Dispute settlements

Dispute Settlementii

N O T E

The Course on Dispute Settlement in International Trade, Investmentand Intellectual Property consists of forty modules.

This Module has been prepared by Mr. Arthur E. Appleton at the request ofthe United Nations Conference on Trade and Development (UNCTAD). Theviews and opinions expressed are those of the author and not necessarily thoseof the United Nations, WTO, WIPO, ICSID, UNCITRAL or the AdvisoryCentre on WTO Law.

The designations employed and the presentation of the material do not implyan expression of any opinion whatsoever on the part of the United Nationsconcerning the legal status of any country, territory, city or areas or of itsauthorities, or concerning the delimitations of its frontiers or boundaries. Inquotations from the official documents and the jurisprudence of internationalorganizations and tribunals countries are designated as reported.

The United Nations holds copyright to this document. The course is alsoavailable in electronic format on the UNCTAD website (www.unctad.org).Copies may be downloaded free of charge on the understanding that they willbe used for teaching or study and not for a commercial purpose. Appropriateacknowledgement of the source is requested.

Copyright © United Nations, 2003All rights reserved

UNCTAD/EDM/Misc.232/Add.22

3.10 Technical Barriers to Trade iii

TABLE OF CONTENTS

Note ii

What you will learn 1

1. Why an Agreement on Technical Barriers to Trade? 31.1 Introduction 3

1.1.1 The Prevention of Protectionism 31.1.2 The legitimate regulation of products for

public policy purposes 41.2 History 5

1.2.1 GATT 1947 51.2.2 Standards Code of 1979 51.2.3 TBT Agreement 5

1.3 Test Your Understanding 6

2. Scope of the TBT Agreement 72.1 General Scope and the Key Concepts 7

2.1.1 Technical Regulation 72.1.2 Standard 82.1.3 Conformity Assessment Procedure 82.1.4 Summary 8

2.2 Questions Concerning the Scope of Applicationof the TBT Agreement 92.2.1 TBT measures and the GATT 1994 92.2.2 Non-Product-Related Processes and Production Methods 92.2.3 SPS v. TBT Measures 102.2.4 TBT Agreement and Government Procurement

Specifications 102.2.5 The TBT Agreement and Import Prohibitions 112.2.6 Application of the Agreement to TBT Measures Adopted

Prior to 1 January 1995 112.2.7 Summary 11


3. Organization of the TBT Agreement 133.1 Structure of the TBT Agreement 133.2 Applicability of the TBT Agreement at Various Governmental

and Non-Governmental Levels 133.2.1 Technical Regulations 143.2.2 Standards 153.2.3 Conformity Assessment Procedures 15


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4. Key Principles and Rules of the TBT Agreement 194.1 Overview 194.2 The Non-Discrimination Principle 194.3 The Prevention of Unnecessary Obstacles to International Trade 21

4.3.1 Legitimate Objectives 224.3.2 Necessity 234.3.3 Reasonableness 244.3.4 Changed Circumstances 24

4.4 Harmonization 254.5 Use of Relevant International Standards 264.6 Equivalence and Mutual Recognition 284.7 Transparency 28

4.7.1 Transparency Obligations 284.7.2 Derogations from Transparency in the Event

of Urgent Problems 304.8 Test Your Understanding 30

5. Developing Country Members and the TBT Agreement 335.1 Technical Assistance 335.2 Special and Differential Treatment 345.3 Test Your Understanding 35

6. Dispute Settlement and Institutional Matters 376.1 Dispute Settlement 376.2 Committee on Technical Barriers to Trade 386.3 Test Your Understanding 40

7. Case Studies 41

8. Suggested Reading 458.1 Books and Articles 458.2 Panel and Appellate Body Reports 458.3 Documents and Information 45

3.10 Technical Barriers to Trade 1

WHAT YOU WILL LEARN

The WTO Agreement on Technical Barriers to Trade (“TBT Agreement”),which entered into force in 1995, is the multilateral successor to the StandardsCode, signed by 32 GATT contracting parties at the conclusion of the 1979Tokyo Round of Trade Negotiations. The purposes of the TBT Agreementcan be broadly described as: (1) assuring that technical regulations, standardsand conformity assessment procedures, do not create unnecessary obstaclesto international trade, while (2) leaving Members adequate regulatory discretionto protect human, animal and plant life and health, national security, theenvironment, consumers, and other policy interests.

This Module provides a detailed examination of the TBT Agreement, one ofthe more technical agreements negotiated during the Uruguay Round. Withoutcompromising the details necessary to understand this Agreement, a seriouseffort has been made to explain the Agreement in terms that someone withonly a minimal familiarity with the WTO will understand.

The legal analysis of the Agreement is divided into six sections. In the firstSection, the reasons for the adoption of the TBT Agreement are set forth andthe treatment of regulations and standards under the General Agreement onTariffs and Trade (“GATT”) is examined. The second Section examines thegeneral scope of the TBT Agreement. The definitions of the key concepts of“technical regulations”, “standards,” and “conformity assessment procedures”are provided. Certain important issues are analysed, in particular the relationshipbetween the TBT Agreement, the GATT 1994, the Agreement on theApplication of Sanitary and Phytosanitary Measures (“SPS Agreement”),and the Agreement on Government Procurement (“AGP”). In addition, thetreatment pursuant to the TBT Agreement of import prohibitions and processesand production methods (“PPMs”) is discussed. The third Sectiondeals withthe structure of the TBT Agreement and the applicability of the Agreement onother than central government bodies. The fourth provides a nuts and boltsexamination of the principles and rules of the TBT Agreement, such as theprinciple of non-discrimination, the obligation to prevent unnecessary obstaclesto international trade and the obligation to use international standards as abasis for technical regulations. The fifth Sectiondeals with technical assistanceand special and differential treatment for developing country Members providedfor in the TBT Agreement. Finally, the sixth Sectiondeals with dispute settlementand institutional matters under the TBT Agreement.


1. WHY AN AGREEMENT ON TECHNICAL BARRIERSTO TRADE?OBJECTIVES

On completion of this section, the reader will be able:

• to assess why the WTO Agreement incorporates the TBT Agreement,an agreement on technical barriers to trade.

• to appreciate the competing policy goals present in the TBTAgreement.

• to discuss the history of the Agreement.

1.1 Introduction

The phrase “technical barriers to trade” refers to the use of the domesticregulatory process as a means of protecting domestic producers.

The TBT Agreement» seeks to assure that:

(1) mandatory product regulations,(2) voluntary product standards, and(3) conformity assessment procedures (procedures designed to test a

product’s conformity with mandatory regulations or voluntarystandards)

do not become unnecessary obstacles to international trade and are notemployed to obstruct trade.

The TBT Agreement seeks to balance two competing policy objectives:

(1) The prevention of protectionism, with(2) the right of a Member to enact product regulations for approved

(legitimate) public policy purposes (i.e., allowing Memberssufficient regulatory autonomy to pursue necessary domestic policyobjectives).

These goals are described in more detail below.

1.1.1 The Prevention of Protectionism

The progressive tariff reductions that have taken place in the GATT/WTOframework have left certain industrial and political leaders looking for othermeans of protecting their industries. These means of protection frequentlytake the form of non-tariff barriers (i.e., means other than tariffs for protectingbusiness sectors).

Objectives

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Technical regulations, standards and conformity assessment procedures areall potential non-tariff measures that are sometimes used for protectionistpurposes. As such, they can be potential barriers to international trade.

The TBT Agreement establishes rules and disciplines designed to preventmandatory technical regulations, voluntary standards, and conformityassessment procedures from becoming unnecessary barriers to internationaltrade. However the TBT Agreement seeks to leave Members with sufficientdomestic policy autonomy to pursue legitimate regulatory objectives.

1.1.2 The legitimate regulation of products for public policypurposes

Juxtaposed with the desire to prevent protectionism, is the need to assure thatMembers retain sufficient regulatory autonomy to accomplish domestic policygoals. Domestic regulations can accomplish several objectives unrelated toprotectionism. For example, domestic regulations can serve as a means ofprotecting consumer health and safety, the environment and national security.Domestic regulations can also further economies of scale, and increaseconsumer confidence, by assuring uniform technical and production standards.Economic development, and the improved education that should result, canlead to demands from consumers and sometimes the business community foran increase in regulations or standards.

Both the preamble of the TBT Agreement and Article 2.2 of the TBT Agreementidentify certain regulatory goals that are deemed “legitimate” for regulatorypurposes. Article 2.2 sets forth a list of legitimate TBT objectives whichincludes:

••••• protection of life/health (human, animal and plant)••••• safety (human),••••• protection of national security,••••• protection of the environment, and••••• prevention of deceptive marketing practices.

The list of legitimate objectives in Article 2.2 is not exclusive. While notspecified, it is widely agreed that technical harmonization (for example,regulations that standardize electrical products, computers, communicationsequipment, etc.), and quality standards (for example grading requirements forproduce and commodities) are legitimate. Both technical harmonization andquality standards are already widely utilized, particularly by developed countryMembers.

