Enhanced Regulatory Cooperation Under the Auspices of the WTO: The Reintroduction of Conditionality?

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Enhanced Regulatory Cooperation Under the Auspices of the

WTO:

The Reintroduction of Conditionality?

LLM Thesis

In partial fulfilment of the requirements for the Degree of LLM

International and European Law:

International Trade and Investment Law

Submitted by Nino Chikhradze

ninichikhradze@gmail.com

12677884

Supervised by Dr Geraldo Vidigal

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i.

List of Abbreviations

AB Appellate Body

ALOP Appropriate Level of Protection CAP Conformity Assessment Procedure

CETA Comprehensive and Economic Trade Agreement DCFTA Deep and Comprehensive Free Trade Agreement DSB Dispute Settlement Body

DSU Dispute Settlement Understanding EU European Union

GATT General Agreement on Tariffs and Trade MFN Most-Favoured-Nation

NAFTA North American Free Trade Agreement MRA Mutual Recognition Agreement PTA Preferential Trade Agreement RTA Regional Trade Agreement SPS Sanitary and Phytosanitary TBT Technical Barriers to Trade TR Technical Regulation WTO World Trade Organization

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ii. Abstract

While equivalence arrangements can alleviate the burden of non-tariff barriers through the reconciliation of regulatory disparities across countries, they clearly leave space for discrimination.

The thesis aims to explore the interplay between norms on regulatory cooperation in the field of SPS and TBT measures and the MFN principle – the premise of the contemporary multilateral trading regime. In essence, it seeks to answer whether WTO-law allows for selective trade

liberalization with respect to TRs and SPS measures in derogation of the Most-Favoured-Nation (MFN) principle.

The focus of Part I is on the degree of conditionality introduced through the norms concerning equivalence and mutual recognition in the SPS and TBT Agreement.

Part II argues that in the absence of explicit derogation from the MFN clause, WTO Members are allowed to condition the conclusion of equivalence agreements/MRAs on SPS measures only on the proper fulfillment of their ALOP. It seeks to establish that historic trade and mutual trust alone prevailing between subsets of WTO Members cannot justify any WTO-inconsistent features to equivalence agreements.

By the same token, Part II suggests that MRAs on SPS measures, TRs, and CAPs can justify only a limited degree of conditionality without incurring the MFN obligation.

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Introduction

Tariffs are far from the only instrument limiting trading prospects of countries. In fact, the international trade community’s recent endeavors have been focused mainly on restrictive regulations of commerce in the form of inter alia, Sanitary and Phytosanitary (SPS) standards,

technical regulations (TRs), and Conformity Assessment Procedures (CAPs) that effectively

influence trade flows across borders.

International regulatory cooperation tools, such as harmonization, equivalence recognition, and

Mutual Recognition Agreements (MRAs), have been widely applied to ease the burden of

non-tariff barriers. As for harmonization, the preamble of the SPS Agreement recognizes that one of the main objectives of the agreement is ‘to further the use of harmonized SPS measures between

Members, on the basis of international standards, guidelines, and recommendations developed by the relevant international organizations.’ This objective finds reflection in SPS Article 3 as well,

which requires Members to harmonize measures on the basis of international standards, but still affirms their right with respect to the protection of the life and health of people. Likewise, World Trade Organization (WTO) Members shall use international standards as a basis for their TRs and CAPs, unless these standards prove as ‘ineffective or inappropriate means for the fulfillment of the

legitimate objectives pursued.’1

It would be naïve, though, to think of harmonization as an ultimate or self-sufficient tool capable of ironing out irreconcilable regulatory differences prevailing across countries that eventually lead to trade restrictions. Therefore, the international trade regime actively promotes

equivalence recognition and MRAs. They are set out in Article 4 of the SPS Agreement and

Articles 2.7, 6.1, and 6.3 of the Technical Barriers to Trade (TBT) Agreement.

Equivalence provisions allow WTO Members to distinguish between products originating in different countries; furthermore, countries are required to accept measures of only certain countries as equivalent and, on this basis, accord preferential market access conditions to their goods. Furthermore, it has been even maintained that, with respect to TBT measures,

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recognition can prove subjective to the core: an importing WTO Member is allowed to deny market access to goods of particular origin produced in accordance with TRs, if it considers that those regulations fail to meet its objectives, even if it permits the sale of goods from other countries produced following TRs, which, in its opinion, satisfy its objectives.2

Norms on MRAs are somewhat less demanding: countries are encouraged rather than required to enter into mutual recognition arrangements. In case they do, they will inevitably accord preferential trade terms to goods of some countries to the exclusion of goods of other countries. As a consequence, questions arise in relation to possible overlaps and conflict with respective MFN clause, margin of state discretion to grant equivalence, and standard of review of a panel in relation to the legality of a particular mutual recognition arrangement.

These issues prove complex and controversial, yet manifest and current in the context of regional trade arrangements that, inter alia, provide for the reduction of technical or sanitary and phytosanitary barriers to trade or seek to pre-empt new TBTs/SPS measures from arising through a set of various tools, including MRAs between constituent Members. First and foremost, do intra-regional MRAs incur MFN obligation to third countries?

