WORLD TRADE  
ORGANIZATION  G/TBT/W/295 
30 October 2008 
 (08-5256) 
Committee on Technical Barriers to Trade Original:   English 
  
 
A MENU OF OPTIONS:  NEW ZEALAND’S APPROACH TO MUTUAL RECOGNITION 
ARRANGEMENTS (MRAS) AND REGULATORY COOPERATION ARRANGEMENTS 
 
Submission by New Zealand
 
 
 
 The following communication, dated 24 October 2008, is being circulated at the request of the delegation of New Zealand
. 
 
_______________ 
 
 
I. INTRODUCTION 
1. Pursuant to Article 6.3 of the World Trade Organization Agreement on Technical Barriers to 
Trade (TBT Agreement), Members are encouraged to  be willing to enter into mutual recognition 
agreements (MRAs) to facilitate the reciprocal  acceptance of results of conformity assessment 
procedures.  
2. In its successive reviews of the TBT Agreemen t, the Committee has noted certain challenges 
to the successful negotiation, conclusion and impl ementation of MRAs and has encouraged Members 
to exchange information on existing MRAs. 
3. In addition, the Committee has highlighted the importance and rele vance of cooperation 
between regulators from different Members, as a means to achieve better understanding of different 
regulatory systems and approaches to addressing identified needs. Regulatory cooperation can 
promote regulatory convergence,  harmonisation, mutual recognition and equivalency, thereby 
contributing to the avoidance of unnecessary regulator y difference and to the reduction of unnecessary 
barriers to trade. 
4. This paper outlines New Zealand’s persp ective on MRAs and regulatory cooperation 
arrangements. In particular, it provides an overview of a menu of options that aim to facilitate trade 
and enhance regulatory compliance through regulatory  cooperation. It also makes some general 
observations about the key conditions for successful  and effective trade facilitation arrangements.  
II. BACKGROUND 
5. Differences and uncertainties in relation to regulatory approaches, standards, test 
requirements and approval processes between countries can  lead to extra costs a ssociated with product 
design and delays in entering an export market. In  addition, there can be significant compliance and 
transaction costs associated with firms’ understanding  of and complying with the requirements of the 
export market. These additional costs can affect  the competitiveness of exporting companies. 
6. In the face of increasing globalisation of manufacturing, trade and the provision of services, 
businesses are calling for mechanisms to reduce transacti on costs in a timely and effective way. This G/TBT/W/295 
Page 2  
 
  includes convergence of regulatory approaches and pr actical solutions to dealing with regulatory 
interface problems. Responding to this call requires a flexible framework of practical options for 
consideration by regulators, which can be applied unilaterally, bilaterally, regionally or multilaterally. 
7. The WTO TBT Agreement sets out the principles and undertakings by Member countries to 
reduce and minimise the impact of different  standards and regulatory approaches between 
jurisdictions. However, in practice, significant barrier s remain. The cost of these can be greater than 
the impact of residual tariffs.  
8. To help overcome these barriers, it is important, in the context of the Fifth Triennial Review 
of the TBT Agreement, to focus on the development of practical guidelines for the design of efficient 
and effective trade facilitation arrangements within the context of risk management approaches.  
9. New Zealand has identified a menu of options that can reduce unnecessary transaction costs 
for businesses operating in different regulatory re gimes and can support efficient economic outcomes. 
As part of this, New Zealand believes there is cons iderable value in promoting dialogue on regulatory 
cooperation with a view to delivering not only economic benefits to our respective business 
communities, but also enhanced risk management and compliance benefits. Enabling regulators to 
engage directly with each other is essential if we are to find new and effective ways to facilitate trade. 
III. MENU OF OPTIONS 
A. U
NILATERAL RECOGNITION  
10. New Zealand seeks, in the interest of regulator y efficiency, to leverage benefits from other 
regulatory regimes. Accordingly, it has, where appropriate, unilaterally recognised in law the 
standards and regimes of other jurisdictions where the outcomes of those regulatory systems meet its 
essential safety, health and environmental requirements.  This is, in effect, a unilateral judgement of 
equivalence. The benefits of this approach include  the reduction of regulatory and consumer costs and 
the preservation of policy flexibility.  
11. Unilateral recognition of the efficacy of other jurisdictions’ product safety regulations can 
enable relatively small countries with limited resourc es to adopt best practice models without the need 
to meet the full range of administrative costs associated with regulatory design.  
B. TRADITIONAL MRA S ON CONFORMITY ASSESSMENT  
12. Traditional MRAs on conformity assessment are one option for addressing differences and 
uncertainties in relation to standards, test requi rements and approval processes between jurisdictions. 
Such MRAs are based on reciprocal obligations  of importing countries to recognise conformity 
assessment carried out by accredited conformity assess ment bodies in the exporting country that meet 
the requirements of the importing country.  In th is context, traditional MRAs can remove unnecessary 
barriers to trade and reduce transaction costs for businesses associated with:  
- accessing information on requirements for testing, inspection, certification and approvals 
must be met in order to place a product on a foreign market;  
 
