Crina Viju Institute of European, Russian and Eurasian Studies Carleton University Outline Non-tariff barriers and their importance International regulatory cooperation Canada - EU historical regulatory cooperation; Regulatory approaches CETA: regulatory cooperation or convergence? Non-tariff barriers Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) measures: Regulations inhibit, restrict and eliminate trade Do they have a legitimate purpose? Protect population from food safety hazards, from fraud (falsely labelled products); Uruguay Round (1994): 2 distinct WTO sub-agreements: Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) and the Agreement on Technical Barriers to Trade (TBT); Non-tariff barriers (cont.) SPS: Science as justification for imposition of barriers to trade; Major disagreements between Canada and the EU: On science itself; Science should be the sole factor in the establishment of SPS import regulations? 2 high profile SPS disputes since 1995: EU import ban on Genetically Modified Organisms (GMOs); EU import ban on beef produced using growth hormones. Non-tariff barriers (cont.) TBT: Major contentious area: labelling requirements for imports; Increased consumers’ interest regarding credence attributes: animal welfare; child labour; use of GMOs; environmentally friendly; use of pesticides; TBT agreement: Import labels cannot be required on the basis of how a product is produced (except when final product is discernibly different); Other sectors: chemicals (labelling requirements and EU REACH programme), car industry, pharmaceutical (different approval times). International regulatory cooperation Three principal forms (Young and Peterson, 2014): Approximation: Align national rules; Negotiated mutual recognition: Bilateral; specific regulations equivalent in effect; preserves regulatory autonomy, equivalence of regulatory objectives; Mutual recognition agreements (MRAs): Acceptance of differences in national standards; specified bodies in each party can certify that products produced in its territory conform to the standards of the other party; EU: Move away from negative top-down Commission-led regulatory harmonization to mutual recognition with positive harmonization of essential safety and performance requirement (Single Market). Regulatory capacity: by late 1990s, regulatory leader: Active role of European standards-making bodies. International Regulatory Cooperation (cont.) 1996 Market Access Strategy: “the completion of the single market regulatory regime now places the Community in a position to pursue a more outward looking trade policy in this field.” 2006 Global Europe: The EU “must play a leading role in sharing best practice and developing global rules and standards.” “…making European norms the reference for global standards.” 2007 European Commission: new trade agenda, deep FTAs with strong regulatory component “a combination of agreement on common principles, regulatory dialogues, and flexible mechanisms to facilitate the resolution of specific non-tariff barriers, increased regulatory transparency and convergence towards EU or international standards, at least in selected priority areas.” International Regulatory Cooperation (cont.) Canada (following the US approach): Industry driven standards; Minimal government intervention: to assure consumer, health and environmental safety; Science and risk-management based on US standards in many areas; Preferential trade agreements: Importance placed on mutually accepted standards, regulations and conformity assessment process equivalence; Obligation to provide justification if equivalence not granted; Federal structure: provinces important regulators. Canada-EU Agreements 1976: Bilateral Framework Agreement for Commercial and Economic Cooperation: Joint Cooperation Committee Bilateral agreements for various trade issues, sectoral agreements and bilateral “consultations” or “dialogues” for various sectors: 1997: cooperation between customs administrators; 1998: Mutual Recognition Agreement (MRA): good manufacturing practices for pharmaceuticals and mandatory conformity procedures in the following sectors: medical devices, tele-communications, terminal equipment, information technology equipment and radio transmitters, electrical safety, electromagnetic compatibility and recreational craft. 1999: competition agreement (cooperation between Competition Bureau Canada and the European Commission); 1999: Veterinary Agreement; 2003: Wine and Spirits Agreement; 2009: Civil Aviation Safety Agreement; 2009: Comprehensive Air Services Agreement; 2005: negotiations on a Trade and Investment Enhancement Agreement (TIEA): Regulatory cooperation, gov. procurement, financial services, IPR CETA October 2008: Joint study: Assessing the Costs and Benefits of a Closer EUCanada Economic Partnership; Benefits: 0.08% increase in EU GDP; 0.77% increase in Canada GDP; Assumption: Doha Round completed and successful. March 2009: Joint Report on the EU-Canada Scoping Exercise – main areas of negotiations: Trade in goods and services; investment; government procurement; regulatory cooperation; intellectual property; temporary entry of business people; competition policy; labour and environment. NTB: regulatory divergence and technical regulation discrepancies (Guerin and Napoli, 2009) Non-tariff barriers Import licensing, customs valuation rules, pre- shipment inspection, rules of origin, investment measures Technical Barriers to Trade (TBT) in industrial sectors and Sanitary and Phytosanitary (SPS) measures in agriculture: Canadian perceptions: packaging, labelling, certification (TBT) and health and safety standards (SPS); European perceptions: sanitary approval for foodstuffs, regulations on spirits (i.e. SPS), labelling and packaging requirements for products and differences in technical and safety standards (TBTs). (Guerin and Napoli, 2008) EU, new FTAs and regulatory cooperation EU’s new approach to regulatory cooperation: EU-South Korea (2011): equivalence based on international standards (UN Economic Commission for Europe); negotiated mutual recognition comprehensive only in one sector (motor vehicles and parts); deeper obligations for electronics, chemicals, pharmaceuticals; EU-Singapore (2013): “far-reaching liberalization” of services markets; commitments from Singapore to improve access to public procurement, reduce TBT in cars, electronics and renewable energy; improved protection for GIs; EU-Japan (>2013): to address Japanese regulatory barriers; EU-TTIP (>2013): sectoral negotiated mutual recognition (except for agricultural sector). CETA: What has been achieved? Chapter 6: TBT; Chapter 7: SPS; Chapter 26: Regulatory Cooperation; Chapter 27: Conformity Assessment; Chapter 29: Dialogues and Bilateral Cooperation; “Without limiting the ability of each party to carry out its regulatory, legislative and policy activities, the Parties commit themselves to further developing their regulatory cooperation in light of their mutual interest in order to: (a) prevent and eliminate unnecessary barriers to trade and investment; (b) enhance the climate for competitiveness and innovation, including through pursuing regulatory compatibility, recognition of equivalence, and convergence; and (c) promote transparent, efficient and effective regulatory processes that better support public policy objectives and fulfil the mandates of regulatory bodies, including through the promotion of information exchange and enhanced use of best practices. ” CETA: What has been achieved? Regulatory cooperation activities on a voluntary basis; “recognizing the right of each Party to determine their desired level of health, safety, environment, and consumer”; Explain why no initiation or withdrawal from cooperation; Ongoing bilateral discussions on regulatory governance; Sharing information, consult, sharing proposed regulations that might have an impact on the other party at an early stage; Regulatory Cooperation Forum: Setting for discussion, assist individual regulators, review initiatives, encourage bilateral cooperation; Outside bodies to conduct assessments on product standards: Parties have to accept decisions. CETA: What has been achieved? Cooperation in motor vehicles regulations: International standards: on a voluntary basis; Cooperation in biotechnology: Shared objectives: Exchanging information on policies, regulations and risk assessment processes; promoting science-based approval process; low level presence of GMOs; minimize adverse trade impacts of regulatory practices. Chapter 24: Trade and Labour: ILO; Chapter 25: Trade and Environment. CETA and regulatory cooperation Not achieving the high level of ambitions expressed during the negotiations; However, can TBT and SPS barriers be removed through trade agreements? Not really; CETA results in substantial progress by establishing various institutional channels through which sectorspecific NTBs can be addressed over time; Elimination of small regulatory differences, double testing, inspection procedures; Importance of Canada in the middle between the US and the EU plus TTIP negotiations.