The TBT Agreement seeks to achieve a fine balance between permittingMembers the regulatory autonomy to protect legitimate interests (throughthe use of technical regulations, standards and conformity assessmentprocedures) and assuring that technical regulations, standards and conformityassessment procedures do not become unnecessary obstacles to international

Article 2.2 TBT


trade. If the TBT Agreement is applied too strictly, the legitimate policy interestsof Members will be thwarted. If the TBT is applied too laxly, technicalregulations may be used for protectionist purposes and the gains Membershave achieved through progressive rounds of tariff reductions may be lost.

Some sensitivity is required when dealing with TBT issues. Developingcountries fear that trade measures (technical regulations and standards)allegedly taken by developed countries for social policy goals may in realitybe for protectionist purposes. Developed countries fear that the TBT Agreementwill be applied too strictly and that trade measures designed to pursue legitimatesocial policy objectives will be struck down.

1.2 History

1.2.1 GATT 1947

Technical regulations and standards are not treated in great detail in the GeneralAgreement on Tariffs and Trade (“GATT”). Although the term “regulation”appears throughout the GATT 1947, and the term “standards” is mentioned inArticle XI, only GATT Articles III:4, XI:2, and Article XX have, from aregulatory perspective, much significance.1 These articles are, however, vaguewith respect to the rules applicable to technical regulations and standards.

Historically, Article III of the GATT 1947 on national treatment was subjectto abuse. Early in the life of the GATT 1947, certain contracting parties beganto use technical regulations and inspection requirements as trade barriers,necessitating the establishment of a stronger regime governing the applicationof technical regulations and standards. This gave birth to the “Standards Code”.

1.2.2 Standards Code of 1979

After prolonged negotiations in the Tokyo Round of Trade Negotiations, aplurilateral agreement (i.e., an agreement not signed by all GATT contractingparties) was concluded in 1979. This early TBT agreement, dubbed the“Standards Code”, served as a basis for the WTO’s TBT Agreement. Withonly 32 signatories, and few teeth2, the Standards Code nevertheless provideda good testing ground for how best to discipline the use of technical regulationsand standards.

1.2.3 TBT Agreement

The Uruguay Round TBT Agreement, which entered into force on 1 January1995, bears a resemblance to the Tokyo Round Standards Code. However,much was learned from the Tokyo Round experience, and some of theweaknesses of the Tokyo Round agreement were remedied in the WTO’s TBT

GATT 1947

1 Article XX of the GATT is also significant to the extent that the term “measure” includes regulations.However, only Article XX(d) specifically mentions regulations.2 Being dependent on consensus, the GATT system lacked a strong enforcement mechanism.

Standards Code

TBT Agreement

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Agreement. First, the TBT Agreement is a multilateral as opposed to aplurilateral agreement meaning that it applies to all WTO Members – it formspart of the Uruguay Round’s “single undertaking”. Second, the TBT Agreementhas a much stronger enforcement mechanism, being subject to the WTO’sDispute Settlement Understanding (DSU).

1.3 Test Your Understanding

1. Why is the TBT Agreement a part of the WTOAgreement?

2. What are the goals of the TBT Agreement?3. Which WTO Members are bound by the TBT

Agreement?4. What was the Standards Code?

Who was bound by the Standards Code?


2. SCOPE OF THE TBT AGREEMENTOBJECTIVES

On completion of this section the reader will be able:

• to discuss the general scope of the TBT Agreement.• to distinguish between key concepts of “technical regulations”,

“standards,” and “conformity assessment procedures”.• to appreciate the relationship between the TBT Agreement and (1)

the Agreement on the Application of Sanitary and PhytosanitaryMeasures, and (2) the Agreement on Government Procurement whichwill be examined.

2.1 General Scope and the Key Concepts

The TBT Agreement is applicable to “technical regulations” “standards”, and“conformity assessment procedures” applicable to technical regulations andstandards. These terms are each defined in Annex 1 of the Agreement. Thesedefinitions establish the general scope of the Agreement.

2.1.1 Technical Regulation

Pursuant to paragraph 1 of Annex I of the TBT Agreement a “technicalregulation” is a:

Document which lays down product characteristics or their related processesand production methods, including the applicable administrative provisions,with which compliance is mandatory. It may also include or deal exclusivelywith terminology, symbols, packaging, marking or labelling requirements asthey apply to a product, process or production method.

In EC – Sardines the Appellate Body referring back to its Report in EC -Asbestos set forth a three part test for determining if a measure is a technicalregulation:

1) the document applies to an identifiable product or group ofproducts;

2) the document must lay down one or more product characteristics;and

3) compliance with these characteristics must be mandatory.3

Example 1: A law stating that only refrigerators that are one meter highcan be sold in State X is a technical regulation.

Objectives

Annex I.1 TBT

3 Appellate Body Report European Communities – Trade Description of Sardines (“EC – Sardines”)WT/DS231/AB/R, adopted 23 October 2002, paras. 189-195 referring to European Communities -Measures Affecting Asbestos-Containing Products, WT/DS135/AB/R , adopted 5 April 2001, paras.66-70,

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Example 2: A law stating that all product packaging must be recyclableis an example of a technical regulation.

2.1.2 Standard

Pursuant to paragraph 2 of Annex I of the TBT Agreement a “standard” isdefined as a:

Document approved by a recognised body, that provides, for common andrepeated use, rules, guidelines or characteristics for products or relatedprocesses 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 orproduction method.

Example 1: A government guideline saying that all eggs weighing 62grams or more are entitled to be labelled “Grade A” is astandard (provided that eggs weighing less may still be sold).

Example 2: A guideline defining what products can display a “recyclablesymbol” is a standard (provided that products that do notbear the symbol may still be sold).

2.1.3 Conformity Assessment Procedure

Pursuant to paragraph 3 of Annex I of the TBT Agreement, a “conformityassessment” procedure is:

Any procedure used, directly or indirectly, to determine that relevantrequirements in technical regulations or standards are fulfilled.

Paragraph 3 further explains that conformity assessment procedures include,inter alia, procedures for sampling, testing and inspection; evaluation,verification and assurance of conformity; registration, accreditation andapproval as well as their combinations.

Example: Assume a country requires as a condition for the sale of spiritsthat the correct alcoholic content be displayed on the bottle. Anofficial test of the beverage to determine that the correct alcoholiccontent is displayed would be a conformity assessment procedureimplemented to verify compliance with a technical regulation.

2.1.4 Summary

The TBT Agreement is applicable to “technical regulations”, “standards”, and“conformity assessment procedures” applicable to technical regulations andstandards.

Annex I.2 TBT

Annex I.3 TBT


The principle difference between a technical regulation and a standard is thatcompliance with a technical regulation is mandatory, while compliance with astandard is voluntary.

Conformity assessment procedures are used to determine whether a technicalregulation or standard has been complied with.

2.2 Questions Concerning the Scope of Application of theTBT Agreement

2.2.1 TBT measures and the GATT 1994

With respect to the relationship between the GATT 1994 and the TBTAgreement and the applicability of the GATT 1994 to TBT measures, thePanel in EC – Asbestos found

Both the GATT 1994 and the TBT Agreement form part of Annex 1A to theWTO Agreement and may apply to the measures in question. Consequently,although we do not in principle exclude application of the TBT Agreementand/or the GATT 1994 to the Decree, we have to determine the order in whichwe should consider this case. According to the Appellate Body in EuropeanCommunities – Regime for the Importation, Sale and Distribution of Bananas,when the GATT 1994 and another Agreement in Annex 1A appear a priori toapply to the measure in question, the latter should be examined on the basisof the Agreement that deals “specifically, and in detail,” with such measures.4

The Panel thus decided to examine first whether the measure at issue wasconsistent with the TBT Agreement, the agreement that deals specifically andin detail with what was allegedly a TBT measure.

2.2.2 Non-Product-Related Processes and ProductionMethods

The definitions of a “technical regulation” and a “standard” are ambiguouswith respect to one point. Does the TBT Agreement govern technical regulationsand standards applicable to manufacturing “processes and production methods”(“PPMs”) when the PPMs utilized are not detectable in the final product –so-called “Non-Product-Related PPMs” (“NPR-PPMs”)?

This is a controversial question. The view generally held in the trade communityis that the TBT Agreement was not intended to apply to PPMs, unless thePPM is product-related (detectable in the final product). However, Membershave notified certain NPR-PPMs to the TBT Committee.5 This has been the

4 Panel Report, European Communities – Measures Affecting Asbestos and Asbestos-containingProducts (“EC – Asbestos”), WT/DS135/R, adopted as modified 5 April 2001, para. 8.16.5 “Notification” in the TBT sense of the term means to inform officially other WTO members of aparticular action through the WTO Secretariat.

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case , for example, for eco-labelling schemes based on a life-cycle analysis.6

Example: The TBT Agreement would probably not apply to a law prohibitingthe domestic sale or import of aluminium produced using electricityderived from nuclear power.

2.2.3 SPS v. TBT Measures

Article 1.5 of the TBT Agreement provides;

The provisions of this Agreement do not apply to sanitary and phytosanitarymeasures as defined in annex A of the Agreement on the Application of Sanitaryand Phytosanitary Measures.

Pursuant to Annex A(1) the SPS Agreement, an SPS measure is any measureapplied:

(a) to protect animal or plant life or health within the territory of theMember from risks arising from the entry, establishment or spreadof pests, diseases, disease-carrying organisms or disease-causingorganisms;

(b) to protect human or animal life or health within the territory of theMember from risks arising from additives, contaminants, toxins ordisease-causing organisms in foods, beverages or feedstuffs;

(c) to protect human life or health within the territory of the Memberfrom risks arising from diseases carried by animals, plants orproducts thereof, or from the entry, establishment or spread of pests;or

(d) to prevent or limit other damage within the territory of the Memberfrom the entry, establishment or spread of pests.

