lesson four | market access in the wto (goods)

UPH MTIC Program | Introduction to WTO Law

Market Access in the WTO (Goods)

www.simonlacey.net

2

Structure of the Present Lecture

1. The importance of market access2. Tariffs3. Quantitative restrictions4. Tariff-Rate Quotas (TRQs)5. Exceptions to the ban on QRs6. Administration of QRs7. Import licensing8. Other non-tariff barriers

www.simonlacey.net

3

The Importance of Market Access

Van den Bossche describes rules on market access as “the core of WTO law” The preamble to the WTO Agreement mentions, in paragraph 1, that the Parties

to the Agreement recognize that “their relations in the field of trade and economic endeavor should be conducted with a view to […] expanding the production of and trade in goods and services […] “

In paragraph 3, the preamble speaks of the goal of “the substantial reduction of tariffs and other barriers to trade […].

www.simonlacey.net

4

The Importance of Market Access cont’

The WTO is very much a market access organization, and much of what happens there revolves around market access:• WTO dispute settlement cases are where countries seek to restore market access

that has been lost;• Trade negotiations (currently Doha), succeed or fail on the basis of the market

access that WTO Members perceive they will be giving away or getting;• Accession negotiations can largely be boiled down to bilateral negotiations over

market access expectations between the acceding country- who is required to open its market- and WTO Members who want to export goods and services to the applicant’s country market or lock-in/increase existing access.

www.simonlacey.net

5


Historically, the General Agreement on Tariffs and Trade (GATT), was about a limited number of issues, all revolving primarily around market access and/or market access expectations:

Eliminating quantitative restrictions (GATT Art. XI); Establishing a mechanism for locking-in tariffs (the tariff binding, GATT Art. II)) and

then subsequently negotiating reductions to tariff levels (tariff negotiations, GATT Art. XXVIII bis);

Establishing binding rules limiting the ability of Contracting Parties to pursue other policies which would undermine the value of tariff concessions (rules on customs valuation, GATT Art. VII; fees and formalities connected with import and export, GATT Art. VIII; subsidies, GATT Art. XVI, state trading enterprises GATT Art. XVII.

www.simonlacey.net

6


Dogmatically, barriers to market access are generally broken down into two broad categories:

– Tariff / Non-tariff barriers Otherwise, barriers to market access can be categorized in various ways, including:

– Border measures / behind the border measures– De jure / de facto measures– Trade-distortive / minimally trade-distortive (particularly in the area of subsidies, which

can have an important effect on market access)– Transparent / non-transparent measures (transparent measures, such as tariffs are

generally published, whereas a non-transparent measure might be an obscure regulation which is not published or easily obtainable which prescribes certain conditions for the importation or sale of certain products).

www.simonlacey.net

7

Tariffs

The most common and widely-used barrier to market access for goods is customs duties, also referred to as tariffs.

A customs duty, or tariff, is a financial charge, in the form of a tax, imposed on products at the time of and/or because of, their importation into the customs territory.

Market access is conditional upon payment of the duty. Customs duties can either be specific, ad valorem or mixed. A specific customs duty on a product is an amount based on the weight, volume or quantity

of that product. An ad valorem customs duty on a good is based on the value of that good, and is expressed

as a percentage of the value of the imported good. A mixed (or compound) duty is a customs duty comprising an ad valorem duty to which a

specific duty is added (or less commonly subtracted).

www.simonlacey.net

8

Tariffs cont’

Ad valorem customs duties are by far the most common type of customs duties and are preferable to specific or mixed duties for several reasons:

– They are more transparent (their impact and price effects are easier to determine)– They are price indexed

Ad valorem, specific or mixed duties can be MFN duties, preferential duties, or neither of the two.

www.simonlacey.net

9

Customs duties or tariffs serve three different purposes: Revenue for governments (more important for developing countries). Protect domestic industries (tilt the playing field in favour of domestically produced like

or substitutable products. Tool for promoting a rational allocation of scarce foreign exchange (encourage spending

on capital goods and discourage spending on consumer or luxury goods and thus as an instrument for economic development policy).

