International markets are important for many United States agricultural products. Trade agreements with various countries provide new market opportunities for United States producers. However, international trade can be a confusing and challenging area of the law to understand. The laws surrounding the export and import of agricultural products often change because of new and existing trade agreements that the United States has with other countries.
This article is the second in a series that the National Agricultural Law Center will publish discussing different areas of international trade. While the first article of this series examined tariffs and how they impact international trade, this article will focus on non-tariff barriers to international trade and some of the international trade rules that affect them. A non-tariff barrier is any measure other than a tariff that acts as a barrier to international trade. Non-tariff barriers can include regulations, rules of origin, and embargoes. While countries have the power to implement their own non-tariff barriers to trade, if they are a member of the World Trade Organization (“WTO”), like the United States, they must take the various WTO agreements into consideration before acting. This article focuses on the various WTO agreements that directly affect a countries ability to impose non-tariff barriers to trade.
The WTO plays a large role in the use of non-tariff barriers because of various trade agreements that affect member countries. The WTO is an international organization that deals with the rule of trade between its 164 members which makes up about 98% of trade worldwide. The WTO was created through a serious of negotiations with countries around the world in order to help ensure global fair trade. The WTO sets rules for the trade of goods, services, and intellectual property. It also has procedures in place to resolve trade conflicts for all its member countries. These decisions and agreements are made by the WTO membership as a whole, and agreements are adopted by all members’ governments. A large majority of the world’s trading is governed by WTO trade agreements. The United States has been a WTO member since 1995.
Multinational trade agreements, like those administered by the WTO, allow governments across the world to adopt regulations that relate to the protection of human health and safety, food safety, and animal and plant life and health. The various WTO agreements bind all countries who are members of the WTO. The agreements that are in place control and limit the types and amount of non-tariff barriers that member countries can have in place.
Sanitary and Phytosanitary Agreement
In 1995, the WTO established the Sanitary and Phytosanitary Agreement (“SPS Agreement”). The SPS agreement sets out the basic rules for ensuring that each country’s food safety and animal and plant health laws and regulations are scientifically supported, fair in their application, and transparent. The SPS Agreement, and any subsequent SPS measures taken by member countries, are all considered non-tariff barriers to trade because they affect the flow to international trade. SPS measures are laws, regulations, standards, and procedures that governments use to protect human, animal, and plant health from various risks. These risks can be come from pests, diseases, disease-carrying and causing organisms, or contaminants found in food items. The introduction of these risks can cause devastation to a country’s plant, animal, and human health. For example, the Australian light brown apple moth and the Mediterranean diamondback moth have both caused extensive damage to a wide range of fruit and vegetable crops in the United States since being introduced to the country. Among other things, the SPS helps to prevent invasive insects like the moths from being introduced to foreign countries.
Countries who are members of the WTO must follow the rules of the SPS Agreement, and any adoption of non-tariff measures meant to protect a member country from diseases or unwanted pests must be in line with those rules. According to the SPS, such non-tariff measures must be based on scientific evidence, all available information, and a risk assessment. The countries that implement these additional trade barriers under the SPS Agreement must publish all SPS requirements and provide explanations for the reasoning behind establishing the measures. Countries have the right to determine their own levels of protection, as long as those levels are technically justified and applied consistently to all trade partners. Countries must also notify the WTO of all new measures or regulations that might affect trade. While member countries can implement a wide variety of SPS measures under the SPS Agreement, each new measure provides another non-tariff barrier to international trade.
- preventive requirements related to plant and animal pests and diseases and disease-carrying and causing organisms in foods, beverages, or feedstuffs
- consumer and food safety requirements, including those related to microbiological and chemical contaminants
- maximum residue limits (MRLs) for crop pesticide residues and veterinary drug residues in meat products
- requirements related to the use of food additives or other product and processing specifications
- requirements regarding agricultural biotechnology
- post-harvest treatments and quarantine requirements
- sanitation treatments (e.g., irradiation, pathogen rinses)
- restrictions on products originating from specific producing areas or the use of certain production inputs
- overlapping technical requirements (e.g., product and labeling standards, use of third-party auditors)
In the United States, various agencies are responsible for establishing and enforcing SPS measures. The United States Department of Agriculture’s (“USDA”) Animal and Plant Health and Inspection Service (“APHIS”) is in charge of establishing and enforcing the United States’ SPS measures on fruit, vegetables, and other agricultural products being imported into the United States to prevent any diseases or harmful organisms from being introduced. The United States Food & Drug Administration (“FDA”) works with foreign governments to harmonize and accept the SPS measures of other WTO member countries. This is done by ensuring that the food safety regulatory systems of WTO member countries are sufficient and similar to that of the FDA in order to best protect the public health.
Technical Barriers to Trade
The Agreement on Technical Barriers to Trade (“TBT Agreement”) was established in 1995. The WTO administers the TBT Agreement, and the TBT Agreement binds all WTO members. The TBTs purpose is to ensure that technical regulations, standards, and other procedures do not create unnecessary obstacles to trade. The agreement does not allow countries to implement technical requirements which purposes are to limit trade, as opposed to technical requirements created for legitimate purposes such as environmental protection. The TBT Agreement also requires that the member countries notify each other of proposed TBTs and give other countries to bring their concerns before the measures are implemented. Similar to the SPS Agreement, every TBT measure adopted by member countries imposes another non-tariff barrier to international trade.
Examples of TBT Measures
Import quotas and administrative procedures are considered TBT measures. An import quota is a restriction placed on the amount of a particular good that can be imported. For example, a country may place a quota on the volume of imported citrus fruit that is allowed. Any quotas that the United States has in place can be found in the Harmonized Tariff Schedule of the United States. Export restrictions and product bans are also TBT measures. The General Agreement on Tariffs and Trade (“GATT”) generally prohibits these types of measures; however, countries can adopt them temporarily to protect against shortages.
Packaging standards and labeling requirements are other forms of TBT measures. One common example is country of origin requirements. In the United States, the Country of Origin Marking regulations require that every foreign item being imported be marked with the item’s country of origin. The WTO has the Rules of Origin Agreement, which is similar to the country of origin requirements because it requires member countries to identify one country of origin for each product. Other examples of TBT measures include:
- consumer and food safety/quality requirements (e.g., sampling, testing, risk assessment, nutritional content)
- certification schemes (e.g., sustainability/organic and animal welfare rules, and other marketing claims)
- technical requirements (e.g., shipping/financial documentation, standards of identity, measurement)
Overall, non-tariff barriers have the potential to be more restrictive for international trade than actual tariffs. Once countries started entering into multinational agreements, the agreements and negotiations dramatically reduced tariffs. For example, in 1934, the average tariff rate for both agriculture and non-agricultural products in the United States was 18.4%. In 2019, it was 2.4%. The WTO agreements discussed above play a large role in limiting the types of non-tariff barriers to trade. With the exception of a few products where tariffs remain high, non-tariff barriers are the current concern for international trade today.
To view the first article in this series on tariffs, click here.
For more National Agricultural Law Center resources on International Agricultural Trade, click here.
For more National Agricultural Law Center resources on Country of Origin Labeling, click here.
To view the WTO Sanitary and Phytosanitary Agreement, click here.
To view the WTO Agreement on Technical Barriers to Trade, click here.