Example: The TBT Agreement would not apply to a law regulating the useof artificial colouring in food products.

2.2.4 TBT Agreement and. Government ProcurementSpecifications

The TBT Agreement is not applicable to purchasing specifications preparedby governmental bodies for production or consumption requirements ofgovernmental bodies. Such measures could fall instead under the WTOAgreement on Government Procurement (“AGP”). However, not all WTOMembers are bound by the AGP, and not all government procurement activitiesfall within the AGP.

Article 1.5 TBT

Article 1.4 TBT

6 Eco-labelling schemes are usually voluntary labelling programmes where a label is awarded toenvironmentally friendlier products based on an environmental assessment of all phases of a productslife-cycle – including, production, use, and disposal.


Example: The TBT Agreement would not apply to purchasing specificationsused to procure government trucks.

2.2.5 The TBT Agreement and Import Prohibitions

Although the definition of technical regulation does not list import prohibitionsor bans among the covered measures, the TBT Agreement is applicable tocertain import prohibitions and bans. The TBT Agreement applies when animport prohibition or ban is based on product characteristics, and exceptionsto the prohibition or ban (based also on particular product characteristics)exist. This question was addressed by the Appellate Body in the EC - Asbestoscase which found:

Like the Panel, we consider that, through these exceptions, the measure setsout the “applicable administrative provisions, with which compliance ismandatory” for products with certain objective “characteristics”. Theexceptions apply to a narrowly defined group of products with particular“characteristics”. Although these products are not named, the measureprovides criteria which permit their identification, both by reference to thequalities the excepted products must possess and by reference to the listpromulgated by the Minister.Viewing the measure as an integrated whole, wesee that it lays down “characteristics” for all products that might containasbestos, and we see also that it lays down the “applicable administrativeprovisions” for certain products containing chrysotile asbestos fibers whichare excluded from the prohibitions in the measure. Accordingly, we find thatthe measure is a “document” which “lays down product characteristics …including the applicable administrative provisions, with which compliance ismandatory.” For these reasons, we conclude that the measure constitutes a“technical regulation” under the TBT Agreement.7

2.2.6 Application of the Agreement to TBT MeasuresAdopted Prior to 1 January 1995

In EC - Sardines the Appellate Body ruled that the TBT Agreement applies tomeasures adopted prior to the entry into force of the WTO Agreement (i.e., 1January 1995) provided that the trade measure at issue has not ceased toexist.8

2.2.7 Summary

The TBT Agreement does not apply to SPS measures and does not apply togovernment procurement. The TBT Agreement applies to import prohibitionsbased on particular product characteristics.

The TBT Agreement probably does not apply to non-product-related processesand production methods (NPR-PMS). NPR-PPMs refers to manufacturingprocesses that are not detectable in the final product.7 Appellate Body Report, EC – Asbestos, paras.74-75 (footnote omitted).8 Ibid., para. 216.



1. What is a technical regulation? What is a standard? Givethree examples of each.

2. What is a conformity assessment proceeding? Why are theycovered by the TBT Agreement?

3. What matters are covered by the SPS Agreement and not theTBT Agreement?

4. Does the TBT Agreement apply when a government seeks toprocure goods? What is the AGP?

5. What is the difference between “product related” and “nonproduct-related” processes and production methods (PPMsand NPR-PPMs)? Do you think that “non-product-relatedprocesses and production methods” should be covered by theTBT Agreement? Why or why not?

6. Can the TBT Agreement be applied to a technical regulationdated January 1985? Under what circumstances?


3. ORGANIZATION OF THE TBT AGREEMENT


• to discuss the structure and organization of the TBT Agreementand its applicability at various governmental levels.

• to consult the TBT Agreement when confronted with a potentialTBT problem.

3.1 Structure of the TBT Agreement

The TBT Agreement applies to technical regulations, standards, and conformityassessment procedures. They are each treated in separate portions of the TBTAgreement.

Technical regulations are dealt with in Articles 2 and 3 of the TBT Agreement..Standards are governed by Article 4. Article 4, however, makes an explicitreference to Annex 3 of the Agreement. Annex 3 of the Agreement containsthe Code of Good Practice for the Preparation, Adoption and Application ofStandards (“Code of Good Practice”). This “Code” is very important. It is inthe Code where almost all of the substantive provisions governing the treatmentof standards are found.

Conformity assessment procedures are dealt with in Articles 5 and 9 of theTBT Agreement.

The principles and rules discussed in Articles 10 through 15 of the TBTAgreement are applicable to each of these areas. There are however certainminor differences in scope and treatment.

In the WTO Agreement, important provisions, in particular definitions, arefound in Annexes. In the TBT Agreement, Annex 1 provides definitions andAnnex 3 contains the Code of Good Practice.

3.2 Applicability of the TBT Agreement at VariousGovernmental and Non-Governmental Levels

The TBT Agreement applies to various governmental and non-governmentalorganizations at different levels of society. This is because technical regulations,standards, and conformity assessment procedures are not only administeredby national authorities, but also by international, regional and local authorities,as well as non-governmental organizations.

The TBT Agreement sets forth rules and disciplines applicable to international,regional, governmental and non-governmental organizations. The applicationof the basic TBT rules differs slightly depending on the regulatory level at

Objectives


issue, and whether technical regulations, standards, or conformity assessmentprocedures are involved.

Within the limits of what is politically acceptable, the TBT Agreement has awide field of application. This is evident from the broad definitions of central,local and non-governmental bodies found in Annex 1 and reproduced below.

3.2.1 Technical Regulations

Pursuant to Article 2 of the TBT Agreement, Members have an obligation toensure that central government bodies abide by the provisions of the TBTAgreement governing technical regulations. A “central government body” isdefined in Annex 1 as:

[a] [c]entral government, its ministries and departments or any body subjectto the control of the central government in respect of the activity inquestions.

With only very minor exceptions, pursuant to Article 3 of the TBT Agreement,Members have an obligation to take reasonable measures to ensure that localgovernmental and non-governmental bodies within their territories also complywith the rules set forth in the TBT Agreement governing the treatment oftechnical regulations. In addition, Members are not allowed to take measuresthat would require or encourage local government or non-governmental bodiesto act inconsistently with the rules governing the treatment of technicalregulations. A “local government body” is defined in Annex 1 as:

[a] [g]overnment other than a central government (e.g. states, provinces,Länder, cantons, municipalities, etc.) its ministries or departments or any.

A “non-governmental body” is defined as:

[a] [b]ody other than a central governmental body or a local governmentalbody, including a non-governmental body which has legal power to enforce atechnical regulation.

Article 3 of the TBT Agreement establishes two exceptions. A Member is notresponsible for taking reasonable measures to ensure that non-governmentalbodies, and local governmental bodies beyond the level directly below thecentral government body, comply with the requirement to notify a technicalregulation to other Members through the WTO Secretariat, as provided for inparagraph 9.2 and 10.1 of Article 2.

Article 2 TBT

Article 3 TBT


3.2.2 Standards

Article 4 of the TBT Agreement references the Code of Good Practice. ThisCode is found in Annex 3 of the TBT Agreement. The Code is designed toregulate the use of voluntary standards. It is open for acceptance bystandardizing bodies within a WTO Member, whether at the central, local ornon-governmental level. It is also open to regional standardizing bodies.

Standardizing bodies that accept the Code of Good Practice accept obligationsexplained in Section 4 of this Module, including most-favoured-nationtreatment, national treatment, harmonization, mutual recognition, andtransparency obligations.

Pursuant to Article 4.1 of the TBT Agreement, Members must ensure thatcentral government standardizing bodies accept and comply with the Code ofGood Practice. Members must also take “such reasonable measures as maybe available to them” to ensure that local governmental, non-governmentaland regional standardizing bodies (of which they are a member) accept andcomply with the Code.

Members are not permitted to take measures that would require or encouragelocal government or non-governmental bodies to act inconsistently with theCode.

3.2.3 Conformity Assessment Procedures

Articles 5 through 9 of the TBT Agreement set forth provisions relevant todetermining the scope and applicability of the TBT Agreement to conformityassessment procedures. Article 5 provides for most-favoured-nation treatment,national treatment, harmonization of assessment procedures, notice,transparency, equivalence, and exceptions in case of urgent problems. Article6 provides for equivalence, accreditation, mutual recognition, and foreignparticipation in conformity assessment procedures. These principles and rulesare discussed in Section 4 below.

Articles 5 and 6, governing conformity assessment by central governmentbodies, are the most important – setting out the applicable legal obligations.They provide a reference point for Articles 7 through 9 of the TBT Agreementwhich govern the application of the TBT Agreement to local government bodies,non-governmental bodies and international and regional systems.

Members have an obligation pursuant to Articles 5 and 6 to ensure that centralgovernment bodies abide by the provisions of the TBT Agreement governingconformity assessment. Not only does Article 5 implement many of the generalprinciples applicable throughout the TBT Agreement to conformity assessmentprocedures, it also establishes very detailed procedural obligations governingtransparency, notice, harmonization, procedural requirements, andconfidentiality.

