Rome, 1 July 1974
1. Mr. Chairman,
In response to your invitation to address this Tenth Session of the Commission on the subject of the Proposed GATT Code of Conduct for Preventing Technical Barriers to Trade it is proposed in what follows to briefly outline:
Background
2. Immediately after the Kennedy Round of trade negotiations had been brought to a successful conclusion in the GATT, a start was made on the preparations for further major negotiations - the negotiations launched at Tokyo by more than 100 governments in September last year.
3. As part of these preparations the GATT established a detailed inventory of nontariff barriers to trade classified under some thirty different headings, one of which relates to problems connected with product standards. A Group was charged with the elaboration, on an ad referendum basis, of concrete solutions to the problems within the area of product standards and quality assurance systems. In June 1973 the Group reported on the results of its work together with a draft text of the Code itself.
4. Again as part of these preparations the GATT Agriculture Committee established a Working Group to deal with health and sanitary regulations, marketing standards, packaging and labelling regulations and a number of other measures which can adversely and unnecessarily affect international trade in agricultural products. This work has proceeded on the basis that it would be open to review the applicability to the agricultural sector of any general solutions evolved in other GATT bodies, such for example as the proposed standards code.
The Scheme of the proposed standards code
5. Before proceeding on this point I would like to emphasize and to make it quite clear that the work of these GATT bodies has been conducted by member countries on an exploratory basis and governments are not committed to the adoption of any particular solution.
6. Clearly negotiations relating to standards must be of a different character from traditional GATT negotiations directed towards the reduction or elimination of tariffs. Governments introduce technical regulations for a variety of purposes, including the protection of health or safety of their population or environment. Nothing in the Code alters this. The aim of negotiations cannot be the abolition of these regulations. The aim of the Code is to simplify and amplify the existing GATT rules on these matters by laying down that, when pursuing these aims, governments should not create unjustifiable obstacles to international trade.
7. While the text of the proposed Code is quite complex and some important points have still not been finalized, the following gives an indication of some of the problems with which it deals and the types of solution envisaged.
8. It is possible for standards to protect domestic industry. This can happen if a particular standard can easily be met by domestic producers but not by foreign producers. The proposed Code would lay an obligation on governments to ensure that their mandatory standards do not create an unjustifiable obstacle to world trade.
9. A second problem is that if standards vary from country to country exporters will have to adopt production to meet the differing requirements of each of their export markets and will be placed at a cost disadvantage compared with domestic producers in these markets.
10. The GATT has taken the view that it should not itself get into the standardswriting process, recognizing that other organizations have the technical competence and experience in this field. It does not intend, therefore, to tackle the problem by drawing up harmonized standards for each of the products concerned. The GATT code would contribute to the harmonization of standards by laying an obligation on signatories to play a full part in the work of appropriate international standards-writing bodies and to adopt international standards as a basis for their own mandatory standards except in cases where these are inappropriate for them. The intention is therefore to make a contribution towards the strengthening of existing standards-writing bodies, such as the Codex Alimentarius Commission.
11. In cases where international standards are considered inappropriate, governments would have an obligation to provide particulars of mandatory standards while they are in the drafting stage and to take account of comments which they receive from other adherents.
12. Barriers to trade may be caused, not only by the mandatory standards themselves, but also by the systems by which governments ensure that products conform with mandatory standards - referred to in the draft code as quality assurance systems. These may for instance provide that tests must be carried out in the importing country, thus causing considerable added expense and difficulty for exporters. In some extreme cases requirements that tests must be carried out at any time during the manufacturing process mean that imports are in practice prohibited.
13. The draft provides that, wherever possible, importing countries should not insist that tests be carried out within their territories and, where this is not possible, lays down a series of provisions which are designed to ensure that their testing requirements do not discriminate against imported products.
14. Some other points with which the proposed code deals are:
Recent development
15. The applicability of the proposed Code to standards relating to products coming within Chapters 1 to 24 of the BTN has not yet been dealt with but is one of the subjects for consideration in the context of the programme of work for the Multilateral Trade Negotiations.
16. In preparation for its discussion of this and other related topics, Group 3(e) of Trade Negotiations Committee on Agriculture requested the GATT secretariat at its last meeting in February 1974 to get in touch with competent persons in bodies specialized in the field in order to discuss the work that could usefully be done if and when a sub-group of experts were established by the Group. Discussions to this end have been initiated with FAO and are continuing, on the basis that we would first wish to have the views of FAO before consulting other specialized bodies on this matter.
17. Group 3(e) will hold its next meeting on 8 July 1974 and this will be followed on 17 July by a meeting of the Trade Negotiations Committee, the body established by the Tokyo Ministerial Declaration to supervise the progress of the negotiations.
