Agreement on various barriers to trade and its implications
Thursday, 16 April 2009
Ferdous Ara Begum
WITHIN the WTO framework, the member-countries have the right to take recourse to the Agreement on Technical Barriers to Trade (TBT) to ensure technical regulations, standards and conformity assessment procedures. It will not create unnecessary barriers to international trade to take regulatory measures to achieve their legitimate objectives. Under the agreement no country is prevented from ensuring quality of exports, the protection of human, animal or plant life or health. The protection of the environment, the prevention of deceptive practices, and protection of its essential security interest at levels it considers appropriate.
On the other hand, the purpose of Sanitary and Phytosanitary (SPS) agreement is to protect human or animal health from food-related risks, human health from animal or plant-carried diseases, animals and plants from pests or diseases, or to prevent other damage from pests. Bangladesh is obligated to maintain TBT and SPS issues without creating unnecessary barriers to international trade.
Difference between these two agreements is sometimes very difficult to understand. TBT agreement has considerably wider coverage than SPS agreement. It also contains much broader, less closely defined objectives for the introduction of technical regulations, standards or conformity assessment procedures than the SPS agreement. TBT measures could cover any subject, from car safety to energy savings devices, to the shape of food cartons. In case of trading fruit, say an orange, it may be regulated by measures that would fall under both TBT and SPS agreement. A measure dealing with the treatment of the imported fruit to prevent the spread of pests would be relevant to SPS agreement, while a measure addressing quality, grading and labelling characteristics of the imported fruit would fall under the TBT agreement. The two agreements have some common elements, such as basic obligations of non-discrimination and similar requirements for the advance notification of proposed measures and the establishment of information offices (Enquiry points).
The two agreement have some specific differences also, e.g. while both the agreements encourage the use of international standards, under SPS agreement, justification for not using such standards relates to scientific arguments resulting from an assessment of the potential health risks. This means that members are permitted to adopt SPS measures which are more stringent than the relevant international standards or adopt SPS measures when international standards do not exists, provided the measures are based on scientific risk assessment, consistently applied and not more trade restrictive. In contrast, regarding TBT agreement, government may decide that international standards are not appropriate for other reasons, including fundamental technological problems or geographical factors.
Ultimately, tariff barriers will be replaced by technical barriers for which preparation of less developed countries is not enough. Component two of the Bangladesh Quality Support Programme (BQSP) funded by the European Union (EU) is aimed at improving the private sector to upgrade their quality and packaging requirements in export markets and in that respect implications of these two agreements is very important. It also helps to enhance its capacities to apply the value-chain approach to find ways to enhance product competitiveness in these markets. The project is assisting Bangladesh in harmonizing the efforts of all stakeholders through development of export strategies at sector level using the value-chain approach and focusing on supply chain management, quality management and packaging to achieve export diversification by enhancing competitiveness and quality products.
One of the important activities of the component is to review the SPS and TBT infrastructure of the country. Recently, a study tour was organized under the project to Thailand to have a practical experience of the effectiveness of the operations of TBT and SPS. National Enquiry Points (NEP) can be strengthened following their examples. It will also help to enhance capability of private organizations to disseminate information about current and proposed standard, technical regulations and conformity assessment procedures and SPS measures.
Preparation of Bangladesh is not enough so far. In order to increase exports and diversify export baskets, we need to conform to international regulation. A SPS and TBT enquiry point has just started its operation in Bangladesh. But it cannot be functional until and unless stakeholders are directly interested in getting involved to get the benefits of these two agreements. For exporting and importing food products, medicines, agro and agro-processing, herbal products, horticulture and related products, we need to develop an SPS and TBT base for further development. Quality of products has to be ensured from the stage of farm level. In a recent visit to Thailand, we were able to see how serious they are in maintaining their qualities in the early stage of the value chain.
WTO's TBT agreement is one of the major legal instruments that ensure a rule-based global trading environment. It covers all industrial and agricultural products that are being traded within the member countries. The rights of the agreement are exercisable through official channels and obligations fall on the government. Effective communication between the government and the private sector is an essential part of the implementation of the agreement. This is similarly true in case of SPS agreement. Due to its transparency, exporters from a member country benefit from assured access to information on importing members' technical regulations' standards and conformity assessment procedures. All members have the right to comment on and seek justification of new technical regulations prior to implementation.
