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Although we have tried to use plain English content on the site, you may come across specialist terms and acronyms. Find out what they mean in our glossary of terms.
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Technical regulations and standards are commonly used to protect human health and safety and the environment, and to prevent deceptive practices in trade. They often vary from country to country. When they are more onerous than is necessary, un-transparent, arbitrarily imposed or discriminatory, they can act as barriers to trade.
The achievement of good regulatory design through the deliberate and effective implementation of all the requirements of the TBT Agreement in the development of technical regulations at the national level is essential. This paper seeks to highlight the practical steps and considerations that need to be addressed by regulators in this regard.
Policy makers considering using standards or technical regulations should read this document.
Technical regulations and standards include requirements about the size, shape, design, functions or performance of a product, and the way the product is processed, manufactured, labelled or packaged before it is put on sale. Technical regulations and standards can also be expressed in terms of the procedures for testing and certifying compliance with the regulations and standards.
Technical regulations are mandatory. Even if a product is allowed to be imported into a country, if it does not meet the requirements of a technical regulation it will not be allowed to be put on sale. By contrast, compliance with standards is voluntary. Non-complying imported products will be allowed on the market, though the products may not sell well if consumers prefer products that meet local standards.
The most common purpose of making technical regulations and standards is to protect human safety or health. Examples of safety regulations are the rules on children's toys, or the requirement that industrial machinery be manufactured in a way that minimises the risk of accidents. Health warnings on cigarette packets are an example of a regulation aimed to protect human health.
Other purposes include protection of the environment, such as regulations requiring re-cycling of paper and plastics and limiting motor vehicle emissions, protection of endangered species and prevention of deceptive practices to protect consumers (generally through labelling and packaging requirements).
The biggest problem for exporters or potential exporters is the diversity of standards among countries. Having to adjust production facilities to comply with diverse technical requirements in individual markets will raise the unit cost of production making goods more expensive than they need to be. The smaller the firm, the greater the financial burden this imposes on it.
Of course, differences between one country and another in their technical regulations and conformity assessment procedures will often be for completely legitimate reasons. For example, since New Zealand is prone to earthquakes, we have stricter building standards than most countries. California, parts of which have serious air-pollution problems, has the world's strictest rules on permissible vehicle emission levels. As a rule of thumb, the demand for high-quality and safe products rises with the level of a country's per capita income.
Conformity assessment costs raise the cost of production, as the exporter generally pays for testing, certification or inspection by laboratories or certification bodies to confirm compliance with technical regulations. Discriminatory conformity assessment procedures have been known to be used by governments for protectionist purposes. Further costs that can be incurred by exporters are the information costs of assessing the technical impact of foreign regulations, and the cost of translating product information into foreign languages.
Discriminatory or non-transparent procedures can also create unnecessary difficulties for exporters.
The purpose of the Agreement on Technical Barriers to Trade (the TBT agreement), one of the outcomes from the Uruguay round, is to ensure that regulations, standards, testing and certification procedures do not create unnecessary obstacles to trade.
The TBT agreement does not prevent countries from adopting the standards they consider appropriate for things like product safety, labelling or environmental impact. But, for the benefit of consumers and producers alike, it does encourage countries to use international standards wherever appropriate. If the circumstances that led a country to adopt a regulation change, or a new alternative less trade-restrictive measure becomes available, then the regulation must be removed.
The TBT agreement sets out a code of good practice for the preparation, adoption and application of standards by central government bodies. It encourages local government and non-governmental bodies, in applying their own regulations, to follow the same principles that apply to central governments.
The TBT agreement requires the procedures used by governments to decide whether a product conforms with national standards to be fair and equitable. Technical regulations must not be "prepared, adopted or applied with a view to, or with the effect of, creating unnecessary obstacles to trade". The agreement applies the Most Favoured Nation (MFN) and national treatment principles so that WTO members are obliged not to use methods that would give domestically produced goods an unfair advantage.
The TBT agreement also encourages countries to recognise each other's testing procedures. This helps exporters in trade between mutually recognising countries, as they can test their products against the importing country's standards in their own country.
To help exporters know what the latest standards are in their markets of interest, the TBT agreement obliges WTO members to establish "national enquiry points". Through this point other WTO members can obtain information on a Member's technical regulations, standards and testing procedures, whether impending or adopted, as well as on participation in bilateral or plurilateral standard-related agreements, regional standardising bodies and conformity assessment systems. New Zealand's enquiry point is Standards New Zealand.
Technical regulations that are made in accordance with relevant international standards are presumed not to create an unnecessary obstacle to international trade. This presumption may be overturned on evidence.
Likewise for conformity assessment, international guides or recommendations issued by international standardising bodies are to be used for national procedures for conformity assessment unless they are inappropriate.
The TBT agreement encourages WTO members to participate, within the limits of their resources, in the work of international bodies for the preparation of standards and guides or recommendations for conformity assessment procedures. New Zealand is a member of the most important of these, the International Standardization Organization (ISO), the International Electrotechnical Commission (IEC) and the International Telecommunication Union (ITU), ensuring that international standards reflect New Zealand's production and trade interests.
But reaching international agreement on the technical details of an international standard can take a long time, often several years. This is why the TBT agreement promotes a complementary approach to technical harmonisation, known as equivalence. Technical barriers to international trade are completely eliminated between WTO members who accept that each other's technical regulations fulfill the same policy objectives, even if through different means. This results in savings to exporters, improving their competitiveness from not having to adjust their production facilities to fulfill foreign regulations.
Similarly, mutual recognition of conformity assessment works by countries agreeing to accept the results of one another's conformity assessment procedures, even though these procedures might be different. This significantly reduces costs because products only need to be tested once, with the results accepted in all countries covered by the mutual recognition arrangement. The TBT agreement encourages WTO members to enter into negotiations with each other for the mutual acceptance of conformity assessment results. New Zealand's Trans-Tasman Mutual Recognition Arrangement with Australia is a good example of this.
WTO members must notify the WTO secretariat of their technical regulations and conformity assessment procedures when two conditions are met:
Draft regulations should be notified to the WTO Secretariat if possible 60 days prior to their formal adoption, so that other WTO members can make comments. If there are urgent problems of safety, health or environment protection, the regulations can be notified after they have been passed.
Product standards can be prepared by non-governmental and private standardising bodies, as well as governmental bodies.
For this reason, the TBT agreement has a "Code of Good Practice for the Preparation, Adoption and Application of Standards". This code sets out rules for central government, local government, non-governmental and regional standardising bodies developing voluntary standards. WTO members must take reasonable measures to ensure that governmental, non-governmental, regional and private standardising bodies accept and comply with the code.
This WTO committee is a mechanism designed to ensure transparency. At its meetings - usually held two or three times a year - WTO members consult on matters relating to the operation of the Agreement or the furtherance of its objectives. The TBT committee has the power to establish working parties to carry out specific functions.
