WORLD TRADE G/TBT/W/41
25April 1997
ORGANIZATION(97-1806)
Original: English Committee onTechnical Barriers toTrade
TBTTRIENNIAL REVIEW
Note from theGovernment ofCanada
ThefollowingpaperwithrespecttotheTriennialReviewoftheAgreementonTechnicalBarriers
toTrade hasbeenreceived from thedelegation ofCanada withtherequest thatitbecirculated to
Members oftheCommittee.
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1. Further tothestatement made byCanada attheTBTCommittee meeting ofFebruary 14,this
noteisdesigned toinitiate discussion regarding thedegree towhich theAgreement reflects andaddresses
developments ininternational standards andtheconcerns ofourbusiness community withrespect to
technical barriers totrade.
2. Thenature ofstandards asunderstood bythebusiness community ischanging. Bystandards,
wemean voluntary standards asdistinct from mandatory technical regulations. "Without prejudice"
totheviews ofmembers regarding thedefinition ofstandards intheTBTAgreement, standards, both
national andinternational, arenowmuch broader thanthetraditional performance, characteristic or
product-related process andproduction method based standards.
3. Overthepast10years, therehasbeenashiftinstandards setting towards standards pertaining
totheorganization thatproduces theproduct (orservice) rather thantheproduct itself. Atthenational
level, environmental management standards, occupational health andsafety, andprivacy standards have
emerged. Internationally, ISOhasdeveloped theISO9000quality management standards andthenew
ISO14000 environmental management standards, which havebeenadopted orareintheprocess of
being adopted bybothdeveloped anddeveloping countries.
4. Themarket impact ofthese standards issignificant. Onemajor characteristic ofglobalization
istheincreased tendency forbusinesses tosub-contract more andmore work, bothdomestically and
internationally. Given "just-in-time" production techniques andgiven thatthefinalassembler or
manufacturer isresponsible forproduct quality andimage, suchcompanies increasingly basetheir
supplierpoliciesonthesenewstandards.Retailerssimilarlyapplythesenewstandardsontheirsuppliers.
Thetradeimpactisthussignificant.Furthermore,deregulationinmanycountriesispushinggovernments
intousing thirdpartyprivate sector audits andtheprocess ofregistration ofcertification, i.e.,ISO9000
system, rather thancarrying outtheconformance andinspection work themselves.
5. Inthiscontext, theincreased useofstandards requires confidence thatmanufacturers 'claims
fortheirproducts ofconformity tostandards arecorrect andjustified. Suchassurance cancome from
thefirm'sinternal procedures formeeting standards (self-certification); fromreview byanindependent
private, source outside thefirm(third party); from agovernment-mandated regulatory programme;
orfromacombinationofsuchelements.Fromatradeperspective,addressingsuchconformityassessmentG/TBT/W/41
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issues iskeytoensuring thatbusiness derives themaximum benefit from theuseofinternational
standards.
6. Given thetrade impact ofthese newstandards, itisimportant thattheTBTCommittee arrive
atconsensus regarding thecoverage andapplication oftheAgreement tothese management standards.
Atpresent, Members interpret differently thedegree towhich these voluntary standards aresubject
toTBT andWTO disciplines. Thisdivergence ofinterpretation increases thelikelihood thatsuch
standards maybeapplied inamanner thatisarbitrary orunjustifiably discriminatory orconstitutes
disguised restrictions oninternational trade.
7. Thisconcern hasalsounderlined ourposition withrespect toeco-labelling. Members should
allay these trade concerns bynotifying theireco-labelling programmes, asCanada hasdone, under
theterms oftherecommendation inparagraph 185oftheCommittee onTrade andEnvironment 's(CTE)
report toSingapore:
Without prejudice totheviews ofWTO Members concerning thecoverage andapplication of
theTBTAgreement tocertain aspects ofsuchvoluntary eco-labelling schemes/programmes
andcriteria, i.e.those aspects concerning non-product related PPMs, andtherefore tothe
obligations ofMembers under thisAgreement regarding those aspects, theCTEstresses the
importance ofWTO Members following theprovisions oftheTBTAgreement anditsCode of
Good Practice, including those ontransparency.
