Regulating goods and the WTO Erik Wijkström Counsellor, Trade and Environment Division World Trade Organization (WTO) Geneva, Switzerland erik.wijkstrom@wto.org +41 22 7395729

Why is regulation becoming more important? Why do I show this? To make the point that regulation, standards – is becoming more central in trade policy. There are several contributing reasons for this … New trade patters today. Production is more fragmented. Globalized manufacturing, integrated supply chains. All this makes “putting the pieces together” more important – more emphasis on regulation, avoding unnecessary trade costs (TFA). … Deeper. Integration is deeper (in RTAs). In trade policy, “deeper integration” (among groups of Members) is on the rise and with it comes a greater focus on “behind the border” measures where standards and regulations figure prominently. Chapters on TBT. Level of detail is going up. And what is the consequence? = Coherence become crucial! 1) Good regulation = GRP 2) Good standard-setting practices = CGP 3) Cooperation, between trade and health community is essential  Coherence Where to start? Articulating the synergies and the risks will help governments promote the complementary objectives of health and trade policies. NCDs are a serious global challenge facing all governments worldwide. For health and trade policies to be coherent more cooperation is needed between regulators, both from health and trade ministries and with their international counterparts. Food labelling next? 2016 – sector-specific discussion. There are signs that governments are willing to cooperate more: for 2016, Members in the TBT Committee have agreed to start a process of "regulatory cooperation", including on specific sectors, where regulation is emerging and new. Why is regulation becoming more important? The right to regulate remains, even under freer trade The “how” is important, much can be learnt from both Agreement and a dynamic committee work

And what is the consequence? = Coherence become crucial! Why do I show this? To make the point that regulation, standards – is becoming more central in trade policy. There are several contributing reasons for this … New trade patters today. Production is more fragmented. Globalized manufacturing, integrated supply chains. All this makes “putting the pieces together” more important – more emphasis on regulation, avoding unnecessary trade costs (TFA). … Deeper. Integration is deeper (in RTAs). In trade policy, “deeper integration” (among groups of Members) is on the rise and with it comes a greater focus on “behind the border” measures where standards and regulations figure prominently. Chapters on TBT. Level of detail is going up. And what is the consequence? = Coherence become crucial! 1) Good regulation = GRP 2) Good standard-setting practices = CGP 3) Cooperation, between trade and health community is essential  Coherence Where to start? Articulating the synergies and the risks will help governments promote the complementary objectives of health and trade policies. NCDs are a serious global challenge facing all governments worldwide. For health and trade policies to be coherent more cooperation is needed between regulators, both from health and trade ministries and with their international counterparts. Food labelling next? 2016 – sector-specific discussion. There are signs that governments are willing to cooperate more: for 2016, Members in the TBT Committee have agreed to start a process of "regulatory cooperation", including on specific sectors, where regulation is emerging and new. WTO - World Trade Report 2014, p118

9% Average applied tariff, WTO Members in 2013

Tariffs have declined significantly.

But also trade patters have changed …

…..to market More specialization! Country / company: A, B, … 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