Tariffs cont’

www.simonlacey.net

10

The National Tariff - Australia

www.simonlacey.net

11

Tariff Bindings at the WTO

Tariffs cont’

www.simonlacey.net

12

The National Tariff - USA

www.simonlacey.net

13

The results of tariff negotiations are referred to as “tariff concessions” or “tariff bindings”. This is a commitment not to raise the customs duty on a certain product above an

agreed level. As a result of the Uruguay Round, virtually all customs duties imposed by developed

country Members are now “bound”. The tariff concessions or bindings of a Member are set out in that Member’s Schedule

of Concessions. The obligation to refrain from imposing tariffs in excess of the tariff binding does not,

however, stop WTO Members from imposing tariffs that are below this level. Thus many Members have applied tariff rates that are slightly or even considerably below their bound rates.

Tariffs cont’

www.simonlacey.net

14

WTO rules on customs duties relate primarily to the protection of tariff concessions agreed to in the context of tariff negotiations.

GATT Article II:1 entitled Schedules of Concessions states:(a) Each contracting party shall accord to the commerce of the other contracting parties treatment no less favourable than

that provided for in the appropriate Part of the appropriate Schedule annexed to this Agreement.(b) The products described in Part I of the Schedule relating to any contracting party, which are the products of territories

of other contracting parties, shall, on their importation into the territory to which the Schedule relates, and subject to the terms, conditions or qualifications set forth in that Schedule, be exempt from ordinary customs duties in excess of those set forth and provided therein.

Several other provisions in the GATT are specifically intended to protect the value of the tariff concessions agreed to, by circumscribing Members abilities to engage in practices that would undermine the value of those concessions.

Tariffs cont’

www.simonlacey.net

15

Although WTO Members may not impose customs duties above the tariff concessions or bindings, the GATT does provide a procedure for the modification or withdrawal of tariff concessions.

GATT Article XXVIII:1 states, in pertinent part: “a [Member] … may, by negotiations and agreement … modify or withdraw a tariff concession included in the appropriate schedule annexed to this Agreement.

Negotiations on the modification or withdrawal of tariff concessions are to be conducted with:

– The Members that hold so-called Initial Negotiating Rights (INRs); and– Any other Member that has a “principle supplying interest”.

Tariffs cont’

www.simonlacey.net

16

The imposition of customs duties generally require three determinations to be made:– The determination of the proper classification of the imported good;– The determination of the customs value of the imported good; and– The determination of the origin of the imported good.

Specific rules on classification can be found in the International Convention on the Harmonized Commodity Description and Coding System of the WCO, which entered into force on 1 January 1988 and to which most WTO Members are a party.

Tariffs cont’

www.simonlacey.net

17

• Because most customs duties are ad valorem, it is first necessary for customs officials to determine the value of the imported goods in order to be able to calculate the customs duty due.

• The WTO agreements contain rules on customs valuation:– Article VII of the GATT entitled Valuation for Customs Purposes” (including its Ad Note)– The WTO Agreement on Implementation of Article VII of the GATT 1994, otherwise

known as the Customs Valuation Agreement.• The WTO rules on customs valuation can be quite technical in their application, but

essentially require that the actual value of the imported goods be used as a basis for assessing duties (transaction value).

Tariffs cont’

www.simonlacey.net

18

• Customs duties applied to imported goods may differ depending on the country from which the goods were exported.

• This is especially relevant where preferential tariffs are applied for one reason or another.

• Rules to determine the origin of imported goods differ from Member to Member and many Members use different rules of origin depending on the purpose for which the origin is determined.

• However, generally speaking, the rules of origin currently applied by Members are based on:

– The principle of value added; or– The principle of change in tariff classification.

Tariffs cont’

www.simonlacey.net

19

Quantitative Restrictions

The original non-tariff barrier In principle, eliminated by GATT Art. XI (numerous exceptions exist) Definition:

“Restrictions which limit the value or quantity of goods which can be imported or exported during a given period”

Different types of QR:•A prohibition or ban on a product which may be absolute or conditional, i.e. only applicable when certain defined conditions are not fulfilled•A quota, i.e. a measure indicating the quantity that may be imported or exported. A quota can be a global quota allocated among different countries or a bilateral quota. •Automatic and non-automatic licensing (most relevant in terms of import licensing); and•Other QRs such as those made effective through State trading operations, a mixing regulation, a minimum price triggering a QR and a voluntary export restraint.

