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May/June 2011
ProVocative

International Trade and Standards

An Interview with Jeff Weiss, Office of the U.S. Trade Representative

Jeff Weiss works with voluntary and mandatory product standards as related to U.S. trade policy; here he addresses market access today and the World Trade Organization’s Technical Barriers to Trade agreement.

What trends and changes in the role of standards in international trade have you seen since the advent of the World Trade Organization’s Technical Barriers to Trade Agreement?

Jeff WeissThere have been at least two major developments since the adoption of the World Trade Organization Technical Barriers to Trade Agreement in 1994 that are relevant to therole of standards in international trade. The first is the agreement by the WTO Committee on Technical Barriers to Trade in 2000 on a set of principles for the development of international standards, namely: 1) openness, 2) transparency, 3) impartiality and consensus, 4) relevance and effectiveness, 5) coherence and 6) the development dimension. This TBT Committee decision makes clear that the process for developing a standard, not the name of the body that developed it, is the critical element for ensuring that the resulting standard is truly international in the sense that it is responsive to global market and regulatory needs, embodies technical merit and embraces technological innovation. In this sense, standards developed in accordance with the principles can promote greater economic efficiency and higher rates of economic growth.

Second, WTO members now recognize that, with tariff levels generally falling around the world, the biggest obstacles faced by industries are often “behind the border” barriers, including problematic standards-related measures. Over the last several years, we have seen the number of specific trade concerns raised in the TBT Committee increase dramatically; several standards-related proposals have been tabled in the Doha Non-Agricultural Market Access (NAMA) negotiations; and standards-related measures are taking a front seat as the United States hosts the Asia-Pacific Economic Cooperation in 2011, as well as in the Trans-Pacific Partnership negotiations. Last year, given the increasingly high profile of the role of standards in international trade, the U.S. trade representative, Ambassador Ron Kirk, initiated an annual USTR Report on Technical Barriers to Trade so that USTR, in consultation with our interagency colleagues, could document the steps taken by the Obama administration to address standards-related barriers to U.S. exports.

What are the main challenges today for manufacturers related to non-tariff trade barriers?

While some of the standards-related barriers facing manufacturers may raise WTO concerns, many standards-related measures impose additional costs and burdens and delays to market for industry simply due to their divergence. Such divergences may be necessary in some instances — for example, if embedded technological infrastructures vary between countries — but oftentimes they are unnecessary. The use of voluntary consensus standards as a basis for regulation is one way to bridge the gap in many of these situations. Where countries arbitrarily limit their consideration of standards to particular bodies rather than selecting the best standard for their regulatory needs, they have more difficulty in aligning their regulations. Further, the use of international standards only facilitates trade to the extent that the technical specifications do not accord an unfair trade advantage by giving preference to the characteristics of the products of one region over the products from another country or region. Standards development and use should not be employed as a tool of trade policy to discriminate against products from other regions or countries.

In order to address some of these unnecessary divergences, the Obama administration recently requested public comment on potential regulatory cooperation projects we could undertake with Canada and Mexico, and may do the same with other large trading partners. Many of the unnecessary divergences that stakeholders have identified in the past result from trading partners who limit themselves in terms of what standards they will use. However, the EU’s strategy of trying to “internationalize” its regional standards through various agreements and arrangements, rather than working to develop truly international standards, is the single greatest cause of global regulatory divergence. The administration is seeking to engage the EU on this issue through the Transatlantic Economic Council and the U.S.-EU High-Level Regulatory Cooperation Forum.

There are other standards-related measures that often create barriers to exports. The number of voluntary measures raised as trade concerns in the TBT Committee has increased over the past few years. In our experience, even measures with which compliance is technically voluntary can be de facto mandatory for companies that are trying to gain access for their products in a particular market, yet many of these measures evade effective multilateral review. The United States is pushing to establish more effective mechanisms for addressing such issues in bilateral, regional and multilateral fora. In addition, duplicative requirements for testing, certification and inspection — including requirements to use conformity assessment bodies located in the importing country — impose tremendous costs, burdens and delays to market for suppliers.

Moreover, the failure of WTO members to ensure effective internal coordination between their regulators and to abide by TBT Agreement provisions to notify the WTO about proposed measures and take comments into account leads to the development of poorly crafted regulations, which often result in trade disruptions. To enhance coordination within the U.S. government in the development of regulations for emerging technologies such as nanotechnology, the Obama administration recently created a White House-led emerging technologies task force, co-chaired by USTR, the Office of Science and Technology Policy, and the Office of Information and Regulatory Affairs (which is part of the Office of Management and Budget). In trying to develop a coherent U.S. approach to regulating such technologies, the task force has identified participation in the development of international standards and the development of coordinated international approaches — principles that are consistent with U.S. law and practice — as core components of that strategy.

In a presentation you made during an Information Technology and Innovation Foundation program, you indicated that a rich standards landscape exists with different tools for different markets. How would you describe that landscape and tools?

The TBT Agreement makes clear that WTO members shall use “relevant” international standards as a basis for technical regulations unless such standards are ineffective or inappropriate to fulfill the member’s legitimate policy objectives. The use of the term “relevant” is often overlooked, but it is a critical element of the obligation. The drafters of the agreement recognized that if standards, even international ones, do not reflect fundamental geographic, climatic, embedded infrastructure or other differences, they will not be relevant to a particular market, nor will they be effective or appropriate. Also commonly overlooked is the fact that the text refers to “relevant international standards” in the plural, meaning that there may be more than one international standard in a particular area.