Why do I show this? To make the point that regulation, standards – is becoming more central in trade policy. There are several contributing reasons for this … New trade patters today. Production is more fragmented. Globalized manufacturing, integrated supply chains. All this makes “putting the pieces together” more important – more emphasis on regulation, avoding unnecessary trade costs (TFA). … Deeper. Integration is deeper (in RTAs). In trade policy, “deeper integration” (among groups of Members) is on the rise and with it comes a greater focus on “behind the border” measures where standards and regulations figure prominently. Chapters on TBT. Level of detail is going up. And what is the consequence? = Coherence become crucial! 1) Good regulation = GRP 2) Good standard-setting practices = CGP 3) Cooperation, between trade and health community is essential  Coherence Where to start? Articulating the synergies and the risks will help governments promote the complementary objectives of health and trade policies. NCDs are a serious global challenge facing all governments worldwide. For health and trade policies to be coherent more cooperation is needed between regulators, both from health and trade ministries and with their international counterparts. Food labelling next? 2016 – sector-specific discussion. There are signs that governments are willing to cooperate more: for 2016, Members in the TBT Committee have agreed to start a process of "regulatory cooperation", including on specific sectors, where regulation is emerging and new. 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 Why do I show this? To make the point that regulation, standards – is becoming more central in trade policy. There are several contributing reasons for this … New trade patters today. Production is more fragmented. Globalized manufacturing, integrated supply chains. All this makes “putting the pieces together” more important – more emphasis on regulation, avoding unnecessary trade costs (TFA). … Deeper. Integration is deeper (in RTAs). In trade policy, “deeper integration” (among groups of Members) is on the rise and with it comes a greater focus on “behind the border” measures where standards and regulations figure prominently. Chapters on TBT. Level of detail is going up. And what is the consequence? = Coherence become crucial! 1) Good regulation = GRP 2) Good standard-setting practices = CGP 3) Cooperation, between trade and health community is essential  Coherence Where to start? Articulating the synergies and the risks will help governments promote the complementary objectives of health and trade policies. NCDs are a serious global challenge facing all governments worldwide. For health and trade policies to be coherent more cooperation is needed between regulators, both from health and trade ministries and with their international counterparts. Food labelling next? 2016 – sector-specific discussion. There are signs that governments are willing to cooperate more: for 2016, Members in the TBT Committee have agreed to start a process of "regulatory cooperation", including on specific sectors, where regulation is emerging and new. The right to regulate remains, even under freer trade

Non-tariff measures (NTMs, NTBs) neutral term! (NTMs are not necessarily bad!) Non-tariff measures (NTMs, NTBs) (including standards)

NTMs are allowed! (and there may me many reasons …)

Information to consumer: fresh or frozen? (TBT) Food safety (SPS) Information to consumer: fresh or frozen? (TBT)

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. Some specifics. 1) Legitimate objective: all agree …– there is agreement on objective, of course! 2) Disagreement lies in the detail: How far to go? Scientific basis? What is effective what is not? (alcohol labelling a good example) 3) Labelling is common - not surprising – and a good example (Thai – Alcohol labelling) – also packaging 4) Content, naming, definitions … (transfat, processed, reformulated)

1 Legitimate objective

TBT SPS

Food safety, animal plant life or health = SPS The rest (including environment, safety and health) = TBT

All products are covered!

Does it make a difference? TBT SPS Open “Relevant” ISBs Factors other than science also Closed: food safety, animal plant life or health Codex, OIE and IPPC Science!

Why do I show this? To make the point that regulation, standards – is becoming more central in trade policy. There are several contributing reasons for this … New trade patters today. Production is more fragmented. Globalized manufacturing, integrated supply chains. All this makes “putting the pieces together” more important – more emphasis on regulation, avoding unnecessary trade costs (TFA). … Deeper. Integration is deeper (in RTAs). In trade policy, “deeper integration” (among groups of Members) is on the rise and with it comes a greater focus on “behind the border” measures where standards and regulations figure prominently. Chapters on TBT. Level of detail is going up. And what is the consequence? = Coherence become crucial! 1) Good regulation = GRP 2) Good standard-setting practices = CGP 3) Cooperation, between trade and health community is essential  Coherence Where to start? Articulating the synergies and the risks will help governments promote the complementary objectives of health and trade policies. NCDs are a serious global challenge facing all governments worldwide. For health and trade policies to be coherent more cooperation is needed between regulators, both from health and trade ministries and with their international counterparts. Food labelling next? 2016 – sector-specific discussion. There are signs that governments are willing to cooperate more: for 2016, Members in the TBT Committee have agreed to start a process of "regulatory cooperation", including on specific sectors, where regulation is emerging and new. 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.

Why do I show this? To make the point that regulation, standards – is becoming more central in trade policy. There are several contributing reasons for this … New trade patters today. Production is more fragmented. Globalized manufacturing, integrated supply chains. All this makes “putting the pieces together” more important – more emphasis on regulation, avoding unnecessary trade costs (TFA). … Deeper. Integration is deeper (in RTAs). In trade policy, “deeper integration” (among groups of Members) is on the rise and with it comes a greater focus on “behind the border” measures where standards and regulations figure prominently. Chapters on TBT. Level of detail is going up. And what is the consequence? = Coherence become crucial! 1) Good regulation = GRP 2) Good standard-setting practices = CGP 3) Cooperation, between trade and health community is essential  Coherence Where to start? Articulating the synergies and the risks will help governments promote the complementary objectives of health and trade policies. NCDs are a serious global challenge facing all governments worldwide. For health and trade policies to be coherent more cooperation is needed between regulators, both from health and trade ministries and with their international counterparts. Food labelling next? 2016 – sector-specific discussion. There are signs that governments are willing to cooperate more: for 2016, Members in the TBT Committee have agreed to start a process of "regulatory cooperation", including on specific sectors, where regulation is emerging and new. The “how” is important, much can be learnt from both Agreement and a dynamic committee work