Article 4 TBT

Articles 5-6 TBT


Members are required, pursuant to Article 7 of the TBT Agreement, to takereasonable measures to assure that local government bodies within theirterritory comply with TBT Articles 5 and 6 of the TBT Agreement. Article 7.1provides an exception with respect to the obligation to notify, as referred to inparagraphs 6.2 and 7.1 of Article 5. However, Members must ensure thatconformity assessment procedures of local government bodies on the leveldirectly below the central government body be notified in accordance withparagraphs 6.2 and 7.1of Article 5, except when the technical content of thelocal procedures is substantially the same as that previously notified by thecentral government body.

Members must not take measures that encourage local government bodieswithin their territories to act inconsistently with Articles 5 and 6 of the TBTAgreement.

Article 7.5 of the TBT Agreement makes Members fully responsible for theobservance of Articles 5 and 6 by local government bodies. Members arerequired to implement a legal mechanism to “support the observance” of theprovisions of Articles 5 and 6 by other than central government bodies.

Article 8 of the TBT Agreement requires that Members take reasonablemeasures to ensure that non-governmental bodies within their territories thatoperate conformity assessment procedures comply with the provisions ofArticles 5 and 6 of the TBT Agreement. Members are not required to ensurethat non-governmental conformity assessment bodies comply with therequirement to notify proposed measures.

Members are not permitted to take measures that have the effect of requiringor encouraging non-governmental conformity assessment bodies from actingin a manner inconsistent with the provisions of Articles 5 and 6.

Members are required to ensure that central government bodies do not relyon conformity assessment procedures operated by non-governmental bodiesunless these bodies comply with the legal obligations set forth in Articles 5and 6 of the TBT Agreement.

Members are encouraged to formulate and adopt international systems forconformity assessment, become members of such systems, and participatetherein. Members must take reasonable measures to assure that internationaland regional conformity assessment bodies in which relevant bodies withintheir territory participate, comply with the obligations set forth in Articles 5and 6 of the TBT Agreement, and that central government bodies only rely oninternational and regional assessment systems to the extent that these systemscomply with the provisions of Articles 5 and 6.

Article7 TBT

Article 8 TBT

Article 9 TBT



1. How is the TBT Agreement organized? What is the Code ofGood Practice?

2. What divisions does the TBT Agreement make betweendifferent governmental and non-governmental entities?

3. To what extent does the TBT Agreement apply to thestandardizing activities of governmental bodies, non-governmental bodies and international bodies?

4. Does the TBT Agreement apply to international and regionalconformity assessment bodies?


4. KEY PRINCIPLES AND RULES OF THE TBTAGREEMENT

On completion of this section, the reader will be able to discuss thekey legal principles and rules applicable to TBT measures as a resultof the TBT Agreement, including non-discrimination, the preventionof unnecessary obstacles to international trade, harmonisation,equivalence and transparency. Many of these principles and rules mayalready be familiar to the reader from other portions of the WTOAgreement.

4.1 Overview

Although the TBT Agreement has three separate fields of application (technicalregulations, standards, and conformity assessment procedures), there arecommon principles and rules that are generally applicable throughout. Thissection concerns these common principles and rules. Because the analysis islengthy, an outline of the structure of this section is provided:

••••• Non-discrimination••••• The prevention of unnecessary obstacles to international trade

••••• Legitimate objectives••••• Necessity••••• Reasonableness••••• Changed circumstances

••••• Harmonization••••• Use of international standards••••• Equivalence and Mutual recognition••••• Transparency••••• Derogations in the event of urgent measures.

4.2 The Non-Discrimination Principle

The WTO’s “non-discrimination” obligation is applicable to technicalregulations, standards and conformity assessment procedures. The principleof non-discrimination is found in the following provisions of the TBTAgreement:

For technical regulations: Article 2.1For standards: Annex 3(D) (Code of Good Practice)For conformity assessment procedures: Article 5.1.1.

The non-discrimination obligation has two elements: “most-favoured-nationtreatment” (“MFN treatment”), and “national treatment”. In a nutshell, “most-favoured-nation” (MFN) treatment is an obligation not to discriminate

MFN and NT


between “like products” imported from different WTO Members. “Nationaltreatment” is an obligation not to discriminate between domestic and imported“like products.”

Example: State A manufactures widgets, and also buys widgets from StatesB and C. All are WTO Members. Assuming these widgets are“like products”, State A has an obligation to apply the same taxand regulatory treatment to widgets imports from States B and C(MFN treatment); State A also has an obligation not to favour(from a tax and regulatory perspective) domestic widgets overwidget imports from States A or B (national treatment).

Non-discrimination is an obligation not to discriminate between imported anddomestic “like products” and among imported “like products”. If two productsare not like products, the non-discrimination principle does not apply as betweenthose products. This raises the important question of what constitutes a likeproduct for purposes of the TBT Agreement.

Whether two products are “like products” is one of the most difficult legalproblems in the WTO Agreement. Likeness is determined on a case-by-casebasis and the notion of likeness is not consistent throughout the WTOAgreement. To date there has not been a TBT case in the WTO in which theterm “like product” has been defined. The concept of “like product” has beenexamined in a number of WTO disputes on Article III of the GATT 1994, butit is unknown to what extent the ruling in these cases should be applied to theconcept of “like product” in the TBT Agreement.

One of the most important WTO dispute settlement decisions interpreting“likeness” is that of the Appellate Body in Japan – Alcoholic Beverages II.9

The Appellate Body noted in its interpretation of GATT Article III:2 of theGATT 1994, in what has become a famous passage, that:

The concept of ‘likeness’ is a relative one that evokes the image of an accordion.The accordion of ‘likeness’ stretches and squeezes in different places asdifferent provisions of the WTO Agreement are applied. The width of theaccordion in any one of those places must be determined by the particularprovision in which the term ‘like’ is encountered as well as by the context andthe circumstances that prevail in any given case to which that provision mayapply.10

The Japan - Alcoholic Beverages decision confirms that, with respect tolikeness determinations, this is an area where absolute rules are not established,and may never be established. It is probable that in the event a TBT disputearises involving a like product question, WTO panels and the Appellate Bodywill seek guidance from GATT 1947 and WTO decisions interpreting likeness

Like product

9 Appellate Body Report Japan – Taxes on Alcoholic Beverages (“Japan – Alcoholic Beverages II”),WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R), adopted 1 November 1996, DSR 1996:I, p. 97.10 Appellate Body Report Japan – Alcoholic Beverages II, p. 114


within the context of the non-discrimination obligations of the GATT, Article I(MFN) and Article III (national treatment). Not only do both Articles I and IIIemploy the term “like product”, because Article III:4 governs productregulations, there is a relation between it and the TBT Agreement. Casesinterpreting the meaning of “like product” within Article III should thereforebe of particular relevance when interpreting this language in the TBT Agreement.

WTO decisions examining Article III of the GATT 1994 have applied a fourpart test in which the following factors are examined:

••••• physical characteristics (the properties, nature and quality of aproduct),

••••• HS classification,11

••••• consumers’ tastes and habits (perception and behaviour), and••••• product end uses.12

Although this multi-part test is widely accepted in GATT Article III cases,until a panel or Appellate Body decision examines what is a like product forTBT purposes, there is no way to be certain that the same test will be appliedin TBT cases. Its application does, however, seem likely.

4.3 The Prevention of Unnecessary Obstacles toInternational Trade

Technical regulations, standards and conformity assessment procedures mustnot be prepared, adopted or applied so as to create unnecessary obstacles tointernational trade. The prevention of unnecessary obstacles to internationaltrade is a principle applicable to technical regulations, standards and conformityassessment procedures, but its application is not necessarily identical in allthree areas. The obligation to prevent unnecessary obstacles to internationaltrade is set forth in the following provisions:

For technical regulations: Article 2.2For standards: Annex 3(E) (Code of Good Practice)For conformity assessment procedures: Article 5.1.2.

With respect to technical regulations, the prevention of unnecessary obstaclesto international trade is defined in Article 2.2 to mean that technical regulationsmust: (1) not be more trade restrictive than necessary to achieve a policy goal(the least-trade-restrictive measure), and must (2) fulfil a legitimate objective,taking into account the risks that non-fulfilment would create. The conceptsof “necessary”, “legitimate objective” and “risk of non-performance” arediscussed below.

Possible Test

11 HS is the Harmonized System of tariff classification. It is used by WTO Members to classifyproducts for tariff purposes.12 See, e.g., Appellate Body Report, EC - Asbestos, para. 101.


With respect to standards, the prevention of unnecessary obstacles tointernational trade is not defined in either Article 3 of the TBT Agreement or inthe Code of Good Practice. Nor is it defined in any WTO panel or AppellateBody decision considering the TBT Agreement. Given the similarities betweentechnical regulations and standards (the primary regulatory difference is thatone is mandatory and the other voluntary), it is probable that the same definitionthat is applicable to technical regulations would also be applied in the case ofstandards, but this remains to be proven.

With respect to conformity assessment procedures, the phrase “unnecessaryobstacles to international trade” is defined in Article 5.1.2 which provides:”

…conformity assessment procedures are not prepared, adopted or appliedwith a view to or with the effect of creating unnecessary obstacles tointernational trade. This means, inter alia, that conformity assessmentprocedures shall not be more strict or be applied more strictly than is necessaryto give the importing Member adequate confidence that products conformwith the applicable technical regulations or standards, taking account of therisks non-conformity would create.”

