Technical Barriers

Technical Barrier Agreement

The WTO agreement on technical barriers to trade sets out rules and principles for the member states in the preparation, adaptation and application of technical regulations and standards.  The purpose is to ensure that they provide the appropriate standards of protection for the life and health of humans, plants and animals and the environment and prevent deceptive practices while not creating unnecessary obstacles to trade.

A technical regulation, in this context, is a mandatory law specifying the characteristics of products, production methods, terminology, symbols, packaging, and labelling requirements for the products’ processes or production methods.  Standards are voluntary guidelines setting out similar requirements.

Conformity assessment proceedings are methods of sampling, testing and inspection for the purpose of evaluating and verifying conformity with the relevant regulations, including steps for registration, accreditation and approval.

The agreement covers agricultural and industrial products.  It does not cover specifications and requirements of goods for consumption by governmental bodies.  These are covered by the agreement on governmental procurement.

It does not cover sanitary and phytosanitary measures, which are covered by a separate agreement.

Govremnetal Obligaitons

Central governments must take reasonable measures to ensure that the bodies under them comply. The agreement applies to local government and non-governmental agencies.

The agreements require member states to establish offices which publish information and assist in relation to technical regulations, standards and conformity assessment procedures which are accessible by interested parties in other states. They must use accepted international systems in devising technical regulations, standards and conformity assessment procedures where possible.

In relation to the application of standards, they must ensure that products imported from other states are accorded no less favourable treatment than similar national products or products originating in other states.

Technical Standards

Technical regulations, standards and procedures must be prepared, adopted and applied so as not to create any unnecessary obstacle to international trade. Technical regulations, standards and conformity assessments must be adopted or amended  unless international standards are used.

States must provide technical assistance to other member states and, in particular, developing states.

The agreement on the application of sanitary and phytosanitary measures complements the last agreement.  It applies to standards designed to protect human, animal and plant life and health.

Such measures must not be disguised restrictions on trade.  They may not arbitrarily discriminate between states where identical and similar conditions exist.  They must be justified by scientific evidence.

Investment

The agreement on trade-related investment measures (TRIMs) seeks to facilitate foreign investment and eliminate distortions that reduce international trade.  Provisions in investment laws that discriminate unfavourably against non-nationals or that impose restrictions on the use of foreign products by foreign-owned enterprises are forbidden.

Requirements on a foreign enterprise to buy domestic products, requirements that the volume or value of its imports are linked to the volume or value of its exports or measures linking its access to foreign exchange to foreign exchange earnings are generally forbidden, subject to conditions.

Import Licensing

The agreement on import licensing seeks to ensure that procedures for such licensing are administered fairly and equitably.  The forms and procedures must be as simple as possible.

Applicants must have to deal with a single administrative entity.  Licenses may not be denied on account of small errors.  Imports are not to be restricted on account of in value or quantity designated in the license.

Anti-Dumping

The agreement on implementation of Article 6 of GATT 1994 is referred to as the Anti-Dumping Code.  Products are dumped if they’re introduced into commerce in another country at less than their normal value. This is the case if the export price is less than the comparable price in the ordinary course of trade for the like product when destined for consumption in the exporting country.

The Anti-Dumping Code does not prohibit dumping in itself. Dumping may be the subject of anti-dumping duty. The investigation must determine that the dumped products cause a material injury or threat or may materially retard the establishment of a domestic industry in the importing country.

An investigation to determine the existence, degree and effect of the dumping may be initiated upon the application of a domestic industry.  The application must show evidence of dumping, material injury or threat to the domestic industry and that it is caused by the dumped imports.

Domestic industry is the domestic producers as a whole of similar products or domestic producers whose collective output of products makes up a major share of the total output of those products within the state.  In some circumstances, governmental authorities of the affected state may initiate the application.  An application may also be made by the authorities of an affected third country.

Process

The investigation must give all parties the opportunity to participate and present their evidence.  They must also have the opportunity to examine, add to and rebut adverse evidence.  It must be carried out expeditiously.  Fair procedures must not be used by any of the parties as a means of delaying the process.

Provisional measures may be permitted after an investigation has been initiated, and a preliminary determination has been made of the requisite injury, where it is found that the measures are necessary to prevent injury during the course of the investigation.  At the conclusion of the investigation, final anti-dumping measures may be imposed if there was a causal link as above.

The amount of anti-dumping duty is not to exceed the difference between the product’s normal value in other states or its cost with a reasonable profit and the price at which is actually exported.  The duty is permissible only for so long as necessary to counteract the relevant damage or injury.

Textiles

The agreement on textiles and clothing is designed to eliminate special arrangements in rising to those products.  Formerly, a series of collateral agreements had been entered between states involved in the clothing and textile trade by way of exemption from general GATT principles.

The arrangements had their origin in low-cost suppliers of cotton textile imports into the United States in the 1950s and ‘60s.  The United States government negotiated concessions from Japan and other low-cost exporters to limit textile exports.  The EU restricted the import of nearly all textiles.

The Multi-Fibre Arrangement entered in 1973 applied to half of the developed world’s imports from developing countries. It permitted states to establish quantitative limits on imports of textiles through bilateral agreements.  It did not necessarily give developing states preference and allowed discrimination.

The Multi Fibre Agreement was replaced by the agreement on textiles and clothing in 1994. The agreement provided for the elimination of the Multi Fibre Agreement over a 10-year period.  States were obliged to remove a percentage of their textile and clothing imports from quota controls progressively.

All quotas were to be removed by 2005 so that all trading was to be incorporated into GATT by that stage.  All quota restrictions inconsistent with GATT were to be abolished.  Ultimately, the agreement on textiles and clothing ended in 2005 and became subsumed into general GATT principles.

Origin

The agreement on rules of origin sets up procedures and methods to determine the origin of goods.  The harmonized rules were made in consultation with the customs cooperation council.

Rules of origin are to be coherent, objective, understandable and predictable.  They are to be administered in a consistent, uniform, impartial and reasonable manner.

Under the basic definition, the country of origin is to be the one with which a particular good was obtained or where more than one country is involved, the one in which the last substantial transformation is carried out.