The thesis examines whether WTO-law allows for selective trade liberalization with respect to

TRs and SPS measures in derogation of the Most-Favoured-Nation (MFN) principle.

The thesis seeks to reconcile WTO norms on MRAs with the overarching non-discrimination principle underlying the multilateral trade regime. In essence, it is suggested that in the absence of explicit derogation from the MFN principle, any interpretation of norms that goes at odds with the MFN clause in the respective treaty is misleading. Moreover, it is argued that the very rationale for the inclusion of norms on equivalence recognition and MRAs is to encourage further elimination of avoidable barriers to trade on a non-discriminatory basis.

The thesis strives to establish that WTO Members are conferred with sufficient, albeit constrained, flexibility to condition conclusion of equivalence agreements/MRAs on pre-defined justifiable criteria so as to ensure the fulfillment of the appropriate level of protection (ALOP). A fine line is drawn between equivalence agreements that adhere to WTO disciplines on equivalence and

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agreements that fail to comply with respective provisions. The central hypothesis is that MRAs grounded upon mutual trust and confidence, rather than equivalence determination between measures, may incur MFN obligation vis-à-vis third countries.

The thesis proceeds as follows: Part I clarifies the interplay between preferential arrangements and the MFN principle in general. It explores the concept of conditionality as introduced through the incorporation of norms concerning equivalence and mutual recognition.

Part II, in sections A and B, explores the rights and obligations contained in Article 4 of the SPS Agreement. To distinguish between SPS-consistent and SPS-inconsistent regulatory cooperation, it examines how SPS Article 4.1 and 4.2 operate, interrelate and relate to the MFN clause enshrined in Article 2.3 of the Agreement.

Part II, in section C, seeks to find whether arrangements that accord exclusive preferential terms to regional trade partners always incur MFN obligation vis-a-vis third countries. To answer this question, the scrutiny is placed on the availability of a defense under GATT Article XXIV or XX.

Part III places the focus on TRs and CAPs. Here, the question of GATT-consistency is addressed in depth.

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Part I. Selective Trade Liberalization and Conditionality between the

WTO Members

1. General Considerations

MRAs accord preferential treatment to some but not all WTO Members. Generally, arrangements that restrict favourable treatment to participating countries prima facie violate the MFN principle provided for in the GATT 1994. This is because, contrary to Article I:1, MRAs condition the extension of preferential terms upon membership/participation requirements. If challenged, parties to an agreement shall demonstrate that ends sought through an explicit MFN violation is defensible under one of the subparagraphs of Article XX of the GATT 1994, and chapeau requirements are further respected. This will inevitably touch upon the question of whether the same conditions prevail in a country that complains. Since main efforts to liberalize trade are usually undertaken in the context of regional trade agreements (RTAs), WTO Members might also attempt to invoke Article XXIV in their defense.

This is not to say that every MRA violates the MFN principle. In fact, it would be wrong to assume that countries are outrightly hindered from granting preferential market access conditions on a selective basis.

With respect to SPS and TBT measures, WTO law implicitly allows for conditionality in trade preferences. This is discernible from the fact that equivalence recognition is due with respect some countries that are in a position to satisfy predefined criteria set out in SPS Article 4.1, TBT Articles 2.7 and 6.1 and no such obligation arises vis-à-vis other WTO countries unless they also fulfil those criteria. Ergo, preferential treatment is to be accorded to products originating from countries that enjoy equivalence recognition and there is no obligation to extend such preferential treatment

unconditionally.

By the same token, MRAs on SPS measures, TRs, and CAPs can justify a limited degree of

conditionality without incurring the MFN obligation. This is to happen when mutual recognition is afforded to measures that had already been objectively determined (rather than presumed) as equivalent. In the same vein, in case mutual recognition arrangement sustains measures that

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cannot secure the same level of protection - third Members can claim for the extension of the MFN treatment through many ways that will be addressed in the following sections.

2. What is the Threshold to Assert Equivalency of Measures?

Equivalency and mutual recognition emerge together to reconcile subsisting regulatory

inconsistencies across countries. In practice, though, they often end up going their separate ways. To establish equivalence, a threshold is firmly set for all: SPS measures, TRs, and CAPs. This threshold must be objectively met or exceeded; In particular, SPS measures must at least achieve

the importing Member's appropriate level of sanitary or phytosanitary protection; TRs must adequately fulfil the objectives of importing Member’s regulations; whereas, CAPs must offer an assurance of conformity with applicable TRs or standards equivalent to importing Member’s own procedures.3

Nevertheless, countries that are willing to enter into mutual recognition arrangements do not necessarily adhere to equivalence rules; A practical task to achieve acceptance for regulatory diversity turns into cooperation and the angle of perspective bends accordingly. In particular, to ensure the conclusion of an MRA, equivalence assessment deviates from an objective judgment of equivalence: the amount of scrutiny might be decreased; minor conflicts might be overlooked. On plain reading of the provisions one might rush to assume that while SPS measures shall meet an objective threshold to qualify as equivalent, TRs/CAPs need not pass an objective test: should an importing Member believe so, equivalence can be established. But the analysis below will prove the opposite.

