As traditional trade protection measures such as tariffs, quotas, and voluntary export restraint agreements have been liberalized, barriers to trade reflected in domestic technical regulations have become more important channels through which trade is blocked. As a consequence, there has been a rising use of technical regulations as instruments of commercial policy in bilateral, regional, and global trade contexts during the past decade. Debate over the impact of domestic regulation and standards imposed on imports has been finding increasing role in international trade discussions about how to address these issues in a trade policy context.

History demonstrates that countries use Technical regulations / mandatory standards for questionable purposes. For example, regulations may discriminate against foreign suppliers, both in their construction and in their outcomes. They may be used to gain strategic international trade advantages for domestic firms over foreign competitors. They may be non-transparent and needlessly force companies to duplicate certification costs. They may be written to exclude both domestic and foreign entrants into a particular market, serving to support national monopolies. Finally, they may be stronger than necessary to achieve a particular level of social protection, imposing excess costs on consumers and user industries.

The impact of standards and technical regulations on trade is particularly true in relation to challenges confronting developing nations as they seek to increase production for export markets. Developing countries have to bear additional costs in meeting mandatory standards, testing, certification, and labeling requirements.

The WTO Agreement on Technical Barriers to Trade (TBT)

The Agreement on Technical Barriers to Trade (TBT) - sometimes referred to as the Standards Code - is one of the legal texts of the WTO Agreement which obliges WTO Members to ensure that technical regulations, voluntary standards and conformity assessment procedures do not create unnecessary obstacles to trade. Annex 3 of the TBT Agreement is the Code of Good Practice for the Preparation, Adoption and Application of Standards which is known as the WTO Code of Good Practice.

The WTO Agreement on the Application of Sanitary and Phytosanitary measures (SPS)

The Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) sets out the basic rules for food safety and animal and plant health standards. It allows countries to set their own standards. But it also says regulations must be based on science. They should be applied only to the extent necessary to protect human, animal or plant life or health. And they should not arbitrarily or unjustifiably discriminate between countries where identical or similar conditions prevail.

The WTO agreements require that regulations should reference, where available, international standards and that regulations in areas of risk to health and safety should be assessed on available scientific evidence.

As per the WTO - TBT Code of Good practice for the preparation, adoption and application of standards, a standardizing body shall accord treatment to products originating in the territory of any other Member of the WTO no less favourable than that accorded to similar products of national origin. Further the standardizing body shall ensure that standards are not prepared, adopted or applied with a view to, or with the effect of, creating unnecessary obstacles to international trade.

The Code of Good practice also requires that, before adopting a standard, the standardizing body must allow a period of at least 60 days for the submission of comments on the draft standard by interested parties within the territory of a Member of the WTO.

By mid 2007, 166 standardizing bodies from 122 countries had notified acceptance of the WTO TBT code of good practice.

While both the TBT and SPS Agreements have been constructed to enable free and fair trade regimes and provide the mechanisms for participation of member countries in the laying down of both mandatory and voluntary standards, they also tend to provide legitimacy when countries tend to use their provisions as protectionist measures. For example the extent of ‘scientific’ justification or the risk assessment to human health and safety could always be aligned with the state of the art of the technology, which is difficult to challenge. National security concerns could be extended to a larger category of products. Verifying the conformity of product may be prescribed through specific procedures. The latter task is called ‘conformity assessment’, and it presents the largest potential technical barrier to trade. For example Governments in importing countries may refuse to recognize tests performed by exporting firms or their public authorities and may not accept conformity declarations. They may insist on performing their own inspections of exporter premises and inspecting imported shipments.

Difficulties encountered by developing countries

Of late, developing countries have also tended to formulate domestic regulatory policies affecting imports as protectionist barriers shielding inefficient domestic producers from competition. However they are unable to justify the risk or scientific basis when challenged by a major importer and these issues often convert into bilateral or WTO disputes.

Developing countries account for 20 percent of world total exports in goods, with manufacturing goods totalling approximately 70 percent of their overall exports. As recent studies indicate, the costs to developing nations of implementing requirements of agricultural standards under the SPS Agreement in order to comply with obligations and exercise their rights are extremely high. Costs may be distinguished between meeting the precise technical regulations and in verifying that the specified standards are met. Besides capacity and infrastructure building, technology-intensive testing and certification systems are often needed to assure that products meet required standards, especially in areas of health and safety that add significantly to the cost of exports.

Lacking the conformity assessment infrastructure poses clear problems for developing countries in meeting import requirements in conformity assessment and in defending their practices in WTO cases. Developing countries lag behind developed countries in their capacities for effective certification, testing and accreditation facilities. This adversely impacts their ability to develop adequate conformity assessment standards and reach mutual recognition agreements (MRAs) with other nations which rely primarily on equivalence in testing and certification arrangements.