In addition, the TBT Committee decision principles have provided an important incentive to further internationalize standardizing activities and have resulted in greater outreach by standards bodies, such as ASTM International, to broaden participation by stakeholders from developing economies. However, obstacles remain to the effective implementation of the committee decision. It is very important that international standardizing activities: 1) be relevant and effectively respond to regulatory and market needs, 2) effectively respond to scientific and technological developments in various countries, 3) not give preference to the characteristics of specific regions when different needs or interests exist in other regions and 4) be impartial and open so that developing countries are not de facto excluded from the process. As adherence to the TBT Committee decision by standards bodies increases, the more likely it is that the resulting standards will be globally relevant. In the U.S. view, it is very important that WTO members maintain and strengthen the incentives for standards bodies to follow the principles.

We believe that the U.S. multiple path approach to standards supports and reinforces the committee decision principles. United States regulators generally do not develop their own industrial standards but utilize voluntary consensus standards, including international standards, in use in the marketplace when developing regulations. A regulator’s decision on which standard to use is based strictly on what is the best standard to achieve the regulatory objective, and diverging from such standards is strongly discouraged by U.S. law. Further, the U.S. approach to standards makes it very unlikely that the United States will be the source of divergences when it comes to international standards. By contrast, approaches to the use of standards that are based on creating superficial hierarchies that rely on the name of the standards body or that restrict the use of certain standards unnecessarily limit the tools that a regulator has to achieve its policy objectives. Such approaches also create unnecessary divergences; can lead to the adoption of standards that are sub-optimal from the perspective of ensuring quality, safety and health; and have the potential to disrupt trade.

How will the Trans-Pacific Partnership TBT Chapter differ from those in previous U.S. trade agreements? What role will international standards play in this agreement?

In the TPP negotiations, the United States will urge a continued emphasis on applying the TBT committee decision principles for determining whether an international standard exists for purposes of the TBT Agreement. The U.S. negotiating team will also seek to enhance transparency in the development of standards-related measures, including the use of early warning mechanisms and other procedures to ensure that comments on proposed standards-related measures are taken into account; liberalize conformity assessment through the TPP region such that suppliers would normally need only one test, certification or inspection to ship their products anywhere in the region; and explore whether additional disciplines are possible in key sectors where standards-related barriers or unnecessary divergences are prevalent.

In addition, the United States will encourage TPP countries to establish and maintain mechanisms or processes for centralized coordination of their regulatory processes; incentivize the use of good regulatory practices in the development of standards-related measures; and encourage TPP regulators to coordinate their work, maintain an open dialogue with interested stakeholders and participate in the development of international standards.

In June 2010, ASTM President James Thomas spoke to the WTO Committee on Technical Barriers to Trade about ASTM’s role in the global standards community. How was ASTM’s presentation perceived by TBT Committee members? What is the significance of that response? What are the ongoing challenges in this arena?

I thought that Jim’s remarks were very well-received by the committee, and it was clear that ASTM International belonged in the room. We hope that this presentation will be the first of many.

What has been most interesting to me is the high level of acceptance among WTO members of the TBT Committee decision principles. In the NAMA negotiations, the United States has proposed to incorporate the decision in treaty text on several occasions. It turns out that this has been one of the more noncontroversial proposals in the negotiations as WTO members have become increasingly comfortable with the principles.

Nevertheless, some countries continue to push for the WTO to limit international standards development to certain named bodies. The United States opposes such an approach because it would contradict the spirit of the committee decision principles, which are designed to be applied by any standards body, and thereby diminish the incentives of named and unnamed bodies alike to follow them. In addition, such an approach would unnecessarily distort how regulators choose the appropriate standard to use as a basis for regulation and lead to the selection of sub-optimal standards, including standards that are not being used in the marketplace or are out of date.

Given the richness and complexity of the standards landscape, it is important that public and private sector officials form strong partnerships to ensure that national standards body officials and regulators are coordinating with their trade and foreign affairs ministries on trade policy developments, such as the NAMA negotiations, where standards-related issues are under discussion. Trade negotiators need to understand the benefits of maintaining the ability of countries, especially developing countries, to develop country-specific standards strategies that provide the greatest amount of choice and flexibility to use the highest quality, most globally relevant standards in order to meet their regulatory, market and development needs.

Jeff Weiss has been senior director for Technical Barriers to Trade at the Office of the U.S. Trade Representative, Washington, D.C., since 2007. His responsibilities primarily involve the development, coordination and implementation of U.S. trade policy with respect to voluntary and mandatory product standards, including those related to labeling and packaging, and procedures to demonstrate compliance with such standards (e.g., testing, certification, inspection, registration). He chairs the U.S. interagency Trade Policy Staff Committee’s Subcommittee on Technical Barriers to Trade and serves as the USTR representative to Industry Trade Advisory Committee 16, which provides advice to the U.S. government on trade and standards-related measures. Weiss has devoted particular attention to resolving specific market access problems facing U.S. agricultural and industrial exporters and addressing systemic TBT issues (e.g., transparency in rulemaking, use of good regulatory practices, international standards development) before the World Trade Organization Committee on Technical Barriers to Trade, where he represents the United States. He is also the lead U.S. negotiator for the TBT chapter of the Trans-Pacific Partnership negotiations and is actively involved in TBT-related negotiations in the World Trade Organization’s Doha Round.