8. Given thecurrent divergence ofinterpretation among WTO Members, theTriennial Review
shouldfocusnotonclarifyingthecurrentcoverageandapplicationoftheAgreementtotheseorganization
ormanagement typestandards butrather initiate discussion onhow, andunder which terms, wecan
explicitly incorporate thesestandards under thedisciplines oftheTBTAgreement anditsCode ofGood
Practice. Thedanger ofdisguised restrictions oninternational trade becomes allthemore acute if
Members canclaim thatthese standards arenotcovered bynorsubject totheapplication ofthe
Agreement. While there maynotbeagreement among Members withrespect tothecoverage and
application oftheAgreement, theTriennial Review provides animportant opportunity toseekagreement
onwhattheAgreement should saywithrespect tothese standards. Thegoalhereistostrengthen the
Code ofGood Practice disciplines withrespect tothese voluntary standards, theirrelated conformity
assessment procedures, andthestandardising bodies responsible forthepreparation, adoption and
application ofthese standards, topreserve andenhance market access.
9. Tofacilitate thistask,theTBTCommittee maywishtoincorporate intoourdiscussions the
comparative initial analysis bytheCommittee onRegional Trade Agreements ontheTBTAgreement
anditsregional equivalents. Anumber ofregional agreements haveconsidered thisissue andsuch
acomparative discussion might serve tofacilitate discussion ofhowanumber ofWTO Members have
addressed thisissue inaregional context.
10. Canada hasidentified three specific issues forconsideration intheTriennial Review:
equivalency, theISO14000 series ofenvironmental management standards, portability ofcertification.
Equivalency
11. While increased useofinternational standards isanoverall objective thatshould beaddressed
during thecourse oftheTriennial Review, theTriennial Review should alsoaddress equivalency issues
given thatacceptance ofdifferent national technical regulations andstandards asequivalent canfacilitate
trade. Inparticular, itisstriking thattheCode ofGood Practice doesnotcontain asimilar provision
toTBTArticle 2.7:G/TBT/W/41
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Members shall givepositive consideration toaccepting asequivalent technical
regulations ofother Members, eveniftheseregulations differ fromtheirown,provided
theyaresatisfied thatthese regulations adequately fulfiltheobjectives oftheirown
regulations.
Thislikely reflects theviewduring thenegotiations oftheTBTAgreement thatequivalency wasof
lessconcern inthecaseofvoluntary standards thanmandatory technical regulations.
12. Thisneeds toberevisited given thechanging nature ofstandards outlined above. Inparticular,
thedevelopment ofquality management standards under theISO9000 series andenvironmental
management standards under theISO14000 series, andtheparallel development ofnational voluntary
standards, suggests thatequivalency maybebecoming asrealanissue inthecaseofstandards asit
isfortechnicalregulations.Requirementsbymanufacturersandretailersforsuppliersforthesevoluntary
standards mayresult ingreater market andtrade impact thaninthecaseofmandatory technical
regulations.
13. Thenon-paper Eco-labelling andTrade: ACooperative Approach prepared byoutside experts
(circulated onMarch 6,1997) outlines apossible approach toequivalency issues inthecontext of
eco-labelling programmes. Thepractical approach outlined inthepaper suggests thatequivalency issues,
while complex, canbeaddressed inatrade-neutral manner.
14. Apriority objective should betoreflect themarket andtradeimportance ofvoluntary standards
intheCode ofGood Practice through aparallel provision onequivalency tothatofArticle 2.7.
Environmental Management andRelated Standards -ISO14000
15. Thedevelopment oftheISO14000 series ofenvironmental management standards (EMS)
represents aresponse toenvironmental andtrade concerns. Theindustry-driven nature oftheISO
development process largely favours amarket, rather thanregulatory, approach. FiveISO14000 series
standards related toenvironmental management standards andenvironmental auditing havebeenadopted
todate. Anumber ofadditional EMS-related standards insuchareas asenvironmental auditing,
environmental labelling, environmental performance evaluation, life-cycle assessment, environmental
aspects inproduct standards, areintheadvanced stage ofdevelopment.
16. From aregulatory perspective, thedevelopment ofISO14000 EMS series facilitates theshift
from a"command andcontrol" approach toregulation toabalance ofregulation andpreventative,
consensus based approaches. Emphasis onenvironmental results provides industry withgreater certainty
interms oflong-term environmental objectives andmore flexibility toachieve those objectives.
Government alsobenefits from awider choice ofapproaches andtools toprotect theenvironment.