Why do I show this? To make the point that regulation, standards – is becoming more central in trade policy. There are several contributing reasons for this … New trade patters today. Production is more fragmented. Globalized manufacturing, integrated supply chains. All this makes “putting the pieces together” more important – more emphasis on regulation, avoding unnecessary trade costs (TFA). … Deeper. Integration is deeper (in RTAs). In trade policy, “deeper integration” (among groups of Members) is on the rise and with it comes a greater focus on “behind the border” measures where standards and regulations figure prominently. Chapters on TBT. Level of detail is going up. And what is the consequence? = Coherence become crucial! 1) Good regulation = GRP 2) Good standard-setting practices = CGP 3) Cooperation, between trade and health community is essential  Coherence Where to start? Articulating the synergies and the risks will help governments promote the complementary objectives of health and trade policies. NCDs are a serious global challenge facing all governments worldwide. For health and trade policies to be coherent more cooperation is needed between regulators, both from health and trade ministries and with their international counterparts. Food labelling next? 2016 – sector-specific discussion. There are signs that governments are willing to cooperate more: for 2016, Members in the TBT Committee have agreed to start a process of "regulatory cooperation", including on specific sectors, where regulation is emerging and new. right obligation

Why do I show this? To make the point that regulation, standards – is becoming more central in trade policy. There are several contributing reasons for this … New trade patters today. Production is more fragmented. Globalized manufacturing, integrated supply chains. All this makes “putting the pieces together” more important – more emphasis on regulation, avoding unnecessary trade costs (TFA). … Deeper. Integration is deeper (in RTAs). In trade policy, “deeper integration” (among groups of Members) is on the rise and with it comes a greater focus on “behind the border” measures where standards and regulations figure prominently. Chapters on TBT. Level of detail is going up. And what is the consequence? = Coherence become crucial! 1) Good regulation = GRP 2) Good standard-setting practices = CGP 3) Cooperation, between trade and health community is essential  Coherence Where to start? Articulating the synergies and the risks will help governments promote the complementary objectives of health and trade policies. NCDs are a serious global challenge facing all governments worldwide. For health and trade policies to be coherent more cooperation is needed between regulators, both from health and trade ministries and with their international counterparts. Food labelling next? 2016 – sector-specific discussion. There are signs that governments are willing to cooperate more: for 2016, Members in the TBT Committee have agreed to start a process of "regulatory cooperation", including on specific sectors, where regulation is emerging and new. First: you don’t necessarily need to regulate (even if you have the right) – there are voluntary and mandatory measures

Measures Voluntary Mandatory Market Technical Regulations Standards Conformity Assessment Procedures Market