The World Bank commissioned a study in 5 African countries in 2004 Titled 'Standards and Global Trade: A Voice for Africa'. This report examined "behind the border" barriers to trade in Africa, investigating the links between standards, regulations, and export success through case studies in five countries including South Africa. The work reviewed laws, regulations, institutional capacities, and programs relating to developing, implementing, and enforcing standards. Some key findings of the study were :

• African exporters face myriad problems relating to standards, including a lack of timely and accurate information, a need to simultaneously meet multiple standards and regulations, costly and difficult testing and verification procedures, and rapidly changing requirements in overseas markets.
• Sanitary and phytosanitary (Food safety) standards and environmental requirements (in export markets) can be ‘moving’ targets, often becoming more stringent once producers achieve compliance. Moreover, awareness of food safety and sanitary and phytosanitary standards is generally low, and the mechanisms for consultations between national authorities in this area and other stakeholders appear to be inadequate.
• In many African countries essential facilities such as testing laboratories are inadequately staffed and scientific equipment is outdated. Moreover, data are not systematically collected or stored, and local certification agencies lack an international reputation.
  
  Failure to raise standards to international levels will have enormous costs in loss of exports

These findings are universally applicable to developing economies. Unfortunately in most cases the respective governments are not fully informed on what steps are required to overcome the handicaps and how to approach them. Organizations like UNIDO, UNDP have launched both information sharing as well as capacity building programmes in LDCs and other developing countries, but these often encounter bureaucratic rules and apathy on the part of local authorities, who have little or no understanding of these issues.

Increased calls for harmonization of standards and negotiation of Mutual Recognition Agreements (MRAs) covering product testing and certification systems. In both these areas developing countries have a special stake, as they have had little involvement in the development of international standards and lack much of the infrastructure necessary to support the modern testing procedures that mutual recognition of testing results requires.

This sets up the agenda for developing countries in relation to Standards and Technical Regulations in the context of WTO / SPS Agreements as follows:

• Setting up a dedicated and proactive division with necessary technical expertise, for addressing the TBT and SPS related issues, which includes but certainly not limited to 'Enquiry Points'.
• Developing a deep understanding of the manner in which international standards and conformity assessment systems are being used by major economic blocs as well as by other developing countries to their trade advantage.
• Developing insight into their own capabilities so as to be able to translate them into TBT / SPS compliant instruments of trade protection. This would involve sharing of information and strong coordination among standardizers, regulators and conformity assessment bodies such as testing laboratories, inspection and product certification bodies, trade bodies and accreditation agencies so as to be able to act as well as to react in real time.
• The creation of a common national perspective on Standards and technical regulations overcoming jurisdiction hurdles among enforcement agencies. This could be done by the setting up of an umbrella organization with adequate authority to coordinate the role of individual agencies. This may also involve simplification or realignment of laws.
• Organizing funds to overcome capability and infrastructure shortcomings as well as to enable participation in international standardization and conformity assessment forums. This may include assistance by international agencies.
• Harmonizing standards with trade partners and international standards with clear linkage on their trade potential.
• The setting up of strong multi-agency expert teams for negotiations on Standards and Conformity Assessment in bilateral and multilateral trade negotiations such as MRAs / FTAs.

Recent developments in India

In the past few years, India has taken several steps to consolidate its understanding on these vital issues. Beginning with the CECA signed between Governments of India and Singapore, FTA negotiations regularly provide for MRAs on Standards and Certification procedures with special teams set up for negotiations. For creating a dynamic information system, CII and BIS have collaborated with the American National Standards Institute for developing a comprehensive Web portal that would incorporate all the required information on Standards, technical regulations and related involved agencies together with their procedures for facilitating international trade. Under the collaboration, the American side would provide similar information on the web portal. BIS and CII have also collaborated to disseminate information regarding WTO notifications published by member countries among industries.

The Planning Commission of India, recognizing the importance of quality, standardization and conformity assessment to India's economic growth, constituted a Working Group on Quality, Certification and Conformity Assessment for the 11^th Plan for the first time. Planning Commission also included the subject of Quality Infrastructure in the Terms of another Working Group for Consumer Policy. Some of the significant recommendations of the two Working groups in this context are:

• The creation of a national regulatory authority for standardization and conformity Assessment in India. This would ensure that the quality infrastructure in the country, especially in the government sector, is upgraded to international levels.
• Establishment of a National System for Standardization to evolve uniform national standards through BIS, the national standards body. This would include the adoption of standards and regulations prepared by regulatory and other Standards developing bodies as national standards by BIS.
• Upgradation of WTO-TBT Enquiring
• Funding participation of identified technical experts in international standardization for a like ISO/IEC/ITU/Codex on a continuing basis
• Funding creation of standards cells in industry bodies and professional/technical organizations to support national/international standardization by eliciting comments
• Accreditation of all conformity assessment bodies used for regulation and other purposes by the government within 3 years
• Clear demarcation of roles of regulatory bodies, conformity assessment bodies and accreditation bodies to remove overlaps and crate synergy.
• In sectors critical to health and safety like food or drugs, funding the infrastructure upgradation costs for the SSI and below to attain national/international standards/regulations like GMP/GHP/HACCP
• Enunciation of a national conformity assessment policy, good regulatory practices, policy on negotiating mutual recognition agreements (MRAs) with India's trading partners
• Opening up of BIS standards for certification by different accredited certification agencies;
Upgrading third party laboratory testing facilities to international level; etc.

It is evident from these recommendations that the solutions would need high level government policy level changes, paradigm shifts and large scale coordination and pooling of resources. The biggest challenge may however lie in the several agencies shedding their traditional roles and working together for a common national strategy, and to speak a common language, something which is so strongly visible in the approach of the developed countries.