Complexities of SPS under WTO: An Outlook
• Non-tariff measures represent a key issue in the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement), specifically in Article 7 and Annex B (WTO Committee on Sanitary and Phytosanitary Measures. 2018)
• SPS measures raise time and costs associated with trade; they also obstruct the development of efficient and safe supply chains, and have a negative impact in business participation, especially affecting micro, small and medium enterprises (MSMEs) in regional and global value chains.
• It is necessary to point out that the main stakeholders who are interested in accessing better SPS notifications, are the ones involved in trading with the country that is imposing that measure.
• In a world that is currently facing outbreaks of protectionism across borders, transparency is a must to address these trends.
The WTO agreements covers a wide range of issues related to trade, such as agriculture, textiles, services, food sanitation regulations and others; however, there are a number of simple and key principles that are included in the majority of agreements. Those principles are related to making the trade competitive, non-discriminatory and transparent (World Trade Organization [WTO], 2018). In this regard, one way for the multilateral system to improve predictability and stability is through transparency provisions. With those binding commitments, WTO members are expected to manage trade rules as clear and public as possible (WTO, 2018).
Given the importance that the WTO has been giving to transparency provisions, non-tariff measures represented a key issue in the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement), specifically in its Article 7 and Annex B (WTO Committee on Sanitary and Phytosanitary Measures. 2018). This agreement entered into force after the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1998. Since then, transparency has been an important issue in the multilateral trading system in terms of allowing any person to be aware if a trade measure has been implemented in any country.
Considering the huge quantum of SPS measures presented by WTO member economies, the process of notifying the implemented measures hasn’t been managed in the most efficient way. Given this situation, one can conclude that quantity does not always represent quality. One of the many possible reasons for this to happen, is that there are still many – both political and economic interests – in not using the SPS notifications in a proper manner. This lack of will to notify the measures implemented correctly might fall under the classification of a Non-Trade Barriers (NTBs), which are still prominent across the world and increasing at an alarming rate.
NTBs create dissatisfaction in businesses, given that they raise the time and costs associated with trade. They also obstruct the development of efficient & safe supply chains, and have a negative impact in businesses’ participation, especially affecting micro, small and medium enterprises (MSMEs) in regional and global value chains. As of today, it is not possible to quantify the real cost of NTBs with certainty, given that in most cases they are unclear and unpredictable.
Ambiguity, inconsistency, and discriminatory behaviour in both, information and enforcement of SPS regulations are common problems highlighted by stakeholders from the business community. According to APEC Business Advisory Council (ABAC), 80% of business respondents consider regulations to be difficult, complex and opaque to understand and implement. From this, we can infer that for businesses, SPS notifications and measures could be labelled as NTBs, which implies that the outcome of SPS Agreements is the very opposite of its main objective.
It is necessary to point out that the main stakeholders that are interested in accessing better SPS notifications, are the ones that are involved in trading with the country, which is imposing the measure. Also, by comparing the quality and completeness of the notifications between India and its main trade partners, it would be possible to determine if the items in which India shows a lack of quality and completeness, are also reflected in the notifications of other countries.
Also, it might be necessary to include the perspective of the private sector, given that they are one of the main users, together with government officials, of the SPS notifications. It is essential to determine their main difficulties and/or challenges in order to propose possible solutions. It might also be necessary to identify other sources that the private sector uses to obtain the information that might be unclear in the SPS notification.
In a world that is currently facing some outbreaks of protectionism, transparency is a must. In that sense, the correct use and implementation of the SPS Agreement and SPS notifications would allow countries to facilitate trade for stakeholders. At the end, trade facilitation will not only benefit exporters or importers; it would also benefit the society at large.