The terms underlined in the above explanation of “unnecessary obstacles tointernational trade) are examined below. Understanding these terms is essentialto comprehend what constitutes an unnecessary obstacle to international trade.

4.3.1 Legitimate Objectives

Technical regulations must fulfil a legitimate objective. This is, in fact, one ofthe “goals” of the TBT Agreement discussed in Section 2 of this Module.Examples of the legitimate objectives permissible with respect to technicalregulations are set forth in a non-exclusive list in Article 2.2. Legitimateobjectives for technical regulations include:

••••• national security requirements,••••• prevention of deceptive practices,••••• protection of human health or safety,••••• protection of animal life or health,••••• protection of the environment, and••••• other undefined objectives.

As noted above, the other legitimate objectives, not listed in Article 2.2 almostcertainly include:

••••• regulations designed to standardize electrical products, computersequipment, communications equipment; etc., and

••••• quality standards.


Both types of regulations already exist widely, particularly in developedcountries.

Labour rights and human rights considerations are not specifically mentionedin the TBT Agreement as legitimate objectives – but the protection of humanlife and health is deemed a legitimate interest in Article 2.2. Should labour andhuman rights objectives be considered legitimate objectives for TBT purposes?This is a controversial issue, as well as a political question that goes beyondthe scope of this Module. It bears noting, however, that PPM considerationsmay be involved, and that in the event NPR-PPMs are at issue, it is uncertainwhether the TBT Agreement applies.13

If a Member bases a domestic regulation on an international standard, and ifthe domestic regulation is for one of the legitimate objectives explicitlymentioned in Article 2.2, it is rebuttably presumed not to create an unnecessaryobstacle to international trade.14

The phrase “legitimate objective” is not used in the analogous provision relatingto standards. However, there is no reason to believe that the objectivesenumerated for technical regulations would not be considered legitimate for“standards”. This point has not yet been addressed in a dispute settlementproceeding.

4.3.2 Necessity

The concept of “necessity” is found in the provisions applicable to regulations,standards and conformity assessment procedures. Article 2.2 of the TBTAgreement provides that technical regulations cannot be more trade restrictivethan necessary to achieve a policy goal. It is probable that the negotiatorswere influenced by language in GATT panel reports defining “necessary” withinthe context of Article XX of the GATT 1994 (General Exceptions).

In the Thailand - Cigarettes case (which cited earlier GATT cases) a GATTpanel concluded that a measure could be considered to be “necessary” in termsof Article XX(b) of the GATT 1947 only if there were no alternative measureconsistent with the GATT, or less inconsistent with it, which a contractingparty could “reasonably” be expected to employ to achieve its regulatory (healthpolicy) objective.15

This test (the least restrictive trade measure) appears to have been given voicein the Article 2.2 definition of “necessary”. With respect to technical regulationsand conformity assessment procedures, an “assessment” of the risks of non-performance of the legitimate objective is carried out. A non-exclusive list ofelements that can be considered in a risk assessment is provided in Article 2.2of the TBT Agreement (applicable to technical regulations) of the TBTAgreement:

13 See above, Section 2.2.2.14 Article 2.5 of the TBT Agreement. See below, Section 4.5.15 Panel Report Thailand - Restrictions on Importation of and Internal Taxes On Cigarettes (“Thailand– Cigarettes”), adopted 7 November 1990 DS10/R - 37S/200, paras. 74-75.


••••• available scientific and technical information,••••• related processing technology, and••••• intended end-uses of products.

4.3.3 Reasonableness

The term “reasonable” does not appear in the (apparent) definition of“necessary” in the TBT Agreement, but there is little doubt that a requirementof reasonableness must be read into Article 2.2 of the TBT Agreement, as itwas in Article XX of the GATT by panels and the Appellate Body. Without therequirement that a less restrictive trade measure be reasonably available, the“necessity” test would be unworkable – establishing a standard that would beextraordinarily difficult to achieve.

In both the Korea-Beef16 and the EC - Asbestos17 decisions the Appellate Bodyexamined what constitutes a “reasonably available” measure for purposes ofthe exceptions (predicated on the necessary test) set forth in Article XX(b)and (d). The Appellate Body found that:

••••• A determination of whether a WTO consistent alternative measureis reasonably available requires a “weighing and balancing process”in which an assessment is made as to whether the alternativemeasure “contributes to the realization of the end pursued.”18

••••• The more vital or important the common interests or valuespursued, the easier it would be to accept as “necessary” measuresdesigned to achieve those ends.19

••••• A measure should be sufficient to achieve a member’s chosen levelof health protection.20

••••• A measure does not cease to be “reasonably” available simplybecause it involves administrative difficulties for a Member.21

Applying the “reasonableness standard” set forth in Korea-Beef and EC -Asbestos in conjunction with the “necessary test” set forth in the TBT Agreementwould reduce the likelihood that legitimate TBT measures would be struckdown based on an overly strict interpretation of the TBT Agreement. Withoutthis standard, far fewer TBT measures would be permitted.

4.3.4 Changed Circumstances

In order to assure that unnecessary obstacles to international trade are avoided,Article 2.3 of the TBT Agreement provides with respect to technical regulations

16Appellate Body Report Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef(“Korea – Beef”), WT/DS161/AB/R, WT/DS169/AB/R, (10 January 2001), paras. 159-166.17 Appellate Body Report, EC- Asbestos, paras. 169-175.18 Ibid, para. 171 citing Appellate Body Report, Korea-Beef, paras. 166 and 163.19 Ibid, para. 172 citing Appellate Body Report, Korea-Beef, para 162.20 Ibid, para.174.21 Ibid, para. 169 citing Panel Report, United States – Standards for Reformulated and ConventionalGasoline, WT/DS2.


that if circumstances change or an objective can be addressed in a less trade-restrictive manner, the more restrictive trade measure must be removed.

The Code of Good Practice, applicable to standards, does not refer to “changedcircumstances” This concept is nevertheless implicit in the avoidance ofunnecessary obstacles to international trade. Not only is this evident from thenotion of avoiding unnecessary obstacles, it is demonstrated by Article 5.2.7,which limits the scope of conformity assessment procedures used to verifythat a standard is met in the event that product specifications are changed.

With respect to conformity assessment procedures, it should be noted that if aproduct’s specifications are changed after the product has been found toconform with a technical regulation or standard, pursuant to Article 5.2.7 theconformity assessment procedure for the modified product is to be limited towhat is necessary to provide adequate confidence that the product still conformswith the technical regulation or standard. This provision reduces the potentialthat conformity assessments will be applied to impede trade. Instances maynevertheless arise when significant changes in a product’s specificationsnecessitate a complete conformity reassessment.

4.4 Harmonization

Harmonization is a central pillar of the TBT Agreement. Members areencouraged to participate in the international harmonization of standards, andto use agreed international standards as a basis for domestic technicalregulations and standards. The emphasis on harmonization is based on theview that (a) trade is disrupted less if Members use internationally agreedstandards as a basis for domestic regulations and standards, and (b) producersand consumers benefit from a degree of harmonization (because of economiesof scale and questions of technical compatibility respectively). The relevantprovisions of the TBT Agreement relating to harmonization and the use ofrelevant international standards are:

for technical regulations: Articles 2.4-2.6for standards: Annex 3(F)-(G) (Code of Good Practice)for conformity assessment procedures: Articles 5.4 and 5.5

Members have an obligation, within the limits of their resources, to participatein the work of international standardization organizations with respect toproducts for which they have adopted or expect to adopt technical regulationsor standards. Members also have a similar obligation with respect to thepreparation of “guides and recommendations” for conformity assessmentprocedures. The provisions of the TBT Agreement relating to this obligationare:

for technical regulations: Article 2.6for standards: Annex 3(G) (Code of Good Practice)for conformity assessment procedures: Article 5.5 .


Harmonization is a pillar of the TBT Agreement. Members are required, withinthe limits of their resources, to participate in the work of internationalorganizations seeking to harmonize international standards. Technicalregulations designed to further one of the “legitimate objectives” set forth inArticle 2.2 benefit from a rebuttable presumption that they do not createunnecessary obstacles to international trade.

4.5 Use of Relevant International Standards

With respect to technical regulations, Article 2.4 of the TBT Agreementprovides that:

where technical regulations are required and relevant international standardsexist or their completion is imminent, Members shall use them, or the relevantparts of them, as a basis for their technical regulations except when suchinternational standards or relevant parts would be an ineffective orinappropriate means for the fulfilment of the legitimate objectives pursued,for instance because of fundamental climatic or geographical factors orfundamental technological problems.