www.simonlacey.net

20

Quantitative Restrictions cont’

In his 1949 book “A Charter for World Trade”, Clair Wilcox described the approach which had been taken in the 1947 negotiations (reflected in the resulting GATT and ITO Charter) towards QRs, and which explain the reasons behind the hostility the US originally felt towards them (p.81):

“ The Charter condemns quantitative restrictions; it permits their employment, of necessity, under specified conditions, but only on sufferance and as an exception to the general rules of policy[…]Quantitative restrictions … impose rigid limits on the volume of trade. They insulate domestic prices and production against the changing requirements of the world economy. They freeze trade into established channels. They are likely to be discriminatory in purpose and effect. They give the guidance of trade to public officials; they cannot be divorced from politics.”

www.simonlacey.net

21

As we have seen, a key objective of the postwar foreign economic policy of the US was the elimination of QRs.

In bilateral discussions between the US and Great Britain in 1943 had anticipated that, in principle, quantitative restrictions would be prohibited. But Britain insisted that they be permitted for dealing with external payment imbalances for a transitional period after the war.

By 1945 it was accepted that exceptions would be needed for three main purposes:– To cope with balance of payments difficulties;– To protect infant industries in poor countries; and– To accommodate certain agricultural programs.


www.simonlacey.net

22

The key provision in the GATT on QRs is Art. XI, entitled General Elimination of Quantitative Restrictions

“No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party.”


www.simonlacey.net

23

The basic disciplines and the issues that have been clarified in the GATT and WTO case law on GATT Art. XI include the following:

Only QRs attributable to governments can be challenged, although the degree of public intervention necessary to attribute a measure to a government is not specified;

The term “measure” has been widely interpreted and a typology of the measures which qualify as QRs has been established through case law;

It is not necessary to prove that the intent of the measure is protectionist, nor is it necessary to demonstrate that the effect of the measure reduces imports (no “aims and effects” test)

The relationship between GATT Art. XI and other GATT provisions (particularly Art. III, XX and XIII) has been clarified in the case law.


www.simonlacey.net

24

In the Japan-Semi-Conductors case, the Panel ruled on the scope of GATT Art. XI:1 saying that the wording “was comprehensive: it applied to all measures instituted or maintained by a contracting party prohibiting or restricting the importation, exportation or sale for export of products other than measures that take the form of duties, taxes or other charges.” (para. 104).

In India-Autos, India tried to argue that the term “restrictions … on importation” within the meaning of GATT Art. XI:1 only applies to border measures. The Panel rejected this argument and noted that the reference to “other measures” in Art. XI:1 suggest a broad scope as to the kind of measures covered by that provision: “the nature of the measure as a restriction in relation to importation, which is the key factor to consider in determining whether a measure may properly fall within the scope of Art. XI:1.” (para. 7.261).


www.simonlacey.net

25

Some examples of measures found to be inconsistent with GATT Art. XI:1 In US-Shrimp, the Panel found that the United States acted inconsistently with GATT Art.

XI:1 by imposing an import ban on shrimp and shrimp products harvested by vessels of foreign nationals not certified by the US authorities as using methods not leading to the accidental killing of sea turtles above certain levels;

In EEC-Minimum Import Prices, the Panel found that the prohibition on QRs in GATT Art. XI:1 applied to a system of minimum import prices;

In Japan – Agricultural Products I, the Panel ruled that the prohibition of GATT Art. XI:1 applied to import restrictions made effective through an import monopoly, or more broadly, through State trading operations;

In India – Quantitative Restrictions, the Panel held that non-automatic import licensing systems are import restrictions prohibited by Art. XI:1.


www.simonlacey.net

26

Tariff-Rate Quotas (TRQs)

Tariff rate quotas are a hybrid instrument which allow a certain quantity (quota) to be imported at one (lower) tariff rate, with all other imports (the out-of-quota imports) entering at another (higher) tariff rate.

TRQs are used extensively in order to guarantee minimum market access commitments under the Agreement on Agriculture (agreed in order to counter any excesses of the tariffication process).

They are also used sometimes by Members as safeguard measures to remedy injury caused to a domestic industry by a sudden and unexpected surge in imports.