Why do I show this? To make the point that regulation, standards – is becoming more central in trade policy. There are several contributing reasons for this … New trade patters today. Production is more fragmented. Globalized manufacturing, integrated supply chains. All this makes “putting the pieces together” more important – more emphasis on regulation, avoding unnecessary trade costs (TFA). … Deeper. Integration is deeper (in RTAs). In trade policy, “deeper integration” (among groups of Members) is on the rise and with it comes a greater focus on “behind the border” measures where standards and regulations figure prominently. Chapters on TBT. Level of detail is going up. And what is the consequence? = Coherence become crucial! 1) Good regulation = GRP 2) Good standard-setting practices = CGP 3) Cooperation, between trade and health community is essential  Coherence Where to start? Articulating the synergies and the risks will help governments promote the complementary objectives of health and trade policies. NCDs are a serious global challenge facing all governments worldwide. For health and trade policies to be coherent more cooperation is needed between regulators, both from health and trade ministries and with their international counterparts. Food labelling next? 2016 – sector-specific discussion. There are signs that governments are willing to cooperate more: for 2016, Members in the TBT Committee have agreed to start a process of "regulatory cooperation", including on specific sectors, where regulation is emerging and new. 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 Why do I show this? To make the point that regulation, standards – is becoming more central in trade policy. There are several contributing reasons for this … New trade patters today. Production is more fragmented. Globalized manufacturing, integrated supply chains. All this makes “putting the pieces together” more important – more emphasis on regulation, avoding unnecessary trade costs (TFA). … Deeper. Integration is deeper (in RTAs). In trade policy, “deeper integration” (among groups of Members) is on the rise and with it comes a greater focus on “behind the border” measures where standards and regulations figure prominently. Chapters on TBT. Level of detail is going up. And what is the consequence? = Coherence become crucial! 1) Good regulation = GRP 2) Good standard-setting practices = CGP 3) Cooperation, between trade and health community is essential  Coherence Where to start? Articulating the synergies and the risks will help governments promote the complementary objectives of health and trade policies. NCDs are a serious global challenge facing all governments worldwide. For health and trade policies to be coherent more cooperation is needed between regulators, both from health and trade ministries and with their international counterparts. Food labelling next? 2016 – sector-specific discussion. There are signs that governments are willing to cooperate more: for 2016, Members in the TBT Committee have agreed to start a process of "regulatory cooperation", including on specific sectors, where regulation is emerging and new. Once that decision has been taken, the rules apply

2 Non-discrimination

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 Avoidance of unnecessary obstacles to international trade

allowing Members to fulfill legitimate objectives at levels they consider appropriate avoiding unnecessary barriers to international trade

Holistic weighing and balancing 1) Degree of contribution 2) Trade restrictiveness 3) nature of the risks / gravity of the consequences 4) alternatives (assessment) Holistic weighing and balancing

Necessary Unnecessary

Necessary Unnecessary

Unnecessary Necessary

allowing for regulatory autonomy to protect legitimate interests avoiding unnecessary obstacles to international trade use of international standards

The use of international standards 4 The use of international standards “harmonization” = ≈

= ≈ Which ones?

= ≈ SPS Does anyone know the difference between the TBT and SPS agreement with respect to harmonization of standards?? SPS names standards from three bodies as relevant for the purposes of the agreement. IPPC – International Plant Protection Convention OIE – World Organization for Animal Health WHO/FAO codex alimentarius commission ISO: The text is approved as an International Standard if a two-thirds majority of the P-members of the TC/SC is in favour and not more than one-quarter of the total number of votes cast are negative.

= ≈ EC – Sardines Sardina Pilchardus Sardinops Sagax

= ≈ EC: Peru: Sardina pilchardus Sardinops sagax … only Sardina pilchardus may be marketed as preserved sardines in EC (Article 2) Sardinops sagax Peru: WTO Slide 51

5 Transparency

Timeline

1 2 3 4 = ≈ 5

WTO rules to not remove the right to regulate! Why do I show this? To make the point that regulation, standards – is becoming more central in trade policy. There are several contributing reasons for this … New trade patters today. Production is more fragmented. Globalized manufacturing, integrated supply chains. All this makes “putting the pieces together” more important – more emphasis on regulation, avoding unnecessary trade costs (TFA). … Deeper. Integration is deeper (in RTAs). In trade policy, “deeper integration” (among groups of Members) is on the rise and with it comes a greater focus on “behind the border” measures where standards and regulations figure prominently. Chapters on TBT. Level of detail is going up. And what is the consequence? = Coherence become crucial! 1) Good regulation = GRP 2) Good standard-setting practices = CGP 3) Cooperation, between trade and health community is essential  Coherence Where to start? Articulating the synergies and the risks will help governments promote the complementary objectives of health and trade policies. NCDs are a serious global challenge facing all governments worldwide. For health and trade policies to be coherent more cooperation is needed between regulators, both from health and trade ministries and with their international counterparts. Food labelling next? 2016 – sector-specific discussion. There are signs that governments are willing to cooperate more: for 2016, Members in the TBT Committee have agreed to start a process of "regulatory cooperation", including on specific sectors, where regulation is emerging and new. Regulation is becoming more important (tariffs down, trade patters changing, deeper integration). Here is where trade policy is going to focus. WTO rules to not remove the right to regulate! 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.

Thank you! erik.wijkstrom@wto.org