In the EC - Sardines decision the Panel found, and the Appellate Bodyconfirmed, that a standard promulgated by Codex Alimentarius, the CodexStan 94, is a relevant international standard for purposes of Article 2.4 of theTBT Agreement.22 The international standard need not be promulgated byconsensus by the recognized standardizing body in order to fall within Article2.4.23

The Panel in EC – Sardines found that the Codex Stan 94, the internationalstandard in question, had not been “used … as a basis” for the TBT measureat issue. The European Communities appealed that finding. The AppellateBody held:

We agree with the Panel’s approach. In relying on the ordinary meaning ofthe term “basis”, the Panel rightly followed an approach similar to ours indetermining the ordinary meaning of “based on” in EC – Hormones. 169 Inaddition to the definition of “basis” in Webster’s New World Dictionary thatwas used by the Panel, we note, as well, the similar definitions for “basis”that are set out in the The New Shorter Oxford English Dictionary, and alsoprovide guidance as to the ordinary meaning of the term:

3 [t]he main constituent. … 5 [a] thing on which anything is constructed andby which its constitution or operation is determined; a determining principle;a set of underlying or agreed principles.

From these various definitions, we would highlight the similar terms “principalconstituent”, “fundamental principle”, “main constituent”, and “determining

Article 2.4 TBT

22 Appellate Body Report EC - Sardines, para. 23323 Ibid., para. 227.


principle”—all of which lend credence to the conclusion that there must be avery strong and very close relationship between two things in order to be ableto say that one is “the basis for” the other.24

The Appellate Body considered it unnecessary to determine in general themeaning of “used … as a basis”. It held that it is clear that when a technicalregulation is totally contradictory to a standard, that the standard is definitelynot used as a basis for the technical regulation.25 In casu, the TBT measure atissue prohibited something that is explicitly provided for under the internationalstandard.

The Panel in EC – Sardines also found that the Codex Stan 94, the internationalstandard in question, was not an “ineffective or inappropriate means for fulfillingthe legitimate policy objectives pursued. These objectives were markettransparency, consumer protection and fair competition. On appeal, theAppellate Body agreed with the Panel that an “ineffective means” is a meanswhich does not have the capacity to accomplish the legitimate objective pursuedand that an “inappropriate means” is a means which is not specially suitablefor the fulfilment of the legitimate objective. Effectiveness bears on the resultand appropriateness on the nature. The Appellate Body upheld the Panel’sfinding that the use of the international standard was neither an ineffective noran in appropriate means to fulfil the legitimate objectives pursued.26

The Appellate Body also found that the burden of proof standard enunciatedin the EC - Hormones27 dispute, an SPS dispute, should also be applied in theEC - Sardines case. The complaining Member challenging a measure asinconsistent with Article 2.4 of the TBT Agreement has the burden of provingthat: (1) the standard was not used as a basis for the challenged regulation,and that (2) the international standard is not ineffective and inappropriate tofulfil the legitimate objective at issue.28

If a Member prepares, adopts or applies a technical regulation for one of thelegitimate objectives explicitly mentioned in article 2.2 and, the measure is inaccord with the relevant international standard, this measure is, pursuant toArticle 2.5 rebuttably presumed not to create an unnecessary obstacle tointernational trade. This presumption makes it harder for a complainingMember challenging the WTO consistency of a TBT to make a prima faciecase that the measure at issue does create an unnecessary obstacle tointernational trade.

The creation of a rebuttable presumption in favour of certain technicalregulations based on international standards should provide a greater incentivefor international harmonization and for reliance on harmonized standards.

Article 2.5 TBT

24 Appellate Body Report, EC – Sardines, para. 244 (footnotes omitted)25 Para. 148.26 Appellate Body Report, EC – Sardines, para. 290.27 Appellate Body Report, EC - Measures Concerning Meat and Meat Products (Hormones) (“EC -Hormones”) WT/DS26/AB/R; WT/DS48/AB/R, adopted 13 February 1998.28 Appellate Body Report, EC - Sardines, paras. 275 - 282.


4.6 Equivalence and Mutual Recognition

Members are encouraged to accept foreign technical regulations as “equivalent”to their own technical regulations (even if they differ) provided that they fulfilthe same objectives.29 Likewise, Members are encouraged to accept foreignconformity assessment procedures as “equivalent” to their own proceduresprovided they are satisfied that those procedures offer an assurance ofconformity with standards and technical regulations equivalent to their ownprocedures. Although the notion of equivalence is not mentioned in the Codeof Good Practice (applicable to standards), the principle of equivalence ismade applicable to standards through Article 6.1 (conformity assessmentprocedures).

Members are encouraged to enter into negotiations for the mutual recognitionof the results of conformity assessment procedures. By accepting the resultsof another Member’s conformity assessment procedures, testing costs arereduced and less time is lost. Confidence in a trading partner’s testingprocedures would seem to be a prerequisite to the acceptance of a mutualrecognition agreement. The relevant provisions of the TBT Agreement onequivalence and mutual recognition are:

for technical regulations: Article 2.7 (on equivalence)for standards: none but equivalence is incorporated in Article 6.1 re:conformity assessment proceduresfor conformity assessment procedures: Article 6 (on both equivalenceand mutual recognition).

There is some scepticism among WTO Members concerning the effectivenessof international standardization efforts, and the extent to which harmonization,equivalence and mutual recognition can be increased between countries atdifferent stages of development

4.7 Transparency

Transparency is another central tenet of the TBT Agreement. Transparency isthe process whereby the creation, terms, and application of technicalregulations, standards and conformity assessment procedures are made public,and opportunities are provided for the public (including other Members) tocomment on proposed technical regulations, standards and conformityassessment procedures. Transparency obligations are found throughout theWTO Agreement.

4.7.1 Transparency Obligations

The provisions of the TBT Agreement relating to transparency are:

29 The term “equivalent” is not defined in the TBT Agreement.


for technical regulations: Articles 2.9 and 10for standards: Annex 3(J)(Q) (Code of Good Practice) and Article 10for conformity assessment procedures: Articles 5.5 and 10.

Transparency obligations take several different forms and are applicable atdifferent points in the promulgation and application of a measure. They includethe following requirements set out in Articles 2.9, 2.10, 5.6 and 5.8 as well asAnnex 3 (L), (M), (N) and (O):

••••• The publication of a pre-implementation notice prior to enactmentof a measure sufficient to allow interested parties to becomeacquainted with a proposed measure.30

••••• Prior to the enactment of a technical regulation or a conformityassessment procedure (when amendments to the measure can stillbe introduced), the notification of other Members through theWTO Secretariat of the products to be covered and the provisionof a brief indication of the objective and rationale for the technicalregulation or procedure. For draft standards, the provision of a60 day period for comments.31

••••• Upon request, provide Members with copies of draft technicalregulations, standards, and conformity assessment procedures.32

••••• Prior to the enactment of a measure, allow Members a reasonabletime for written comment, and for discussions concerning proposedmeasures, and take these comments/discussions intoconsideration.33

••••• Publish “or otherwise make available” technical regulations,standards, and conformity assessment procedures to othermembers and to interested parties.34

••••• In addition, Members are required, pursuant to Article 10 of theTBT Agreement, to establish “enquiry points” to answer reasonableinquiries from, and provide relevant documents to, Members andother interested parties concerning technical regulations, standardsand conformity assessment procedures. Enquiry points have theresponsibility to provide information concerning a WTO Member’sparticipation in regional and international standardisation andconformity assessment bodies. Enquiry points also have theresponsibility to provide certain information concerning theactivities of non-governmental standardization organizations.

30 See for technical regulations: Article 2.9.1; for standards: (L) (Code of Good Practice); and forconformity assessment procedures: Article 5.6.1.31 See for technical regulations: Article 2.9.2; for standards: (L) (Code of Good Practice); and forconformity assessment procedures: Article 5.6.2.32 See for technical regulations: Article 2.9.3; for standards: Annex 3 (M) (Code of Good Practice);and for conformity assessment procedures: Article 5.6.3.33 See for technical regulations: Article 2.9.4; for standards: Annex 3 (L) and (N) (Code of GoodPractice); and for conformity assessment procedures: Article 5.6.4.34 See for technical regulations: Article 2.11; for standards: Annex 3 (O) (Code of Good Practice);and for conformity assessment procedures: Article 5.8.


Transparency is a cornerstone of the TBT Agreement. Transparency obligationsexist prior to the formation of technical regulations, standards and conformityassessment procedures, and continue throughout the life of these measures.

Example: A Member seeking to enact an environmental law regulatingautomobile exhaust would be required, prior to enactmentof the law, to provide drafts of the measure to otherMembers, permit comments from them, publish the measure,and notify Members through the Secretariat of the measure.Once enacted the Member would be obliged to provideinformation and relevant documents relating to the law toany interested party.

4.7.2 Derogations from Transparency in the Event of UrgentProblems

The transparency obligations applicable prior to the adoption of technicalregulations and conformity assessment procedures may be omitted in the eventof urgent problems related to safety, health, the environment or national security.In such cases, post-facto obligations exist to notify Members of the measuresenacted, make copies available upon request, and to consider comments fromother Members. With respect to draft standards, the 60 day period allowedfor comment may be shortened in the event of urgent problems related tosafety, health, or the environment. The provisions of the TBT Agreementproviding for derogations from the transparency obligations are:

••••• for technical regulations: Article 2.10••••• for standards: Annex 3, (L) (Code of Good Practice)••••• for conformity assessment procedures: Article 5.7.

Example: State A discovers that a type of packing material producesdeadly emissions when burned. It immediately outlaws itsproduction and use within its territory. It must thenimmediately notify other WTO members of the ban, makingcopies of the ban available upon request, and permittingcomments from all Members on the regulatory measure.


