*Mreganka Kukreja & Paavani Gupta
The Agreement on Technical Barriers to Trade (“TBT”) is a special regime in international trade law that seeks to ensure that the technical regulations, standards, and conformity assessment procedures do not create unnecessary obstacles to trade. The TBT has been the subject of immense scrutiny by the Dispute Settlement Body (“DSB”). One such ground-breaking case was the , which arose due to the complaints raised by Canada and Norway against the European Community (“EC”) regulations banning the importation and marketing of seal and seal containing products. Canada and Norway challenged the regulation under various provisions of the TBT Agreement and the General Agreement on Tariffs and Trade (“GATT”) before the DSB. The result, however, seems to create an unsettling legal position as the AB’s interpretation of the term ‘technical regulation’ has led to inconsistent results on its jurisprudence.
CASES PRIOR TO THE EC SEALS CASE
Determination of technical regulations under the TBT has always been a contentious issue. The EC Sardines Case established the ‘objective test’ for determining technical regulations, requiring the features and qualities of a product to be objectively defined. The EC Asbestos Case developed the “three-fold test” which required (a) the regulation to be applied to an identifiable product or group of products, (b) which lays down product characteristics or related processes or production methods, and (c) that the regulation must be mandatory in nature. Subsequently, the U.S. Tuna II (Mexico) case established the distinction between a technical regulation and standard.
THE EC SEALS CASE
The Panel Body Report, in this case, held that the measures adopted by the European Union (“EU”) for the protection of seals, amounted to a technical regulation as it fulfilled the triple test established in EC-Asbestos Case. This is because the regulation concerned a particular group of seal products; lay down product characteristics in the form of absence of seals in products, and this requirement was mandatory in nature. The Panel further analysed that the exceptions to the regulation allowing the sale of products having seals caught by specific communities or methods also constituted a product characteristic, making the regulation in its entirety a technical regulation.
The AB, however, took a contrary view from that of the Panel by laying down the “essential and integral” test for which it divided the regulation into two parts.: first, the regulation implemented a general ban on seal products, second, it allows for certain exemptions (seal products derived from certain hunts). It observed that banning of seal products may amount to technical regulation, but since the exceptions do not provide any product characteristics, the regulation would not amount to a technical regulation in totality. The Board viewed the exception as the most integral part of the regulation which in its view did not fulfil the conditions of technical regulation, and hence the regulation in its entirety was outside its ambit.
The factual similarity between EC- Asbestos and EC Seals
It is questionable why the AB took a divergent view from the standards laid down in the prior cases, specifically the EC Asbestos case which introduced a measure banning the sale of asbestos and asbestos-containing products barring a few explicitly stated exceptions. This is especially concerning due to the similarity of the factual situation between the two cases. Both the cases banned not only the products for which the measure was implemented but all products containing it. Further, both measures provided for allowable exceptions.
The difference, however, is that unlike the EC-Asbestos case which applied the three-tier test only to the main measure, the EC Seals case applied the test to the exceptions as well.
The flaw in the "Essential and Integral Part" Test
Despite observing that the operational part of the regulation is technical in nature, the AB rejects its conformity to the TBT as it assumes the exceptions to the regulation to be its essential feature which lacked ‘product characteristics’. It failed to observe that the exception was regarding the catching/killing of seals which would come under the purview of non-product related (“NPR”) processes and production methods (“PPMs”) as would be later argued by the authors.
The analysis of the panel report in understanding technical regulation seems to be at a better legal footing than that of the AB which has narrowed the scope of measures which would fall within the scope of technical regulation. The impact of this decision was seen on the marked reduction of import of seal containing products which formerly formed a major part of the EU seal imports due to denial of market access. Additionally, even though AB laid down certain vague guidelines for determining the scope of technical regulations in its “essential and integral approach” such as circumstances of the case and contextual guidance from other TBT provisions, they failed to establish its practical application.
SCOPE OF NPR-PPM UNDER THE TECHNICAL REGULATION
The Panel made no concrete findings on examining the scope of “their related PPMs” under a technical regulation. As a corollary, the AB presented a limited opinion on the same by merely observing that “their related PPMs” mean that the subject matter of a technical regulation may consist of a PPM that is related to product characteristics, i.e. the PPMs at issue must have a ‘sufficient nexus’ to the characteristics of a product in order to be considered related to those characteristics. The authors argue that the exception to the ban on seal products amounts to an NPR-PPM i.e. one that does not leave any physical trace in the final product and the same should have been considered by the AB to fall within the ambit of technical regulation for the following reasons:
1. Strict interpretation of Technical Regulations includes NPR-PPM
A textual reading of the definition of ‘Technical Regulation’ may indicate that both PR-PPMs and NPR-PPMs are covered by it as there is nothing to indicate that the product characteristics are related to only physical characteristics. Therefore, even some NPR-PPMs could be covered by the definition of technical regulation so long as it is related to the product characteristics.
2. NPR-PPM can be included in the Second Sentence of the Definition of Technical Regulations
The strict interpretation is often at odds with the prevailing view that the phrase “their related” in the first part of the definition of technical regulation includes only PR-PPMs., which is also supported by the negotiating history of the TBT. However, the position of the DSB provides differently. In EC – Asbestos, the AB stated that it is not relevant what kind of information the marking or labelling provides or whether it is related to PR-PPMs or NPR-PPMs, the labelling scheme as such constitutes “product characteristics”. Further, the Panel in EC- Trade Marks and Geographical Indications and the US – Tuna II confirmed this approach. Therefore, it is argued that the position on the inclusion of NPR-PPM finds support by the DSB itself.
3. Avoidance of GATT subjection to the NPR-PPM
If NPR- PPMs are not covered by the TBT, then technical regulations based on NPR-PPMs would most likely be scrutinized under the GATT provisions. However, the concerns over the protectionist or unilateralist abuse of NPR-PPMs can be better-taken care of effectively by subjecting such measures to the TBT. Hence, to prevent unnecessary obstacles to international trade, it only makes sense to read NPR-PPM under the provisions under the TBT.
As discussed above, AB’s approach in EC-Seals Products case that provided the “integral and essential’ approach for understanding ‘technical regulations’ led to arbitrary conclusions on the position of ‘technical regulation’ even though it may appear seemingly sound. Further, AB most certainly missed the opportunity to clarify once and for all, the jurisprudence concerning NPR-PPM.
After the EC-Seals Case, only one case that dealt with the definition of ‘technical regulation’, more specifically, the ‘product characteristic’ requirement under the same has come before the DSB i.e. in the Australia-Tobacco Plain Packaging case. However, it was on the lines of US-Tuna II (Mexico) case and provided that term “characteristics” is sufficiently broad to encompass requirements relating to terminology, marking or labelling of a product. It did not concern itself with the question of “integral and essential approach” or NPR-PPM. It remains to be seen if the DSB adopts a narrow or a broad approach on the ‘sufficient nexus’ approach to include NPR-PPM and takes EC-Asbestos or EC-Seals approach. For now, it is safe to say that the decision on the EC-Seals Products case is a warning to the WTO members that each definitional criterion under ‘Technical Regulation’ may be scrutinized more strictly in the future.
Mreganka Kukreja and Paavani Gupta are 4th Year, BBA LLB (Hons) students at Symbiosis Law School, Pune.