- complying with different technical regulations  and standards than those recognised in the 
domestic market; 
 
- requirements for re-testing and certificati on of product to the importing country’s 
requirements; 
  G/TBT/W/295 
 Page 3 
 
 
  - meeting costs associated with manufacturing plan t inspection by inspectors or auditors from 
the importing country, which can often be superfluous to managing legitimate risks; 
 
- onerous documentation requirements; and 
 
- language barriers. 
 13. Traditional MRAs, however, have not proved as e ffective in practice as originally hoped. 
Reasons for this include limited regulator involvem ent in their development; resistance to extending 
the scope of coverage of MRAs due to trade polic y expectations that there should be reciprocal 
economic benefits rather than basing decisions for extension on risk management criteria; and 
difficulties associated with Treaty amendment pro cesses, among other things.  The approach to 
traditional MRAs has accordingly limited the poten tial economic benefit to business. It has also 
limited the potential benefits for regulators in  terms of enhanced regulatory compliance.  
14. Traditional MRAs can, however, be successful if they are developed in the context of a clear 
problem definition. In particular, this calls fo r a factual assessment of the scope and level of 
compliance costs faced by businesses, the materiality of  those costs, and the extent to which the MRA 
could directly reduce them. As such, traditional MR As can be used successfully only if the problem 
lends itself to this solution model.  
C. A
RRANGEMENTS BASED ON RECIPROCAL  RECOGNITION OF EQUIVALENCE  
15. These arrangements can be sectoral or comprehensive. New Zealand’s MRA with Australia 
(the Trans Tasman Mutual Recognition Arrangement) is its most advanced and comprehensive MRA. 
It is based on the principle of mutual recognition of  equivalence of our respective regulatory regimes. 
Each side has confidence in the regulatory outcomes of the other. Our respective laws provide that: 
- a good that can be legally sold in New Zealand ca n be legally sold in Australia and vice versa, 
regardless of differences in standards or othe r sale-related regulatory requirements between 
the jurisdictions; and 
 
- a person registered to practice an occupation in one jurisdiction is entitled to practice an 
equivalent occupation in the other withou t the need to undergo further testing. 
 16. Virtually all traded goods between Australia a nd New Zealand, with a few limited special 
exemptions, are traded under the provisions of the TTMRA.  
17. The unique feature of this Arrangement is th at it focuses on removing regulatory barriers to 
trade without explicit obligations for regulat ory harmonisation or burdensome line-by-line 
comparison of standards. It simply accepts the regulatory outcomes as achieving the same health, 
safety and environmental objectives. The practical e ffect of this has been to deepen regulatory 
coordination which, in turn, has lead to mo re aligned regulatory approaches and greater 
harmonisation.  
18. A number of important conditions underpinne d the development of the TTMRA, including: 
- Similar regulatory regimes, including enforc ement and interventi on arrangements. Many 
Australian and New Zealand laws and instituti ons share common principles and objectives, 
including very similar level of acceptable risk; 
 G/TBT/W/295 
Page 4  
 
  - Existing regulatory coordination. There were a number of existing trans-Tasman regulatory 
fora, for example the Electrical Regulatory Authorities Council (ERAC), which have well 
established cooperation programmes that driv e regulatory cooperation and coordination; 
 - Close regulator cooperation and coordination un derpins confidence in regulatory outcomes; 
 
- Common standards in many areas, including th e use of international standards and the 
development of joint Austra lia/New Zealand standards; 
 - New Zealand Ministers are invited to particip ate in Australian Ministerial Council meetings. 
More specifically, New Zealand Ministers ha ve the right to vote on any TTMRA-related 
issues.  
 19. This type of comprehensive arrangement is onl y possible where there is  shared confidence in 
the regulatory institutions and approaches of the pa rties supported by the key underpinning conditions 
outlined above already exist.  
D. T
AILORED COOPERATION ARRANGEMENTS (ASYMMETRIC ARRANGEMENTS ) 
20. New Zealand’s approach has evolved in recent y ears to embrace different arrangements that 
seek to achieve both trade and enhanced regulator y compliance outcomes. In addition to removing 
unnecessary barriers to trade and transaction costs for business, these arrangements incorporate 
obligations to exchange market surveillan ce information and maintain on-going regulatory 
cooperation to support improved co mpliance with domestic require ments. These arrangements may 
involve asymmetric obligations on the parties that reflect and capture the strengths of the respective 
regulatory regimes and differences in approaches to regulatory intervention.  New Zealand’s interest 
in developing more flexible approaches has been informed by five principles: 
- the increasing need to develop models th at suit engagement between developed and 
developing countries; 
 
- in this context the need to bring new persp ectives to the overarching risk management 
framework and how this interfaces with a trade facilitation framework; 
 
- the need to find solutions that work with th e strengths of the institutional and regulatory 
regimes in developing countries and that rec ognise their institutional developmental policy 
priorities; 
 
- the recognition that pragmatic and efficient solutions may require different types of 
commitments on the part of each party; and 
 
