Regulating goods and the WTO Erik Wijkström Counsellor, Trade and Environment Division World Trade Organization (WTO) Geneva, Switzerland
The “how” is important, much can be learnt from both Agreement and a dynamic committee work The right to regulate remains, even under freer trade Why is regulation becoming more important?
WTO - World Trade Report 2014, p118
9% Average applied tariff, WTO Members in 2013
Tariffs have declined significantly.
But also trade patters have changed …
Country / company: A, B, … …..to market More specialization! WTO Trade Facilitation Agreement (agreed in Bali 2013). Report just out. -Multilateral cooperation -Standard-setting / harmonization -Trade costs high in d-ing countries …
= production is more fragmented
Another way to say it: deeper integration
Compatibility , inter-operability
More focus on “behind the border” measures
In sum: tariffs are declining, production is more fragmented and deeper integration is on the rise, this puts increasing focus on regulations (and regulation is not declining).
The right to regulate remains, even under freer trade
Non-tariff measures (NTMs, NTBs) (including standards) neutral term! (NTMs are not necessarily bad!)
NTMs are allowed! (and there may me many reasons …)
Information to consumer: fresh or frozen? (TBT) Food safety (SPS)
Protecting environment (dolphins), informing the consumer (TBT)
Nutritional labelling (not safety) = TBT
In the last three years, 27 per cent of trade issues discussed in the TBT Committee are related to NCDs.
Legitimate objective 1
TBT SPS
Food safety, animal plant life or health = SPS The rest (including environment, safety and health) = TBT
All products are covered!
TBT SPS Does it make a difference? Open “Relevant” ISBs Factors other than science also Closed: food safety, animal plant life or health Codex, OIE and IPPC Science!
In sum: You have the right to regulate – WTO rules are not about removing barriers to trade, they are about disciplining how you regulate so as to avoid unnecessary trade trade friction.
The “how” is important, much can be learnt from both Agreement and a dynamic committee work
right obligation
First: you don’t necessarily need to regulate (even if you have the right) – there are voluntary and mandatory measures
Standards Technical Regulations VoluntaryMandatoryMarket Conformity Assessment Procedures Measures
So to repeat: an important first question is if there is a need to regulate. That is a decision that you, regulators (government), must take – not WTO.
Once that decision has been taken, the rules apply
Non-discrimination 2
Most-favoured nation (MFN) treatment and national treatment (NT)
Can you label “fresh” if defrosted?
Treating “characterizing flavours” differently
MFN and NT: “Like products” – same treatment (this is a simplification)
Avoidance of unnecessary obstacles to international trade 3
avoiding unnecessary barriers to international trade allowing Members to fulfill legitimate objectives at levels they consider appropriate
1) Degree of contribution 2) Trade restrictiveness 3) nature of the risks / gravity of the consequences 4) alternatives (assessment) Holistic weighing and balancing
Unnecessary Necessary
Unnecessary Necessary
Unnecessary Necessary
use of international standards allowing for regulatory autonomy to protect legitimate interests avoiding unnecessary obstacles to international trade
The use of international standards “harmonization” = ≈ 4
Which ones?
SPS = ≈
EC – Sardines Sardina Pilchardus Sardinops Sagax = ≈
WTOSlide 51 Sardina pilchardus EC: Sardinops sagax Peru: … only Sardina pilchardus may be marketed as preserved sardines in EC (Article 2) = ≈
Transparency 5
53 Timeline
= ≈
The rules are about fairness, necessity, transparency, use of international standards: taking these into account will make regulation more effective and less likely to cause friction. WTO rules to not remove the right to regulate! Regulation is becoming more important (tariffs down, trade patters changing, deeper integration). Here is where trade policy is going to focus.
Thank you!