Countries / Territories

  •     WTO: Non-Tariff Measures

    Technical Barriers to Trade

    We are commencing a new series on understanding the WTO Agreement on Technical Barriers to Trade (TBT) from the business perspective.

    This agreement enshrines the steps taken by WTO members to encourage free and fair trade by providing for minimizing the use of technical regulations by countries in a manner which could result in trade barriers.

    In this series, the TBT Agreement will be described under the following seven headings:

    1. What are technical barriers to trade?

    2. Basic principles of the Agreement on Technical Barriers to Trade

    3. Difference between standards and technical regulations

    4. Conformity assessment

    5. Information retrieval and dissemination

    6. TBT and the environment

    7. Dispute settlement

    Part 1: What are technical barriers to trade?

    Technical barriers to trade generally result from the preparation, adoption and application of different technical regulations and conformity assessment procedures. If a producer in country A wants to export to country B, he will be obliged to satisfy the technical requirements that apply in country B, with all the financial consequences this entails. Differences between one country and another in their technical regulations and conformity assessment procedures may have legitimate origins such as differences in local tastes or levels of income, as well as geographical or other factors. For example, countries with areas prone to earthquakes might have stricter requirements for building products; others, facing serious air-pollution problems might want to impose lower tolerable levels of automobile emissions. High levels of per capita income in relatively rich countries result in higher demand for high-quality and safe products.

    Barriers to trade are measures in place in the country to which you wish to export which make it difficult, even impossible, for you to export your product to it. Such measures are considered undesirable in the context of world trade, because they restrict the flow of goods, drive prices up and are detrimental to the consumer. These barriers take many forms, and are generally divided into two broad types, namely tariff barriers and non-tariff barriers. Standards, sanitary and phytosanitary measures and technical regulations are considered non-tariff barriers. In this seminar we will focus our attention only on this last category.

    OECD performed a study that compares the technical regulation regimes of Japan, Germany, the United Kingdom and the United States on a number of products; two examples are given below:

    • For terminal telecommunications equipment, a fairly high level of harmonization was found (e.g. differences in standards have been reduced by mutual acceptance of foreign standards and conformity assessment procedures have been streamlined).

    • For specialty dairy products, the picture is not as rosy e.g. strict sanitary requirements are particularly onerous for importers because of differences in the mandatory standards of the importing and the exporting country, standards and conformity assessment requirements change at fairly short notice, and rapid access to such information is not always possible with the conclusion that the exported product is denied entry to the market because it does not comply with the new rules.

    Following are some examples of technical barriers with respect to conformity assessment procedures:

    • Supplier's own declaration of conformity of product or quality system is not accepted by buyers;

    • Repeat inspection and/or testing of the product at the buyer's end;

    • Test report furnished by the supplier is not accepted;

    • Suppliers are required to get their products tested in testing laboratories approved by the buyer or by the regulatory authority of the importing country;

    • Product certification mark awarded under the national product certification mark scheme of a country is not accepted as a means of product conformity in the importing country;

    • The supplier in an exporting country is required to obtain the product certification mark of the importing country;

    • Buyers nominate their own agent or appoint an international inspection body to conduct inspection and/or testing before shipment or on arrival of goods;

    • Compulsory import inspection for product conformity as a regulatory requirement of the importing country is carried out either at the point of shipment from the exporting country or on arrival in the importing country.

    Duplicate testing and certification requirements represent significant costs to manufacturers, consumers and society. In particular, we can mention the high cost and complexity involved in determining conformity to varying national technical regulations and also the cost involved for re-testing and re-certifying products that have already been tested for conformity to similar standards. By not recognizing the tests carried out elsewhere, and by demanding new tests, buyers and/or national regulators are often causing needless delays resulting in extra cost to exporters, thus making imports less competitive in comparison to domestic products.