Thebroad-based EMS approach based ontheISO14000 series provides, fromanenvironmental policy
perspective, acomprehensive means tolinkbusiness andeconomic decision-making, andtheoperations
ofanorganization, withitsenvironmental management.
17. From atrade perspective, theapproach oftheISO14000 series could provide abasis for
facilitating environmental equivalency. TheISO14000 series hastwofundamental requirements:
commitment tocomply withnational environmental legislation andregulations andcommitment to
continuous improvement. Inother words, there isnoextrajurisdictional application ofdomestic
environmental legislation andregulation, andPrinciple 7oftheRioDeclaration, "common but
differentiated responsibility", isfullyrespected.G/TBT/W/41
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18. Thus, theISO14000 series treats non-product related process andproduction methods ina
trade neutral manner, asitleaves ittonational governments tosetvalues andthresholds. Local policy
requirements arefullyrespected. This"built-in" equivalency thusmayofferawaytoaddress increased
useofenvironmental standards inamanner thatfullytakes intoaccount trade concerns.
19. Thedevelopment ofISO14000 series standards onenvironmental labelling andlife-cycle
assessment mayfurther facilitate discussion ofeco-labelling related issues.
20. Additional issues thatwillneedtobeconsidered within theTriennial Review andother fora
areissues related totheISOsystem ofnational implementation andthecertification issues outlined
below.
Portability ofCertification
21. Conformity assessment –assessment thattheparticular product conforms totheparticular
standard –iscentral totheuseofstandards. Inthecontext ofmany commercial andregulatory uses
ofstandards, measures toevaluate andensure conformity areofasmuch ormore significance than
thestandards themselves. They impose significant costsinmanufacturing, through testing, inspection,
audit, andrelated procedures. Thebenefits thatmitigate these costs accrue from thevalue added by
increased buyer-regulator confidence thataproduct orservice meets therequired standard.
22. Canadian exporters repeatedly complain regarding requirements formultiple certification,
i.e.,thatcertification toanISOstandard carried outinCanada maynotbeacceptable intheexport
market which follows orrequires conformity tothesame ISOstandard. Thisisparticularly acute with
respect toISO9000(andlikely withISO14000) where thestandard isinternational butthecertification
requirement islocal.
23. Amajor goalofharmonized international standards istofacilitate trade. Yetnowthatwehave
anincreased number ofinternational standards, weironically findthatthisobjective isbeing undermined
bymultiple testing andcertification requirements. Canadian companies, bothlargeandsmall, complain
about thetime-consuming andexpensive nature ofthese requirements.
24. TheTriennial Review should takeahardlookattheprovisions ofArticle 6oftheAgreement
(Recognition ofConformity Assessment byCentral Government Bodies )toconsider whether ornotthese
provisionsneedtobestrengthenedtoaddressthisproblem.Ourgoalshouldbetoensurethatcertification
istrulyportable. Elimination ofneedless andexpensive duplication ofcertification procedures would
provide arealbottom lineimprovement tothebusiness community, andreinforce therelevance of
theWTO toitsconcerns.
25. Inthiscontext, TheTriennial Review should consider mutual recognition oftestresults and
conformityassessmentprocedures.Thisdiscussionshouldincludemutualrecognitionissueswithrespect
tobothinternational andnational technical regulations andstandards. Many WTO members arefamiliar
withthedifficulties andcostsinherent innegotiating bilateral mutual recognition agreements. Itwould
beuseful tohaveadiscussion among Members regarding theirexperience innegotiating MRAs with
aviewtodevelop draftguidelines formutual recognition agreements.
26. Thegoalhereisnotto"water-down" conformity assessment requirements given thatthiswould
onlyresult ininternational traders either re-creating thesystem inanewfashion ordeveloping anew
system toensure theconfidence necessary forstandards tofacilitate international trade. What isrequired
isimprovement ofWTO TBT disciplines with respect toconformity assessment (e.g., leastG/TBT/W/41
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trade-restrictive, clearer definition astohowinternational standards aretobeapplied nationally, and
howother countries 'conformity assessments aretobeaccepted) toaddress these business concerns.
27. Thisconsideration needs totakeintoaccount thesimilar objectives oftheQuality Assessment
Recognition System (QSAR) developed under theISOandtheInternational Accreditation Forum (IAF).
28. Inconclusion, Canada supports aTriennial Review thataddresses bothimplementation issues
andtheneedtoensure thecontinued relevance oftheAgreement todevelopments ininternational
standardization.