1. What does non-discrimination mean? What is the differencebetween national treatment and most-favoured-nationtreatment?

2. What is a like product? Provide two examples of like products.What makes you think that the products you have identifiedare like products?

3. What does the obligation in Article 2.2 of the TBT Agreementto prevent unnecessary obstacles to international trade entail?


4. What does the term “necessary” mean for TBT purposes?5. What regulatory goals are considered to be legitimate

objectives for TBT purposes? Is the list in TBT Article 2.2exclusive? In your opinion, what other objectives could orshould be included?

6. What is the difference between harmonization, equivalenceand mutual recognition?

7. What is transparency? Why is transparency important fromthe perspective of the TBT Agreement? What kinds oftransparency obligations exist under the TBT Agreement?


5. DEVELOPING COUNTRY MEMBERS AND THE TBTAGREEMENT


• to assess the technical assistance that is available under the TBTAgreement to WTO Members and, in particular developing countryMembers.

• To appreciate the special and differential treatment provided for inthe TBT Agreement for developing country Members.

5.1 Technical Assistance

Technical assistance can be defined as the provision of expert assistance byother Members, the WTO Secretariat, or third parties. Normally, developingcountries are the recipient of technical assistance. Article 11 of the TBTAgreement sets forth a broad range of technical assistance provisions. WTOMembers are required to:

••••• Advise other Members, especially developing country Members,on the preparation of technical regulations.

••••• Provide technical assistance, in particular to developing countries,regarding the establishment of national standards bodies, andparticipation in these bodies, and encourage their national standardsbodies to do likewise.

••••• Take reasonable measures to arrange for regulatory bodies withintheir territories to advise other Members, in particular developingcountry members. Provide technical assistance on agreed termsregarding the establishment of regulatory and conformityassessment bodies, and assistance on the methods by which theirtechnical regulations can best be met.

••••• Take reasonable measures, in particular with respect to developingcountry Members, to advise on the establishment of bodies forthe assessment of conformity with standards.

••••• Grant technical assistance, especially to developing countryMembers, regarding the steps that should be taken by foreignproducers seeking access to conformity assessment systemsoperated by governmental and non-governmental bodies.

••••• Encourage organizations within their territory which are membersof, or participants in, international or regional conformityassessment systems to advise other Members, and considerrequests for technical assistance from other Members (in particulardeveloping countries) regarding the establishment of institutionswhich would enable relevant organizations within their territoriesto fulfil the obligations of membership or participation ininternational and regional conformity assessment systems.

Objectives

Article 11 TBT


••••• Grant other Members, especially developing country Members,technical assistance related to the institutions and legal frameworkof international and regional systems for conformity assessmentsufficient to enable them to fulfil the obligations of membershipor participation in such systems.

••••• Give priority to the needs of the least-developed countryMembers.

Developing countries are working to assure that commitments made withrespect to such assistance are respected.

5.2 Special and Differential Treatment

The TBT Agreement requires Members, in particular developed countryMembers, to provide more favourable treatment to developing countryMembers based on the financial and trade needs of the latter.

Article 12 of the TBT Agreement sets forth a broad range of provisionsproviding special and differential treatment to developing country Members.Although Article 12 does not provide developing country Members withpermanent derogations to the substantive provisions of the TBT Agreement,the pro-developing country character of Article 12 is unambiguous.

Pursuant to Article 12 of the TBT Agreement, Members are required to providespecial and differential, i.e., more favourable treatment, to developing countryMembers in several different forms. Article 12 requires:

••••• Members to recognize and to take into account the special needsof developing countries in the promulgation and application oftechnical regulations, standards and conformity assessmentprocedures. Factors to be recognized include the developmental,financial and trade needs of developing country Members, andthe preservation of indigenous technology and production methods.

••••• The facilitation of participation of developing country Membersin international standardisation and conformity assessment bodies.One means of facilitation is through encouraging developingcountry participation in the standardisation and conformityassessment process; a second means is to take measures to ensurethat international standards are prepared for products of interestto developing countries.

••••• The provision of technical assistance in accordance with Article 1of the TBT Agreement.

••••• The grant of time-limited exceptions obligations arising under theTBT Agreement.

Under the WTO Work Programme agreed at the Ministerial Conference inDoha in November 2001, the WTO provisions granting special and

Article 12 TBT


differential treatment to developing country Members will be reviewed andtheir effectiveness evaluated.


1. What types of technical assistance are available under theTBT Agreement? Do you think that the technical assistanceavailable is satisfactory? Why or why not?

2. What forms of special and differential treatment are available?Do you think they are satisfactory? Why or why not?

3. How are LDCs treated for purposes of technical assistanceand special and differential treatment?


6. DISPUTE SETTLEMENT AND INSTITUTIONALMATTERSOBJECTIVES

On completion of this section the reader:

• will be familiar with how disputes are settled under the TBTAgreement.

• will have learned that the WTO’s Dispute Settlement Understanding(“DSU”) applies to TBT disputes. An important dispute involvingthe TBT Agreement will be noted.

• will be familiar with the Committee on Technical Barriers to Trade.This WTO Committee is charged with overseeing the applicationand administration of the TBT Agreement.

• will also be informed of the regular reviews of this Agreement thatthe WTO Members are required to conduct.

6.1 Dispute Settlement

As provided for in Article 14.1 of the TBT Agreement alleged violations of theTBT Agreement are handled pursuant to the provisions of Articles XXII andXXIII of GATT 1994, as elaborated and applied in the WTO Dispute SettlementUnderstanding (“DSU”).35 This is the normal manner in which WTO disputesare handled.

At the request of a party to the dispute, or at its own initiative, a panel hearinga TBT dispute may, pursuant to Article 14.2 of the TBT Agreement, establisha “technical expert group” to assist in questions requiring technical expertise.Annex 2 of the TBT Agreement establishes a procedure governing the role ofexperts. Annex 2:

••••• provides criteria for the selection of as an expert,••••• establishes the authority of experts to seek information and advice,••••• protects confidential information, and••••• allows the Members concerned (parties and third parties to a

dispute) to comment on the draft report developed by a TechnicalExpert Group.

Article 14.4 of the TBT Agreement provides that the dispute settlementprovisions can be invoked when a Member considers that another Memberhas not achieved satisfactory results under Articles 3, 4, 7, 8 and 9 of the TBTAgreement and its trade interests are significantly affected. This means thatwith respect to technical regulations (Article 3), standards (Article 4), andconformity assessment procedures (Articles 7, 8 and 9), Members have anobligation, and are fully responsible for ensuring that local government bodies,

Objectives

Article 14.1 TBT

Annex 2 TBT

Article 14.4 TBT

35 See Chapters 3.1, 3.2, 3.3 and 3.4 of this Handbook.


non-government bodies, and international and regional systems, comply withthe terms of the TBT Agreement. A DSU proceeding can be commenced againsta Member in the event of non-compliance.

Today there has only been one WTO dispute in which the outcome dependedon the TBT Agreement, EC – Sardines which was decided on the basis of theTBT Agreement. In EC – Sardines, the Panel and, on appeal, the AppellateBody found that the EC’s regulation on the marketing of “preserved sardines”was inconsistent with Article 2.4 of the TBT Agreement.36

The EC - Asbestos decision examined the applicability of the TBT Agreement,in particular what constitutes a technical regulation, but it was not based onthe TBT Agreement.

The TBT Agreement also played a prominent role in the EC – Asbestos disputeconcerning a French import ban on asbestos and asbestos-containing products,but this dispute was decided on the basis of the GATT 1994. In EC – Asbestos,the Panel had ruled that the TBT Agreement was not applicable to an importban such as the measure at issue in the dispute. The Appellate Body reversedthe Panel’s finding on this point and found that the TBT Agreement wasapplicable.37 However, the Appellate Body declined to complete the legalanalysis and to apply the TBT Agreement to the import ban on asbestos andasbestos-containing products.

Until recently, panels have avoided applying the TBT Agreement, preferringinstead to resolve potential TBT cases based on GATT rules. With the AppellateBody’s 2001 decision in the EC - Asbestos case holding that the TBT Agreementwas applicable to the import ban in question, and the 2002 decision in the EC- Sardines dispute finding the EC measure at issue inconsistent with Article2.4 of the TBT Agreement, this has now changed. As a result, one can expectto see an increase in TBT disputes, primarily because, despite the need fordomestic policy autonomy to address legitimate interests, technical regulations,standards, and conformity assessment procedures are indeed sometimes usedas protectionist devices.

6.2 Committee on Technical Barriers to Trade

Article 13 of the TBT Agreement creates a Committee on Technical Barriersto Trade. Representatives of each of the WTO Members are entitled toparticipate. The Committee meets as necessary, but at least once a year.

The TBT Committee has several responsibilities:

••••• It provides Members with an opportunity to consult on TBT issues.

36 See above, Section 4.5.37 See above, Section 2.2.5.


••••• It carries out whatever responsibilities the Members may assignto it, and establishes working parties and other bodies to carryout these responsibilities.

••••• It works to avoid duplication between its activities and the workof governments in other technical bodies.

The TBT Agreement requires that the TBT Committee annually review theimplementation and operation of the TBT Agreement taking into account theobjectives of the Agreement.