As long as the higher (out-of-quota) level does not exceed the WTO Member’s tariff binding on that good, and the quota is administered in accordance with the relevant GATT rules (see below), they will not face compliance problems.

www.simonlacey.net

27

Exceptions to the Ban on QRs

As we have seen above, from the very early days of the GATT there was consensus that exceptions to the ban on QRs would be needed for at least three policy objectives:

– To cope with balance of payments difficulties;– To protect infant industries in poor countries; and– To accommodate certain agricultural programs.

Paragraph 2 of GATT Art. XI itself circumscribes the otherwise broad scope of the ban, by stating that the provisions of paragraph 1 shall not extend to:

– Export prohibitions or restrictions temporarily applied to prevent or relieve critical shortages of foodstuffs or other essential products;

– Import and export prohibitions or restrictions necessary to the application of standards […]– Import restrictions on any agricultural or fisheries product necessary to the enforcement of

governmental agricultural support programs.

www.simonlacey.net

28

Exceptions to the Ban on QRs cont’

The most important exception to the ban on QRs (at least today) is undoubtedly contained in GATT Art. XX entitled General Exceptions. The most important exceptions here are usually enacted in order to pursue or more of the following policy objectives:

– Protect human, animal or plant life or health– Relating to the conservation of exhaustible natural resources

Another import exception in this regard is GATT Art. XXI entitled Security Exceptions. Here the most important exceptions will be QRs imposed in order to allow members to regulate or stop:

– Trade in fissionable materials or the materials from which they are derived;– Traffic in arms, ammunition and implements of war

www.simonlacey.net

29

The Panel in Turkey – Textiles noted (para. 9.64):“ From early in the GATT, in sectors such as agriculture, quantitative restrictions were maintained and even increased … In the sector of textiles and clothing, quantitative restrictions were maintained under the Multifibre Arrangement … Certain contracting parties were even of the view that the quantitative restrictions had gradually been tolerated and accepted as negotiable and that Art. XI could not be, and had never been considered to be, a provision prohibiting such restrictions irrespective of the circumstances specific to each case”

However the economic effects of these bans, as well as other policies was becoming increasingly clear to many countries over time:

–The need to integrate the clothing and textiles sector into GATT disciplines was a key concern of developing countries during the Uruguay Round–The trade-distorting effects of protectionist policies in the agricultural sectors of many developed countries had, by the 1980s, become well documented and disciplining these policies in order to mitigate their trade distorting effects was a key objective of many countries in the Uruguay Round.


www.simonlacey.net

30

The Results of the Uruguay Round contain various examples of the successes achieved in strengthening the disciplines on QRs and eliminating the exceptions to Art. XI:1 was a key objective and outcome of the Uruguay Round, which was manifested, inter alia in:

– The tarrification process of the Agreement on Agriculture (Art. 3 and footnote 1 of the Agreement)

– The ban on imposing new restrictions on imports of textiles and clothing contained in Art.2.4 of the ATC and the phase out of all existing restrictions together with the Agreement pursuant to Art. 9 ATC,

– The ban on VERs and other grey area measures in Art. 11 of the Safeguards Agreement.


www.simonlacey.net

31

Even with the success the multilateral trading system has had on policing QRs, many such measures typically remain today.

Below an exert from the USTR Trade Barrier Report (2009) for Indonesia:Quantitative Restrictions

The Indonesian government requires an import permit from the Directorate General of Livestock Services for imports of animal-based food products. In approving requests for such permits, the Indonesian government arbitrarily may alter the quantity it allows to enter. U.S. industry estimates the annual trade impact of this restriction to be between $10 million and $25 million.Indonesia bans salt imports during the harvest season. It requires salt importers to be registered and to source products locally. Indonesia applies quantitative import limits to imported wines and distilled spirits. Only one registered importer, a state-owned enterprise, is authorized to import alcoholic beverages, with an annual quota set by the Ministries of Trade and Industry. As a result of new mining legislation, mining firms operating in Indonesia will face new restrictions in exporting unprocessed ore. The legislation will require them to process the ore in Indonesia before shipping it abroad. The United States will closely monitor implementation of the law to ensure that it does not constitute an export ban on raw materials.


www.simonlacey.net

32

The Japanese Ministry of International Industry and Trade also monitors trade barriers in its most important trading partners. Below an excerpt from its 2009 report concerning QRs in Canada:

QUANTITATIVE RESTRICTIONS Export Restrictions on Logs <Outline of the measure> The Province of British Columbia has prohibited the export of a portion of softwood logs in order to protect its domestic industry. Specifically, provincial law requires that lumber produced from provincial forests be either used or processed within the Province. Raw materials that are not used within the province are exported as superfluous materials only in the event that permission is given by the Lieutenant Governor or Minister of Forestry. However, the export of a portion of high-quality coniferous raw materials, including all Norway spruce and yellow cedar as well as spruce-fir, is prohibited except from certain areas such as native settlements. <Problems under international rules> Since the measure may protect the Province’s domestic industry under the pretext of Forestry Resource Protection, it is highly likely to be in violation of GATT Article XI. Although the measure is that of a local government, pursuant to Paragraph 12 of GATT Article XXIV, Canada is fully responsible for the observance of all GATT provisions by British Columbia.


www.simonlacey.net

33

Administration of QRs

In light of the numerous exceptions to the ban on QRs, GATT contracting parties set out from the very outset of the multilateral trading system, to ensure that any remaining QRs would be administered subject to certain disciplines.

GATT Art. XIII contains a number of such disciplines, the most import of which are:

– The rule of non-discrimination;– Rules on the distribution of trade; and – Rules on import licensing procedures

www.simonlacey.net

34

Administration of QRs cont’

GATT Art. XIII:1 provides that, QRs, when applied, should be administered in a non-discriminatory manner.

What GATT Art. XIII:1 requires is that is a Member imposes QRs on products to or from another Member, products to or from all other countries are “similarly prohibited or restricted”.

This requirement is an MFN-like obligation, the idea being that like products should be treated equally, irrespective of their origin.

www.simonlacey.net

35


The GATT Panel in EEC –Apples I (Chile) found that the EC had acted inconsistently with the non-discrimination obligations of GATT XIII:1.

Apples from Argentina, Australia, NZ and SA had been restricted through VERs. The EC tried to reach an agreement with Chile on a similar VER with Chile but the negotiations

failed. The EC then adopted measures restricting imports of Chilean apples to aprox. 42’000 tones. The Panel in this case found that the measures applied to Chilean imports by the EC were not

a restriction similar to the VERs negotiated with other countries and was thus a violation of GATT XIII:1.

The Panel largely came to this finding on the basis that:– There was a difference in transparency between the two types of action;– There was a difference in the administration of the restrictions, the one being an import

restriction, the others being export restraints;– The import restrictions were unilateral and mandatory while the other actions were “voluntary”

and had been negotiated.

www.simonlacey.net

36


If QRs, other than a prohibition or ban, are applied on the importation of a product, the question arises how the trade that is still allowed is to be allocated.

In this respect, the chapeau of GATT XIII:2 providesIn applying import restrictions to any product, [Members] shall aim at a distribution of trade in such product approaching as closely as possible the shares which the various [Members] might be expected to obtain in the absence of such restrictions.

Moreover, GATT XIII:2 sets out a number of requirements to be met when imposing QRs. Art. XIII2(a) states:

Wherever practicable, the quotas representing the total amount of permitted imports (whether allocated among supplying countries or not) shall be fixed, and notice given of their amount in accordance with paragraph 3(b) of this Article.

In cases where a quota is allocated among supplying countries, GATT XIII:2 (d) provides:The [Member] applying the restrictions may seek agreement with respect to the allocation of shares in the quota with all other [Members] having a substantial interest in supplying the product concerned

www.simonlacey.net

37


However, where this method of allocating the shares in the quota “is not reasonably practicable”, i.e. when no agreement can be reached with all the Members having a substantial interest, the Member applying the quota must be allocated on the basis of Members’ shares of trade during a previous representative period (normally 3 years).

Quotas allocated among supplying countries must be allocated among all Members having a substantial interest in supplying the product.

There is no obligation to allocate a part of the quota to Members without a substantial interest in supplying the product concerned.

This provision can be considered as lex specialis to the general requirements of MFN, since it allows for discrimination between Members with and Members without a substantial interest in supplying the product at issue.

www.simonlacey.net

38

Import Licensing

Quotas (and TRQs-more on this later) are usually administered by means of import-licensing procedures.