In this respect, the preparation of Bangladesh is not that much impressive. A national enquiry point has just been formed in the Ministry of Commerce for SPS and for TBT Bangladesh Standard and Testing Institute has been working. Strengthening of these NEPs and their capacities to conform to the needs of the private sector in respect of maintaining standards and qualities is very much important and eventually can help diversify export. Adequate awareness among private stakeholders should be created.
Like Bangladesh, Thai Industrial Standards Institute (TISI) under the Ministry of Industry there is working as the National Enquiry Point (NEP) since long. They do not have any separate accreditation body, though they have Accreditation Act. They have MRA with ILA and APLAQ. Thailand has 25 accredited laboratories. So far they have developed 95 mandatory standards which are very important. They follow same process in testing for voluntary and mandatory measures. Most of the cases they follow international standards.
They have adopted International Electrochemical Commission (IEC), for food they were maintaining codex. Testing products are done by private standard organizations, universities but report must be sent to the TISI. Under TISI, they do not have any labs but they accredit labs. Thailand has Mutual Recognition of Agreements (MRA) with Japan for Electronic Products, MRA with the Philippines is in process. In regard to signing MRA with Bangladesh, BIMSTEC could be a vehicle to be utilized.
Bangladesh also adopted international standards and is a member of ISO and Codex. In most cases, Bangladesh adopts international standards. Sometimes local standards are also used where international standards are not available. e.g. jute and textile. In that respect, Bangladesh wants to develop its own standards.
Interesting feature of TISI is that they are working as NEP as well as NA. They download notifications every day. NEP first studies the notification and enquiries, highlights the important areas and then distributes it to those concerned. Thai NEP maintains contacts with the stakeholders. They have 18 different notifications authority. All eighteen national authorities give copy to the Ministry of Commerce for better coordination. For food, Ministry of Agriculture is the notifying authority. In regard to giving warning to the industries, they send letters and provide press releases through TISI.
Nowadays Thailand is facing some problems with Japan in respect of exporting electronics and with Brazil o they have some problems regarding toys. TISI has an internal committee to work for TBT. This committee has been authorized by cabinet to decide what to do and what not. The committee is composed of members concerned including some private sector stake holders. The committee is headed by a permanent secretary, In Bangladesh, a committee of this type has just been formed in case of SPS, for TBIT such a committee is yet to be formed.
TISI has a Board of International standards. When TBT Committee cannot resolve the issue, they refer it to the Board. Chairman of TISI Board is also a permanent secretary. All gazettes are notified through central government.
During discussions in Thailand, the issue of Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) which was imposed by EU countries came up. They recognized the complexity of the issue and opined that though it could be possible for the large enterprise to accommodate the measure, it would be really difficult for small and medium scale entrepreneurs to abide by the measures. It was also said that the objective of the measure is legitimate so one should encourage SMEs to develop their capacities so that they can also be capable of following the measure.
TISI informed that Nickel has been used in several industries of their country. The EU has identified it as one of the hazardous issues for health. Nickel and nickel substances have been identified as very dangerous. TISI also informed that the EU is going to introduce Red Across Methodology, through which some common elements can be identified as hazardous. The EU named it as CLP (Certification Labelling and Packaging). In regard to REACH, Thai stakeholders have agreed to its objectives but its implementation will be very difficult. Thai Petroleum Energy, Siam Cement and Thai Petroleum Authority have taken registration for REACH. It was informed that registration for REACH is also very expensive, so SMEs will have to face serious problems in that respect. Bangladesh can request for any sort of technical assistances in getting cooperation from the concerned.
In Thailand, there are several regulatory bodies. Based on requirement, they distribute the enquires to the concerned organizations. For example, Thai Food and Drug Administration (FDA) is taking care of the food quality and testing. Thai Industrial Testing Institute (TISI) is taking care of the issue of plastic and leather products. Textile Institute is taking care of the quality and other related issues of textiles. As the main vehicle for taking care of the agreement is the government, regular training programmes for developing the required manpower is very important.
Development of TBT and SPS infrastructure is a very much related issue with export development. A detailed database for SPS measures taken by the similarly placed countries and the export destinations is a must. In order to protect our country from importing sub-standard products, SPS and TBT measures can be imposed but before that we need to build our own capacities because as per agreement no discrimination is allowed for domestic and international products. In comparison with Thailand, our laboratory facilities are very much limited and there is absence of the required laboratory technicians.
Whatever resources we have, we do not know how to utilize them. So the problem is both upstream and downstream. Our first step towards these targets would be to make NEPs strong and equip them with required authority. A small survey can be conducted to identify the required standard conforming to the priorities of our potential export sector.