Pursuant to Article 12.8 of the TBT Agreement, the TBT Committee isauthorized to grant “time-limited exception” to obligations under the TBTAgreement in order to ensure that developing countries are able to complywith the TBT Agreement. In granting such an exception the Committee is toconsider:

••••• the special problems experienced by developing countries in thepreparation and application of technical regulations, standards andconformity assessment procedures,

••••• the special development and trade needs of the developing countryMember, and

••••• the stage of technological development of the particular developingcountry.

The Committee is required to take into account special problems experiencedby the least-developed country Members (LDCs).

Pursuant to Article 12.10 of the TBT Agreement, the TBT Committee is alsoobliged to “examine periodically the special and differential treatment, as laiddown in this Agreement, granted to developing country Members on nationaland international levels.” It has done so in each of two triennial reviewsdiscussed below.

Every three years the TBT Committee must conduct a review of theimplementation and operation of the TBT Agreement, with a view torecommending adjustments of the rights and obligations of the Agreementwhere necessary. This review is designed to ensure mutual economic advantageand balance of rights and obligations, without prejudice to the provisionsconcerning special and differential treatment of Article 12.

Based on the implementation experience, the TBT Committee is entitled tosubmit proposals to amend the TBT Agreement to the Council for Trade inGoods.

To date, two triennial reviews have been held, the first in 1997: G/TBT/5 (97-5092) 19 November 1997; and the second in 2000: G/TBT/9 (00-4811) 13November 2000. These documents, referenced by number, are available onthe WTO’s internet site. They offer a somewhat critical review of the successesand failures under the TBT Agreement

Article 1.3 TBT

Article 12.8 TBT

Article 12.10 TBT

Article 15.4 TBT



1. Does the WTO’s Dispute Settlement Understanding Apply tothe TBT Agreement?

2. What role, if any, do experts have in TBT disputes?3. Is a Member responsible if a technical regulation established

within a region violates the TBT Agreement? Can anotherMember challenge the consistency of such a regulation withthe TBT Agreement under the DSU?

4. What is the Committee on Technical Barriers to Trade? Whatare its responsibilities?

5. How often must the implementation and operation of the TBTAgreement be reviewed? What provisions must be reviewed?

6. Does your country have a national TBT enquiry point and ifso what is its address? Has it notified TBT measures to theWTO? Try to answer these questions by looking at the WTOwebsite.


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7. CASE STUDIES

The State of Airmania is a developed country with very high environmentalstandards applicable to domestic industries. Consumers in Airmania have astrong demand for environmentally friendly products. They also have thetechnology to manufacture environmentally friendly products.

The State of Anxiety is a developing country with considerable industrialcapability. It is a beneficiary of export driven development and is an importanttrading partner of Airmania. Airmania imports a large portion of Anxiety’smanufactured goods. While the State of Anxiety has many environmental lawson its books, they are seldom enforced. Economic advancement for now playsa more important role than environmental protection. Both Airmania andAnxiety are founding Members of the WTO Agreement.

Airmania has just introduced a law implementing a variation on an “eco-labellingprogramme” pursuant to which manufactured goods that satisfy certain criteriawill be eligible to be labelled as “Eco-Friendly”. The criteria will be developedand administered by a local non-governmental organization in Airmania knownas “Eco-Lab”. Eco-Lab will examine all phases of a given product’s life-cycle(a cradle-to-grave analysis). This will include an analysis of how a product ismade (the production processes used and the environmental implications ofthese processes), as well as environmental factors associated with a product’spackaging, its use, and its subsequent disposal. Eco-Lab will be entirelyresponsible for establishing the criteria and testing whether products satisfythe criteria and can wear the “Eco-Friendly” label.

Conformity with Airmania’s programme is voluntary – in other words amanufacturer in Anxiety will not need a label from Eco-lab to sell its productsin Airmania. However, it is expected that having the “Eco-Friendly” label willmake products very popular among Airmania’s environmentally consciousconsumers.

You are an attorney for industrial exporters in the State of Anxiety. Yourclients are worried that the eco-labelling scheme will make it more difficult tosell their goods in Airmania. Your clients have approached you with questionsconcerning the WTO Agreement, in particular the TBT Agreement.

Variation No. 1

a) Does Airmania’s law fall under the TBT Agreement?

b) If yes, is it a technical regulation, a standard or a conformityassessment procedure?

c) What are Airmania’s obligations under the TBT Agreementwith respect to notification and transparency?


d) What are Airmania’s obligations with respect to nationaltreatment and MFN treatment?

e) Is Airmania’s objective legitimate? How does this point affectyour analysis?

f) Is it significant that because of their environmentalknowledge and production skills, Airmania’s domesticindustries may benefit from the labelling scheme?

g) Is Airmania allowed pursuant to the TBT Agreement toimplement the scheme described above? If not, what changesmust be made?

h) How is your analysis affected by the fact that the labellingcriteria includes processes and production methods?

i) What would your evaluation of this dispute be under GATTArticles III and XX of the GATT 1994?

Variation No. 2

With one exception, the facts are the same:

Airmania’s labelling programme is mandatory, but only applies to theuse and disposal of products (and not to production processes). If yourproducts do not qualify for a label, you can not sell them in Airmania.

a) Does this change your analysis and your answer to thequestions above? (Work your way through each question.)

b) What would your evaluation of this dispute be under ArticlesIII and XX of the GATT 1994?

Westland is a developed country and a major exporter of agricultural goods.It has recently begun to plant genetically. It produces two products fromthese GMO seeds: edible soybean oil used for cooking, and a light oil used asa machine lubricant.

Graceland is a developing country that has, based on ethical grounds, forhuman safety, outlawed planting GMO seeds in its territory and hasimplemented a technical regulation outlawing the sale in its territory of anyproduct derived from GMO seeds. The only exception to this ban is if lessthan one percent of the product is derived from GMOs. Graceland’s technicalregulation was implemented on an urgent basis without any notice to otherWTO Members or to the WTO Secretariat. The measure has now been ineffect for six months.

In order to improve its agriculture, Graceland has asked Westland for technicalassistance in plant hybridization, and additional assistance in drafting a second

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technical regulation banning GMO imports in the event that its present technicalregulation is struck down in a WTO dispute settlement proceeding. Westlandhas refused to offer any technical assistance.

Westland has challenged Graceland’s ban under the TBT Agreement. Gracelandhas retained your services to defend itself in a WTO dispute settlementproceeding. In particular Graceland seeks answers to the following questions.

a) Does the TBT Agreement apply and if so to what extent?

b) If the TBT Agreement does apply, which provisions areapplicable?

c) If Graceland invokes its right to special and differentialtreatment, what effect will this have in its dispute withWestland?

d) What right does Graceland have to technical assistance andwhat kind of assistance is Westland obligated to offer?

e) What arguments is Graceland likely to face in a disputeinvolving the TBT Agreement?

f) Does Graceland have a potential counterclaim againstWestland and how should it proceed?


8. SUGGESTED READING

8.1 Books and Articles

••••• Cottier, T. and Mavroidis, P. (eds.), Regulatory Barriers and thePrinciple of Non-Discrimination in World Trade Law (University ofMichigan Press, 2000).

••••• The WTO Secretariat, Guide to the Uruguay Round Agreements,Kluwer Law International (The Hague 1999).

••••• Baldwin, R., Regulatory Protectionism, Developing Nations, and aTwo-Tier World Trade System, Brookings Trade Forum 2000, 237-280.

8.2 Panel and Appellate Body Reports

••••• Panel Report, European Communities – Measures Affecting Asbestosand Asbestos-Containing Products (“EC – Asbestos ”), WT/DS135/Rand Add.1, adopted 5 April 2001, as modified by the Appellate BodyReport, WT/DS135/AB/R.

••••• Appellate Body Report, European Communities – Measures AffectingAsbestos and Asbestos-Containing Products (“EC – Asbestos ”), WT/DS135/AB/R, adopted 5 April 2001.

••••• Panel Report, European Communities – Trade Description of Sardines(“EC – Sardines ”), WT/DS231/R, adopted 23 October 2002, asmodified by the Appellate Body Report, WT/DS231/AB/R.

••••• Appellate Body Report, European Communities – Trade Descriptionof Sardines (“EC – Sardines ”), WT/DS231/AB/R, adopted 23October 2002.

8.3 Documents and Information

••••• WTO, A Training Package, Module 3, Goods: Rules on NTMs (1998).••••• WTO, First Triennial Review of the Operation and Implementation of

the Agreement on Technical Barriers to Trade, G/TBT/5 (97-5092),(19 November 1997).

••••• WTO, Second Triennial Review of the Operation and Implementationof the Agreement on Technical Barriers to Trade, G/TBT/9 (00-4811),(13 November 2000).

••••• WTO, Technical Barriers to Trade, <www.wto.org/english/tratop_e/tbt_e/tbt_e.htm> (visited 15 February 2002). (This is the WTO’s accesspoint for TBT-related information.)

The WTO maintains an excellent website at www.wto.org. On this site onecan find background information concerning the TBT Agreement, the completetext of the TBT Agreement, the results of the Annual and Triennial TBT


Committee Reviews, Member notifications, the WTO’s TBT training guide,lists of national TBT Inquiry Points, Minutes of TBT Committee meetings,working documents of the TBT Committee, a list of Standardizing bodies thathave accepted the Code of Good Practice, and many other TBT-relateddocuments.

Dispute settlements

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