Update on USTR’s “Technical Barriers to Trade” Report

In March 2010, the Office of the United States Trade Representative issued its Report on Technical Barriers to Trade (TBT Report) to Congress.

This report is a new, specialized report that focuses on significant foreign trade barriers in the form of product standards, technical regulations and testing certification, and other procedures involved in determining whether products conform to standards and technical regulations (conformity assessment procedures). These measures were previously addressed in the National Trade Estimate Report on Foreign Trade Barriers but were separated out because of the increasing role that standards-related barriers play in the global flow of trade.

The following are highlights of the report:

Trends and Issues on Foreign Trade Barriers to U.S. Products

The report includes a discussion of trends that appear across various U.S. trading partners’ markets, as well as trends or systemic issues observed within a single trading partner’s market. These issues include the following (partial list):

European-wide standards. This section of the report highlights how the European Commission promotes European standards to provide an advantage to European industry. An example of this approach is the EU New Approach Directive, through which the European Commission requests European standards bodies to develop standards to meet “essential requirements” of various other EU directives. Non-EU persons may not participate in the setting of these standards and U.S. producers report feeling compelled to use the European standards because the cost of proving that an alternative standard is comparable can be prohibitive.

China’s IT sector. Since joining the WTO, China has worked to reform its standards, testing, and certification regimes to align its standards system with international practices. The U.S. remains concerned, however, about China’s development and use of standards and technical regulations in the information technology sector, which in many instances appear designed to favor China-specific approaches.

Mandatory Biotech labeling. Mandatory retail labeling for food products that contain or are derived from biotechnology has impeded or, in some cases, blocked U.S. exports of food products to the following countries: Australia, Brazil, China, EU member states, Indonesia, Japan, Korea, Malaysia, New Zealand, Russia, Saudi Arabia, Thailand, and Taiwan. U.S. biotechnology crops include corn, cotton, and soybeans, as well as food produced or processed from these crops. Biotechnology crops are the core of U.S. agricultural exports, which totaled $98.6 billion in 2009.

Conformity assessment bodies. Some governments do not permit U.S. suppliers to use competent conformity assessment bodies (e.g., testing laboratories or product certifiers) located in the U.S. to demonstrate that their products comply with their technical regulations. Rather, U.S. exporters are required to use conformity assessment services provided by bodies in the destination market. Requiring conformity assessment procedures to be performed by conformity assessment bodies in the destination market can impose additional costs and burdens on U.S. exporters. These costs and burdens can be compounded by significant delays when the foreign market lacks sufficient domestic testing, inspection, or certification capacity.

Distilled spirits. Divergences in how governments in different regions regulate distilled spirits have also created trade problems for U.S. exporters. For instance, the EU maintains a three-year minimum aging requirement for whiskey, which is based on the climatic conditions in Scotland and Ireland, where three years of aging may be necessary to produce Scotch Whiskey and Irish Whiskey. By contrast, the climatic conditions in the U.S. are different, so U.S.-produced whiskey need not be aged three years to achieve the same result. The EU requirement acts to restrict U.S. exports to the EU of whiskies that are aged less than three years or are blended with neutral spirits. The ramifications of the U.S.-EU divergence on whiskey aging adversely affect U.S. whiskey producers when they export to other markets as well, including to Israel, Colombia, and Brazil.

Organic products. How countries regulate organic products can make exporting U.S. organic products a more costly and burdensome endeavor—in some instances, prohibitively so. In the organics sector, the U.S. has negotiated three types of agreements, alone or in combination, with major trading partners in an attempt to facilitate trade in organic products and overcome such divergences. These agreements are a “recognition agreement,” an “equivalency agreement,” and an “export arrangement.”

Toys and children’s products. Following high-profile recalls of unsafe toys in 2007, many WTO members (including the U.S. and ten other APEC member economies) adopted new or improved toy safety measures to protect children from potential hazards posed by certain toys and children’s articles. Recently, the U.S. and other WTO members have raised trade concerns in the TBT Committee with new testing requirements for toys and children’s articles that Argentina, Brazil, and other countries have adopted because they appear to favor domestically-produced products over imports.

Overview of U.S. Engagement on Standard-Related Measures

The report provides an overview of U.S. engagement on standards-related measures to prevent trade obstacles and resolve specific trade concerns. This effort includes participation in the following groups: the World Trade Organization Technical Barriers to Trade Committee; APEC; NAFTA; the WTO Doha Round Negotiations; and the Organization for Economic Cooperation and Development.

Specific Country Reports

The report includes country reports that identify specific standards-related trade barriers encountered by U.S. stakeholders. In addition to the trade barriers discussed in the Trends section of the report, other standards-related trade barriers were found in the areas of medical devices, telecommunications, wine, cheese, tobacco products, cotton, mobile phones, hazardous substances, lawnmowers, cosmetics, tires, poultry and poultry products, motor vehicles, refrigerators, etc.

The countries investigated for the 2010 report include:

(See ITT’s Online Archives or 04/01/10 daily news, (Ref: 10040105), for BP summary of USTR announcement of TBT report being sent to Congress.)

USTR 2010 TBT report available at http://www.ustr.gov/sites/default/files/REPORT%20ON%20TECHNICAL%20BARRIERS%20TO%20TRADE%20FINALTO%20PRINTER%2025Mar09.pdf