Technical Barriers to Trade (TBT) Agreement

Technical Barriers to Trade (TBT) Agreement

Subject :Economy

Context: 

In the past few years, the tariff reductions have led to the rise in technical barriers to trade (TBTs) and preference trading agreements.

Preferential trade agreements:

• In this type of agreement, two or more partners give preferential right of entry to certain products by reducing duties on an agreed number of tariff lines.
• Besides conferring tariff advantages,countries also establish trading preferences through labour, environmental and technical standards. 
• Many such standards could translate into new Technical Barriers to Trade or non-tariff measures.
• Example-Indo-Pacific Economic Framework for Prosperity
  • It was initiated by the US in May 2022, with 13 other countries, including Japan and India.
    • Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, United States, and Vietnam.
    • In September 2022, India opted out of signing the declaration on IPEF’s trade pillar.
  • The IPEF is not a Free Trade Agreement (FTA) but allows members to negotiate the parts they want to. The negotiations will be along four main “pillars”.
    • Supply-chain resilience.
    • Clean energy, decarbonisation & infrastructure
    • Taxation & anti-corruption
    • Fair & resilient trade.
  • The trade pillar seeks to connect free and fair trade with technology policy, inclusive growth, and the interests of workers as well as consumers.

The Technical Barriers to Trade (TBT) Agreement 

• It aims to ensure that technical regulations, standards, and conformity assessment procedures are non-discriminatory and do not create unnecessary obstacles to trade. 
• It recognises WTO members’ right to implement measures to achieve legitimate policy objectives, such as the protection of human health and safety, or protection of the environment.
• The TBT Agreement strongly encourages members to base their measures on international standards as a means to facilitate trade.
• TBT (Technical Barriers to Trade) Agreement covers all technical regulations, voluntary standards and the procedures to ensure that these are met, except when these are sanitary or phytosanitary measures as defined by the SPS Agreement.
  • SPS Agreement the only justification for not using such standards for food safety and animal/plant health protection are scientific arguments resulting from an assessment of the potential health risks.
    • Regulations which address microbiological contamination of food, or set allowable levels of pesticide or veterinary drug residues, or identify permitted food additives, fall under the SPS Agreement.
    • Some packaging and labelling requirements, if directly related to the safety of the food, are also subject to the SPS Agreement.
  • In contrast, under the TBT Agreement governments may decide that international standards are not appropriate for other reasons, including fundamental technological problems or geographical factors. TBT measures could cover any subject, from car safety to energy-saving devices, to the shape of food cartons.
  • TBT measures could include pharmaceutical restrictions, or the labelling of cigarettes.
  • Most measures related to human disease control are under the TBT Agreement, except for the diseases which are carried by plants or animals .
  • In terms of food, labelling requirements, nutrition claims and concerns, quality and packaging regulations are generally not considered to be sanitary or phytosanitary measures and hence are normally subject to the TBT Agreement.

SPS vs TBT

The sanitary and phytosanitary measures may be imposed only to the extent necessary to protect human, animal or plant health, on the basis of scientific information. Governments may, however, introduce TBT regulations when necessary to meet a number of objectives, such as national security or the prevention of deceptive practices.