The writer is former Executive Director, Saarc Chamber of Commerce and Industry
WITHIN the WTO framework, the member-countries have the right to take recourse to the Agreement on Technical Barriers to Trade (TBT) to ensure technical regulations, standards and conformity assessment procedures. It will not create unnecessary barriers to international trade to take regulatory measures to achieve their legitimate objectives. Under the agreement no country is prevented from ensuring quality of exports, the protection of human, animal or plant life or health. The protection of the environment, the prevention of deceptive practices, and protection of its essential security interest at levels it considers appropriate.
On the other hand, the purpose of Sanitary and Phytosanitary (SPS) agreement is to protect human or animal health from food-related risks, human health from animal or plant-carried diseases, animals and plants from pests or diseases, or to prevent other damage from pests. Bangladesh is obligated to maintain TBT and SPS issues without creating unnecessary barriers to international trade.
Difference between these two agreements is sometimes very difficult to understand. TBT agreement has considerably wider coverage than SPS agreement. It also contains much broader, less closely defined objectives for the introduction of technical regulations, standards or conformity assessment procedures than the SPS agreement. TBT measures could cover any subject, from car safety to energy savings devices, to the shape of food cartons. In case of trading fruit, say an orange, it may be regulated by measures that would fall under both TBT and SPS agreement. A measure dealing with the treatment of the imported fruit to prevent the spread of pests would be relevant to SPS agreement, while a measure addressing quality, grading and labelling characteristics of the imported fruit would fall under the TBT agreement. The two agreements have some common elements, such as basic obligations of non-discrimination and similar requirements for the advance notification of proposed measures and the establishment of information offices (Enquiry points).
The two agreement have some specific differences also, e.g. while both the agreements encourage the use of international standards, under SPS agreement, justification for not using such standards relates to scientific arguments resulting from an assessment of the potential health risks. This means that members are permitted to adopt SPS measures which are more stringent than the relevant international standards or adopt SPS measures when international standards do not exists, provided the measures are based on scientific risk assessment, consistently applied and not more trade restrictive. In contrast, regarding TBT agreement, government may decide that international standards are not appropriate for other reasons, including fundamental technological problems or geographical factors.
Ultimately, tariff barriers will be replaced by technical barriers for which preparation of less developed countries is not enough. Component two of the Bangladesh Quality Support Programme (BQSP) funded by the European Union (EU) is aimed at improving the private sector to upgrade their quality and packaging requirements in export markets and in that respect implications of these two agreements is very important. It also helps to enhance its capacities to apply the value-chain approach to find ways to enhance product competitiveness in these markets. The project is assisting Bangladesh in harmonizing the efforts of all stakeholders through development of export strategies at sector level using the value-chain approach and focusing on supply chain management, quality management and packaging to achieve export diversification by enhancing competitiveness and quality products.
One of the important activities of the component is to review the SPS and TBT infrastructure of the country. Recently, a study tour was organized under the project to Thailand to have a practical experience of the effectiveness of the operations of TBT and SPS. National Enquiry Points (NEP) can be strengthened following their examples. It will also help to enhance capability of private organizations to disseminate information about current and proposed standard, technical regulations and conformity assessment procedures and SPS measures.
Preparation of Bangladesh is not enough so far. In order to increase exports and diversify export baskets, we need to conform to international regulation. A SPS and TBT enquiry point has just started its operation in Bangladesh. But it cannot be functional until and unless stakeholders are directly interested in getting involved to get the benefits of these two agreements. For exporting and importing food products, medicines, agro and agro-processing, herbal products, horticulture and related products, we need to develop an SPS and TBT base for further development. Quality of products has to be ensured from the stage of farm level. In a recent visit to Thailand, we were able to see how serious they are in maintaining their qualities in the early stage of the value chain.
WTO's TBT agreement is one of the major legal instruments that ensure a rule-based global trading environment. It covers all industrial and agricultural products that are being traded within the member countries. The rights of the agreement are exercisable through official channels and obligations fall on the government. Effective communication between the government and the private sector is an essential part of the implementation of the agreement. This is similarly true in case of SPS agreement. Due to its transparency, exporters from a member country benefit from assured access to information on importing members' technical regulations' standards and conformity assessment procedures. All members have the right to comment on and seek justification of new technical regulations prior to implementation.
In this respect, the preparation of Bangladesh is not that much impressive. A national enquiry point has just been formed in the Ministry of Commerce for SPS and for TBT Bangladesh Standard and Testing Institute has been working. Strengthening of these NEPs and their capacities to conform to the needs of the private sector in respect of maintaining standards and qualities is very much important and eventually can help diversify export. Adequate awareness among private stakeholders should be created.
