Tracey Epps looks closely at one of the lesser known chapters of the CPTPP which addresses an issue of very real importance for Kiwi exporters: the Technical Barriers to Trade Chapter.
The Technical Barriers to Trade (TBT) Chapter aims to prevent technical regulations, standards and conformity assessment procedures (CAPs) becoming barriers to trade.
Each of these types of measures has the potential to be misused by governments to protect local industries and make business difficult and unnecessarily expensive for imports. In some cases, they can make imports prohibitive.
The Chapter covers:
• Technical regulations: a mandatory government requirement for products to have certain characteristics or to be processed and produced in a certain way. Examples include a requirement for food labels to be in English, or safety requirements for children’s toys.
• Standards: a document, approved by a recognised body, that sets out rules, guidelines, or characteristics for products, or for their related process and production methods. Standards include rules or guidelines for things such as packaging, marking or labelling. Standards are not mandatory and include things such as rules developed by a government-recognised organics organisation for what producers must do if they want to label their food as organic.
• Conformity assessment procedures: a procedure that is used to determine if a requirements set out in technical regulations or standards have been met.
Many businesses do not question other countries’ measures of this type. After all, if they want access to a country’s market, complying with these kinds of measures will often be non-negotiable and is probably considered a necessary cost of doing business. If the opportunities in a market are good enough, they will find ways to comply with requirements, however burdensome or unreasonable.
The TBT Chapter aims to do something about this by requiring governments to meet their WTO obligations to ensure that their measures do not discriminate against foreign products, and are no less trade restrictive than necessary to fulfil a legitimate objective. It also puts in place additional measures that require countries to be open and transparent about their measures, and allow other CPTPP Parties to comment on proposed measures.
A new innovation that hasn’t been seen in previous FTAs is the annexes that put specific rules in place with respect to wines and spirits, ICT products, pharmaceuticals, cosmetics, medical devices, proprietary formulas for pre-packaged foods and food additives, and organics products.
I have previously discussed technical barriers to trade in the context of the Government’s new portal for registering trade barriers (www.tradebarriers.govt.nz). However, businesses should pay particular attention to any issues in our CPTPP partners. The TBT Chapter sets up a committee and contact points that will enable governments to communicate more closely with each other to address problems encountered by exporters.
For businesses focusing on turning a profit in the next quarter, the TBT Chapter might not seem of immediate relevance. But in the medium- to long-term it could make a significant difference. If one business is facing problems, others likely are too.
So talk to other exporters, and if you have questions or concerns, talk to MFAT, or seek legal advice.
Tracey Epps is a trade law consultant with Chapman Tripp. www.chapmantripp.com