Art. 1.1 of the Import Licensing Agreement defines import-licensing procedures as:administrative procedures … requiring the submission of an application or other documentation (other than that required for customs purposes) to the relevant administrative body as a prior condition for the importation into the customs territory of the importing Member

Article 1 of the Import Licensing Agreement sets out rules on the application and administration of import-licensing rules, the most important of which (Art 1.3), reads:

The rules for import licensing procedures shall be neutral in application and administered in a fair and equitable manner.

www.simonlacey.net

39

Import Licensing cont’

The Import Licensing Agreement distinguishes between two kinds of licensing:‒ Automatic‒ Non-automatic

The two underlying and dominant principles of the Import Licensing Agreement are‒ Neutrality, fairness and equity (non-trade-distorting)‒ Transparency (publication and notification)

www.simonlacey.net

40


Automatic import licensing is defined as import licensing where approval of the application is granted in all cases (provided all the required documentation is provided).

Automatic import licensing is used by governments for various purposes, including to collect statistical and other information on imports.

Art. 2.2 of the Import Licensing Agreement requires that automatic import-licensing procedures shall not be administered in such a manner as to have “restrictive effects on imports subject to automatic licensing”.

www.simonlacey.net

41


Non-automatic import licensing is import licensing where approval is not granted in all cases.

Import licensing procedures for quotas and TRQs are by definition non-automatic import licensing procedures.

Article 3.2 of the Import Licensing Agreement requires that:Non-automatic licensing shall not have trade-restrictive or distortive effects on imports additional to those caused by the imposition of the restriction

Other requirements relating to non-automatic import licensing concern:– Non-discrimination among applicants for import licenses;– The obligation to give reasons for refusing an application;– The right of appeal or review of the decision on applications;– Time-limits for processing applications– The validity of import licenses; and– The desirability of issuing licenses for products in economic quantities

www.simonlacey.net

42

Other non-tariff barriers

As the term indicates, this is a residual category of measures and actions that restrict, to various degrees and in different ways, market access for goods and which are not administered in the form or a tariff.

This category covers numerous rather different measures and actions, such as:– Technical barriers to trade– Sanitary and phytosanitary measures– Customs formalities and procedures– Government procurement practices– State trading agencies– Lack of transparency– Other measures or actions, such as preshipment inspection et al.

www.simonlacey.net

43

Standards, as an issue, is a relatively late edition to multilateral disciplines; The General Agreement (GATT), drafted in 1947, makes no specific reference to them; The impetus to negotiate rules on standards in the late 60s and early 70s, came from three

directions:– General recognition of the fact that, of the 900 notifications in the GATT nontariff measure (NTM)

inventory, about 150 of them involved or were linked to the application of standards.– US interest in the negotiation of GATT rules for standards quickened by the action of Britain, France and

Germany in concluding a tri-partite agreement (CENEL) for the harmonization and certification of electronic components

– European view that the US was considerably less willing to adopt international standards than the Europeans themselves. The EC Commission was keenly interested in having the US accept the standards it was formulating, as this would increase its authority vis-à-vis EC Member States.

Why do we have an agreement on technical barriers to trade?

www.simonlacey.net

44

The Punta del Este declaration which launched the Uruguay Round in September 1986 did not contain specific language on negotiating a new standards code (unlike other areas such as agriculture, services, intellectual property).

In the context of standards, the Punta del Este declaration limited itself to a statement, under a heading entitled “MTN Agreements and Arrangements”, saying:

“Negotiations shall aim to improve clarify, or expand, as appropriate, Agreements and Arrangements negotiated in the Tokyo Round of Multilateral Negotiations”

Generally there was a feeling that the Tokyo Round Standards Code had worked well, and that it only needed slight improvement in a limited number of areas.

Negotiating texts in the UR focused mainly on widening its scope and making its rules more effective.

Uruguay Round and TBT

www.simonlacey.net

45

Substantive Scope of the WTO TBT Agreement

The rules of the TBT Agreement apply to a “limited class of measures”:– Technical regulations– Standards; and– Conformity assessment procedures

These three types of measure are defined in Annex 1 to the TBT Agreement.

www.simonlacey.net

46

Definitions of Technical Barriers to Trade

Annex 1.1. defines a technical regulation as a“[d]ocument 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.”

