1, PARA 3. WHAT IS A CONFORMITY ASSESSMENT PROCEDURE? TBT AGREEMENT, ANNEX 1, PARA 3.

CONFORMITY ASSESSMENT PROCEDURES (CAP) ▪ Annex 1.3 of the TBT Agreement : "Any procedure used, directly or indirectly, to determine that relevant requirements in technical regulations or standards are fulfilled".

CAPs include, inter alia, procedures for:

• sampling, testing and inspection;
• evaluation, verification and assurance of conformity;
• registration, accreditation and approval as well as their combinations.

SUBSTANTIVE OBLIGATIONS WITH RESPECT TO CAPS

5.1 Members shall ensure that, in cases where [CAPs are] required, their central government bodies apply the following provisions to products originating in the territories of other Members: 5.1.1 [CAPs] are prepared, adopted and applied so as to grant access for suppliers of like products originating in the territories of other Members under conditions no less favourable than those accorded to suppliers of like products of national origin or originating in any other country, in a comparable situation … 5.1.2 [CAPs] are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. This means, inter alia, that [CAPs] 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.

WHAT IS A CONFORMITY ASSESSMENT PROCEDURE? TBT AGREEMENT, ANNEX 1, PARA 3.

▪ In EC – Seal Products, Panel found that, as relevant EU regulations qualified as "technical regulations", the procedures for determining whether the specific requirements under the EU Seal Regime are fulfilled constitute a CAP within the meaning of the TBT Agreement. ▪ Appellate Body reversed characterization of EU regulations as "technical regulations" and declared "moot and of no legal effect" the finding that the procedures for verification of compliance with those regulations are a CAP.

SUBSTANTIVE OBLIGATIONS WITH RESPECT TO CAPS

5.1 Members shall ensure that, in cases where [CAPs are] required, their central government bodies apply the following provisions to products originating in the territories of other Members: 5.1.1 [CAPs] are prepared, adopted and applied so as to grant access for suppliers of like products originating in the territories of other Members under conditions no less favourable than those accorded to suppliers of like products of national origin or originating in any other country, in a comparable situation … 5.1.2 [CAPs] are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. This means, inter alia, that [CAPs] 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.

SUBSTANTIVE OBLIGATIONS WITH RESPECT TO CAPS

5.1 Members shall ensure that, in cases where [CAPs are] required, their central government bodies apply the following provisions to products originating in the territories of other Members: 5.1.1 [CAPs] are prepared, adopted and applied so as to grant access for suppliers of like products originating in the territories of other Members under conditions no less favourable than those accorded to suppliers of like products of national origin or originating in any other country, in a comparable situation … Was the situation in Ukraine and other Members “comparable”?

SUBSTANTIVE OBLIGATIONS WITH RESPECT TO CAPS

• The Panel recognised that control inspections are conducted abroad by

citizens of the importing Member. It considered that, in the specific circumstances of a dispute such as the one at hand, “the importing Member in applying Article 5.1.1 may confront the need to weigh and balance the interests of suppliers of products … against its interest in safeguarding the life or health of its employees when undertaking conformity assessment activities, such as inspections, abroad” (reference to Article XX(b) as context).

• The Panel noted that “there must be a rational relationship between the

need to protect the life and health of inspectors travelling abroad and the situation prevailing in the country where inspections are to be carried out”.

• According to the Panel, “the importing Member in principle benefits from a

margin of discretion in carrying out such a weighing and balancing of interests, as appropriate to the circumstances, which include the importance of the interests at stake” (Russia – Railway Equipment, paras. 7.372-376).

SUBSTANTIVE OBLIGATIONS WITH RESPECT TO CAPS

5.1 Members shall ensure that, in cases where [CAPs are] required, their central government bodies apply the following provisions to products

• riginating in the territories of other Members:

5.1.2 [CAPs] are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. This means, inter alia, that [CAPs] 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. The key question was whether the alternative measures proposed by Ukraine were reasonably available. These were: "(a) additional communications with the relevant Ukrainian producers; (b) entrusting on-site inspections in Ukraine to the competent authorities from Kazakhstan and Belarus; (c) accrediting non-Russian inspectors, either experts

• r
• rganizations, to conduct inspections in Ukraine; and (d) off-site inspections."

Relationship of the TBT Agreement with the GATT 1994 and the SPS Agreement

RELATIONSHIP OF THE TBT AGREEMENT WITH THE GATT 1994

TBT Agreement GATT 1994

TRADE IN GOODS lex specialis

RELATIONSHIP OF THE TBT AGREEMENT WITH THE SPS AGREEMENT

▪ Article 1.5 of the TBT Agreement: SPS Measures are exempted from the scope

• f the TBT Agreement.

▪ SPS measures are, in part, "technical regulations" with a particular objective:

• to protect human or animal health from food-borne risks,
• to protect human health from animal or plant-carried diseases,
• to protect animals and plants from pests or diseases, or to prevent other damage

from pests.

▪ Thus, if a technical regulation does not pursue SPS objectives, the TBT Agreement applies. If it does, the SPS Agreement applies. TBT measure or SPS measure ?

RELATIONSHIP OF THE TBT AGREEMENT WITH THE SPS AGREEMENT

▪ What happens if a law has more than one objective?

Part of the measure (that is, provisions dealing with the protection of human health) could fall within the scope of the SPS Agreement, while

• ther parts of the measure (that is, provisions dealing with packaging)

could fall within the scope of the TBT Agreement.

Source image: WTO e-learning course, SPS Measures, https://ecampus.wto.org/admin/files/course_405/coursecontents/sps-r4-e-print.doc