- a desire to build long term co-ope rative relationship between regulators. 
 21. These principles underpin New Zealand’s approach  to negotiations with developing countries 
today and are reflected in our Cooperation Agr eement on Conformity Assessment in Relation to 
Electrical and Electronic Equipment and Component s with China under our Free Trade Agreement. 
The Agreement with China is an asymmetrical, risk -based, equivalence orientated arrangement. It 
seeks to deliver trade facilitation within a strong framework for regulatory cooperation, the aim of 
which is to enhance regulatory compliance in the ma rketplace. As such, this approach combines the 
strengths of MRAs and regulat ory cooperation arrangements.  G/TBT/W/295 
 Page 5 
 
 
  E. REGULATORY COOPERATION ARRANGEMENTS (RCA S) 
22. New Zealand’s approach to regulatory coopera tion is based on the increasing importance we 
now attach to regulator-to-regulator dialogue.  
23. RCAs recognise the importance of building deep in stitutional relationships at the regulators’ 
level as a way to build confidence in and develop regulatory approaches that will, in turn, support 
trade facilitation. Another key objective of RCAs is to build strong cooperation between the trade 
policy and regulatory communities. 
24. RCAs can support the enhancement of regulat ory quality and effectiveness by sharing 
information (hazard alerts, market surveillance da ta) and developing joint programmes to enhance 
regulatory compliance. Well constructed RCAs will l ead to improved regulatory practice, increased 
regulatory alignment and/or harmoni sation and confidence between regulators which, in turn, supports 
more trade facilitation options.  
25. RCAs can be an alternative to, or a companion for MRAs. They can be negotiated on a 
sectoral or multi-sectoral basis and can be tailore d to capture specific co-operative activities that 
would best achieve the objective of improving  regulatory quality and effectiveness.   
IV. GENERAL COMMENT 
26. To be successful, trade facilitation arrangements, whether it be RCAs or more formal 
instruments, symmetric or asymmetric in their obligations, must be based on a clear understanding of the capabilities and approaches of each party and a willingness to work with these. In addition, New 
Zealand believes that there are a number of key conditions that underpin the success and effectiveness 
of any arrangement.  These include: 
- Building a good understanding of, and confidence in, respective regulatory approaches and 
outcomes. This means increased emphasis on closer regulator-to-regulator cooperation to support the successful design, implementati on, maintenance and evolution of the 
arrangements;  
 
- A good and shared understanding by the parties of  the issues that need to be addressed, 
including the scope and materiality of the comp liance costs faced by businesses. This can help 
focus the arrangement appropriately and can clearly identify the expected benefits;  
 
- To the extent that these exist, the use of internationally recognised standards and conformity 
assessment infrastructures as the basis for the arrangement, but also acceptance of 
equivalence of regulatory outcomes where devi ations from common international standards 
occur, so long as these do not create risks to health, safety or the environment;  
 
- An understanding that, while MRAs are traditi onally seen as vehicles for facilitating trade, 
they can also aim to improve regulatory comp liance, and sometimes regulatory convergence. 
This is particularly the case where MRAs include  provisions designed to facilitate exchange 
of information and cooperation between regulators;  
 
- The mandate for regulators to consider intern ational compliance issues and the recognition of 
the benefits this can have in the domestic context; 
 G/TBT/W/295 
Page 6  
 
  - Regulator confidence in, and reliance on, the MLAs
1 of international and regional groups such 
as ILAC, IAF, APLAC and PAC2 as a means to eliminate duplication of processes. 
 
- An acknowledgment that arrangements need not be symmetrical in d esign and commitments. 
Where different regulatory systems exist, it may be possible to develop asymmetric 
arrangements that take jurisdictional differe nces into account but still deliver significant 
benefits to the parties involved. Asymmetric arrangements are partic ularly important where 
the level of regulatory intervention is not the same in both jurisdictions or where trade flows between jurisdictions tend to be in one dir ection. They can be developed to allow product 
access to the marketplace and, at the same time, to reinforce each other’s compliance 
arrangements including through th e exchange of market surve illance information. In this 
context, asymmetric arrangements can achieve a balance between trade and regulatory compliance objectives. 
 
V. RECOMMENDATIONS 
27. New Zealand proposes that, in the context of the Fifth Triennial Review of the WTO TBT 
Agreement, the Committee should consider: 
(a) Continuing to exchange information on MR As, regulatory cooperation arrangements 
and other arrangements that aim to facilitate  trade with a view to building a better 
understanding of the issues that need to be considered in the choice of trade facilitation arrangements; and 
(b) Developing practical guidelines on how to design efficient and effective trade 
facilitation arrangements within the contex t of risk management approaches.  
 
__________  
                                                     
 
1 MLAs: Multilateral Arrangements;  
2 ILAC: International Laboratory Accreditation Cooperation 
IAF: International Accreditation Forum  APLAC: Asia Pacific Laborato ry Accreditation Cooperation 
PAC: Pacific Area Cooperation