Annex 1.2. defines a standard as a“[d]ocument 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.

Annex 1.3 defines a conformity assessment procedure as:“Any procedure used, directly or indirectly, to determine that relevant requirements in technical regulations or standards are fulfilled.”

www.simonlacey.net

47

The Agreement on Sanitary and Phytosanitary Measures

Two-Fold Objective of the SPS Agreement

To recognize the sovereign right of WTO Members to provide the level of health protection they deem appropriate; andTo ensure that SPS measures do not represent unnecessary, arbitrary, scientifically unjustifiable, or disguised restrictions on international trade.

www.simonlacey.net

48

Article 1.1 of the SPS Agreement defines the scope of application of the Agreement and provides that:

“This Agreement applies to all sanitary and phytosanitary measures which may, directly or indirectly, affect international trade. Such measures shall be developed and applied in accordance with the provisions of this Agreement.”

Scope of the SPS Agreement

www.simonlacey.net

49

To fall under the SPS Agreement’s scope and coverage, a measure must: Be a sanitary or phytosanitary measure; and Directly or indirectly affect international trade.

What is an SPS measure?

www.simonlacey.net

50

A sanitary or phytosanitary measure or “SPS measure” is defined in para. 1 of Annex A to the SPS Agreement as any measure applied:(a) to protect animal or plant life or health within the territory of the Member from risks arising from the entry, establishment or spread of pests, diseases, disease-carrying organisms or disease-causing organisms; (b) to protect human or animal life or health within the territory of the Member from risks arising from additives, contaminants, toxins or disease-causing organisms in foods, beverages or feedstuffs; (c) to protect human life or health within the territory of the Member from risks arising from diseases carried by animals, plants or products thereof, or from the entry, establishment or spread of pests; or(d) to prevent or limit other damage within the territory of the Member from the entry, establishment or spread of pests.

What is an SPS Measure? – cont.

www.simonlacey.net

51

Paragraph 1 of Annex A of the SPS Agreement provides a non-exhaustive list of SPS measures. Among them:•End product criteria; •Processes and production methods; •Testing, inspection, certification and approval procedures; •Quarantine treatments including those associated with the international transport of animals or plants (or those concerning the materials necessary for their survival during transport); •Provisions on relevant statistical methods; •Sampling procedures and methods of risk assessment and packaging and labeling requirements that are directly related to food safety.

What is an SPS Measure? – cont.

www.simonlacey.net

52

• As set out in Art. 1.5 of the TBT Agreement, the TBT Agreement does not apply to SPS measures.

• When a measure is an SPS measure as defined in Annex A(1) to the SPS Agreement, the SPS Agreement applies to the exclusion of the TBT Agreement, even if the measure would otherwise be considered a “technical regulation, standard or conformity assessment procedure” for purposes of the TBT Agreement.

Relationship between the SPS and the TBT Agreements

www.simonlacey.net

53

TBT measures typically deal with:

Labeling of composition or quality of food, drink and drugs;

Quality requirements for fresh food;

Volume, shape and appearance of packaging;

Testing vehicles and accessories;

Regulations for ships and ship equipment;

Safety regulations for toys.

SPS measures typically deal with:

Additives in food or drink;

Contaminants in food or drink;

Certification: food safety, animal or plant health;

Processing methods with implications for food safety;

Other sanitary requirements for imports;

Labeling requirements directly related to food safety and others.

Examples of TBT and SPS Measures

www.simonlacey.net

54

Summary

Governments have proven very ingenious in finding ways to manage trade, particularly imports, and subject them to various restrictions, designed to pursue various policy objectives.

Nevertheless, market access remains a key driver of much of the WTO’s activities and is at the very heart of what the Organization is about.

Tariffs are the most important market access barrier, but quantitative restrictions, although subject to a general ban in theory, are also an important market access barrier.

Today, traders are faced with a complex array of varying obstacles and procedures that need to be overcome or complied with before they can import (or export) their products.

Trade is more highly regulated than ever, and is still anything but “free”.

UPH MTIC Program | Introduction to WTO Law

Market Access in the WTO

Simon Lacey

Thank You

lesson four | market access in the wto (goods)

Education

uph mtic program

state trading

minimum import

protect infant

multilateral

conformity

market access

import licensing