TWN Info Service on WTO and Trade Issues (Jun16/15)
24 June 2016
Third World Network

Call for drafting voluntary best practice guidelines on private standards
Published in SUNS #8265 dated 20 June 2016

Geneva, 17 Jun (D. Ravi Kanth) - China along with India, South Africa, Brazil, Russia, Egypt, and Pakistan on Thursday (16 June) called for drafting voluntary "Best Practice Guidelines regarding Private Standards" at the World Trade Organization with a view to curb their chilling effect on global trade, several trade diplomats told the SUNS.

The call came at the meeting of the WTO's Committee on Technical Barriers to Trade (TBT) and is aimed at curbing the chilling effect on global trade of such standards-setting by private bodies that effectively act as non-tariff trade barriers (NTBs), trade diplomats said.

The United States, the European Union, and Japan, which are major culprits in imposing such private standards on the imports from developing countries, however, blocked China's proposal on the ground that private standards do not come under the ambit of the TBT agreement, said a developing country official.

At the WTO's committee on TBT on 16 June, China issued a statement about the adverse effects caused by private standards in international trade.

The private standards/regulations issued by non-governmental agencies in the developed countries have proliferated over the years, according to several studies.

Under Article 4.1 of the TBT agreement, China said, members are required to take "such reasonable measures as may be available to them to ensure that non-governmental standardizing bodies within their territories accept and comply with the Code of Good Practice (CGP) for the Preparation, Adoption and Application of Standards in Annex 3 to the TBT Agreement."

The TBT agreement contains "disciplines" for standardizing bodies which are set out in the Code of Good Practice. Further, Article 4 and Annex 3 on the CGP have clearly stipulated substantive provisions such as "non- discrimination," "avoidance of unnecessary barriers to trade," "use/participation of international standards," and "transparency/consultation," according to Erik Wijkstrom, a counsellor at the WTO.

"Standardizing bodies that have accepted and are complying with the Code of Good Practice shall be acknowledged by the Members as complying with the principles of this Agreement," according to Wijkstrom.

The TBT agreement's Article 4.1 has clearly stipulated that "members shall ensure that their central government standardizing bodies accept and comply with the Code of Good Practice for the Preparation, Adoption, and Application of standards in Annex 3 in this agreement (referred to in this agreement as the "Code of Good Practice")."

Although the TBT agreement refers to non-governmental bodies, which have a legal power to enforce technical regulation, it emphasizes that "they [Members] shall take such reasonable measures as may be available to them to ensure that local governments and non-governmental standardizing bodies within their territories, as well as regional standardizing bodies of which they or one or more bodies within their territories are members, accept and comply with this code of good practice."

China said the rules are clearly stated as regards standards issued by non-government organizations. "In addition, Members shall not take measures which have the effect of, directly or indirectly, requiring or encouraging such standardizing bodies to act in a manner inconsistent with the Code of Good Practice," China argued.

China pointed out that "the obligations of Members with respect to compliance of non-governmental standardizing bodies with the provisions of the Code of Good Practice shall apply irrespective of whether or not the standardizing body has accepted the Code of Good Practice."

Despite several concerns raised by members about the "private standards" and the negative effects during the 5th, 6th and 7th Triennial Reviews of the TBT Agreement, there is no coordinated effort to address the issue by exchanging information and experiences on reasonable measures taken by members to "ensure that non- governmental standardizing bodies involved in the development of standards within their territories, accept and comply with the Code," according to China.

Against this backdrop, China said it is in the process of drafting a paper on "Best Practice Guidelines regarding Private Standards."

China invited "interested Members to participate in this drafting exercise so as to ensure that the drafting exercise is without prejudice to the rights and obligations of Members under the WTO or the views of the members regarding the scopes of the relevant WTO agreements."

Significantly, China said, "it is in the interest of the whole Membership to encourage private standard setters and Members hosting them to follow internationally recognized best practices in the preparation, adoption, application, certification, use and supervision of private standards."

"A voluntary "Best Practice Guidelines regarding Private Standards" applied by private standard setters and Members hosting them will help private standards make positive contributions to Members' economic, environmental and social progress while avoiding the creation of unnecessary barriers to trade," China emphasized.

India said it will support China's demand for drafting a voluntary code of best practices as "the emergence and proliferation of private standards is a reality in the business today."

Although these standards are generally put in place for achieving some crucial objectives such as health, quality, safety and environment, they are increasingly causing barriers to trade due to burdensome and non-transparent compliance requirements, India maintained.

Brazil, South Africa, Russia, Egypt, and Pakistan also supported China's call for a multilateral drafting on best practices that could force the private standard bodies to follow voluntary guidelines, according to trade officials present at the meeting.

But the three major developed countries - the US, the EU, and Japan - blocked China's move to commence work on best practice guidelines for private standard setters.

In crux, the developed countries want to ensure that their non-tariff barriers are multiplied regardless of pressure from developing and poorest countries for arriving at an equitable global trading framework, trade officials told the SUNS.