Like Bangladesh, Thai Industrial Standards Institute (TISI) under the Ministry of Industry there is working as the National Enquiry Point (NEP) since long. They do not have any separate accreditation body, though they have Accreditation Act. They have MRA with ILA and APLAQ. Thailand has 25 accredited laboratories. So far they have developed 95 mandatory standards which are very important. They follow same process in testing for voluntary and mandatory measures. Most of the cases they follow international standards.
They have adopted International Electrochemical Commission (IEC), for food they were maintaining codex. Testing products are done by private standard organizations, universities but report must be sent to the TISI. Under TISI, they do not have any labs but they accredit labs. Thailand has Mutual Recognition of Agreements (MRA) with Japan for Electronic Products, MRA with the Philippines is in process. In regard to signing MRA with Bangladesh, BIMSTEC could be a vehicle to be utilized.
Bangladesh also adopted international standards and is a member of ISO and Codex. In most cases, Bangladesh adopts international standards. Sometimes local standards are also used where international standards are not available. e.g. jute and textile. In that respect, Bangladesh wants to develop its own standards.
Interesting feature of TISI is that they are working as NEP as well as NA. They download notifications every day. NEP first studies the notification and enquiries, highlights the important areas and then distributes it to those concerned. Thai NEP maintains contacts with the stakeholders. They have 18 different notifications authority. All eighteen national authorities give copy to the Ministry of Commerce for better coordination. For food, Ministry of Agriculture is the notifying authority. In regard to giving warning to the industries, they send letters and provide press releases through TISI.
Nowadays Thailand is facing some problems with Japan in respect of exporting electronics and with Brazil o they have some problems regarding toys. TISI has an internal committee to work for TBT. This committee has been authorized by cabinet to decide what to do and what not. The committee is composed of members concerned including some private sector stake holders. The committee is headed by a permanent secretary, In Bangladesh, a committee of this type has just been formed in case of SPS, for TBIT such a committee is yet to be formed.
TISI has a Board of International standards. When TBT Committee cannot resolve the issue, they refer it to the Board. Chairman of TISI Board is also a permanent secretary. All gazettes are notified through central government.
During discussions in Thailand, the issue of Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) which was imposed by EU countries came up. They recognized the complexity of the issue and opined that though it could be possible for the large enterprise to accommodate the measure, it would be really difficult for small and medium scale entrepreneurs to abide by the measures. It was also said that the objective of the measure is legitimate so one should encourage SMEs to develop their capacities so that they can also be capable of following the measure.
TISI informed that Nickel has been used in several industries of their country. The EU has identified it as one of the hazardous issues for health. Nickel and nickel substances have been identified as very dangerous. TISI also informed that the EU is going to introduce Red Across Methodology, through which some common elements can be identified as hazardous. The EU named it as CLP (Certification Labelling and Packaging). In regard to REACH, Thai stakeholders have agreed to its objectives but its implementation will be very difficult. Thai Petroleum Energy, Siam Cement and Thai Petroleum Authority have taken registration for REACH. It was informed that registration for REACH is also very expensive, so SMEs will have to face serious problems in that respect. Bangladesh can request for any sort of technical assistances in getting cooperation from the concerned.
In Thailand, there are several regulatory bodies. Based on requirement, they distribute the enquires to the concerned organizations. For example, Thai Food and Drug Administration (FDA) is taking care of the food quality and testing. Thai Industrial Testing Institute (TISI) is taking care of the issue of plastic and leather products. Textile Institute is taking care of the quality and other related issues of textiles. As the main vehicle for taking care of the agreement is the government, regular training programmes for developing the required manpower is very important.
Development of TBT and SPS infrastructure is a very much related issue with export development. A detailed database for SPS measures taken by the similarly placed countries and the export destinations is a must. In order to protect our country from importing sub-standard products, SPS and TBT measures can be imposed but before that we need to build our own capacities because as per agreement no discrimination is allowed for domestic and international products. In comparison with Thailand, our laboratory facilities are very much limited and there is absence of the required laboratory technicians.
Whatever resources we have, we do not know how to utilize them. So the problem is both upstream and downstream. Our first step towards these targets would be to make NEPs strong and equip them with required authority. A small survey can be conducted to identify the required standard conforming to the priorities of our potential export sector.
The writer is former Executive Director, Saarc Chamber of Commerce and Industry