Diversity of tools for regulatory cooperation and greater latitude for their application might be rooted in the inherent superiority of health protection concerns over quality considerations ensured by SPS measures.4_{As suggested by nilf Veggeland and Christel Elvestad, there is not much at}

3_{for the latter two, though, when the threshold is met is clearly not an objective test.}

4_{Frode Veggeland and Christel Elvestad, ‘Equivalence and Mutual Recognition in Trade Arrangements: Relevance}

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stake to relax measures and negotiate equivalence for TBT measures.5 More plausible arguments, though, ascribe the difference to the need for more pragmatic approach due to the open-ended nature of the TBT Agreement with regard to what constitutes a legitimate policy objective.6

5_Ibid. 6_Ibid.

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Part II: International Regulatory Cooperation under the SPS

Agreement

A: General

1. Rationale for the incorporation of Article 4 in the SPS Agreement

As stated, one of the rationales for the inclusion of norms on equivalence recognition and MRAs is to encourage further elimination of avoidable barriers to trade. In contrast with harmonization, these tools might successfully overcome irreconcilable regulatory differences across countries. In particular, Article 3.1 obliges Members to base their SPS measures on international standards {1}. Measures that are supported by or built upon international standards do not necessarily incorporate all the elements or conform to those standards.7 Alternatively, under Article 3.2. Members can choose to adopt measures conforming to international standards {2}.8_{In any event,}

harmonized measures will be comparable across countries but hardly the same.

Furthermore, not all SPS measures are based on, or in conformity with, international standards.

Firstly, it is recognized that in specific fields, international standards simply do not exist.9_While

Members are required to fully engage with relevant international organizations to ensure the development and periodic review of standards, certain SPS threats necessitate a timely response over cooperative remedy introduced gradually or belatedly.

Secondly, at times specific international standards do not satisfactorily address the concerns of

importing Members. Thus, they are allowed to introduce a measure resulting in higher SPS protection than achievable through a measure based on relevant international standards.10 Measures that increase a level of protection necessitate either scientific justification or a higher ALOP (ALOP) in place that conforms with the requirements regarding the risk assessment and

7_{See AB Report, EC – Hormones, para.163.} 8_{AB Report, EC - Hormones, para. 170.} 9_{Article 3.1 of the SPS Agreement.} 10_{Article 3.3 of the SPS Agreement.}

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the determination of the ALOP , that is, available pertinent scientific evidence, economic and other factors is taken in due account and consistency with other SPS provisions is otherwise ensured.11 In any scenario exporting Members need either to fully adapt to a variety of SPS standards in

place in specific countries in order to obtain market access for their products {1} or seek the

recognition of equivalence for their SPS measures that are capable of bridging the regulatory diversity that standards cannot overcome {2}.

{1} To satisfy different sets of requirements prevailing across different countries entails an excessive burden and, depending on a multitude of factors, might eventually prove unattainable. For instance, importing countries’ market access might be conditioned on conflicting SPS requirements in place. Exporters then will face reality where they either adjust their goods accordingly (i.e., separately to each set of requirements) or simply lose market access in one country to qualify for (the) other(s).

{2} To alleviate such a negative impact on international trade caused by myriad of divergent SPS standards, WTO Members are encouraged to opt for the alternative, i.e., seek for equivalence recognition of their SPS measures that objectively fulfill the ALOP of the importing Member.

Alternative to seeking recognition through a formal request, Members can choose to negotiate

MRAs that provide for equivalence recognition of SPS measures.

On the other hand, these regulatory cooperation mechanisms had been widely applied before they were incorporated in the WTO-law. Thus, rather than derogating from the basic premise of the multilateral trading regime, the act of incorporation can be viewed as advancing

non-discriminatory application of the instruments among WTO Members.

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2. Article 4 of the SPS Agreement

2.1. Normative Content of SPS Article 4

Should the importing Member avoid entering into bilateral or multilateral agreements on the recognition of equivalence, Article 4.1 contains obligation incumbent upon it to recognize SPS measures of the exporting Member unilaterally and on an ad hoc basis.

In particular, according to SPS Article 4.1, recognition of SPS measures might be requested, and shall be granted, provided preconditions stipulated in the provision are satisfied. While the rationale of the stipulation is readily apparent, its scope and basic operation necessitate clarification.

The provision reads as follows:

‘Members shall accept the sanitary or phytosanitary measures of other Members as equivalent, even if these measures differ from their own or from those used by other Members trading in the same product, if the exporting Member objectively demonstrates to the importing Member that its measures achieve the importing Member's appropriate level of sanitary or phytosanitary protection. For this purpose, reasonable access shall be given, upon request, to the importing Member for inspection, testing, and other relevant procedures.’12

Thus, the SPS Agreement imposes upon importing Members a strong conditional obligation of the acceptance of equivalence. In particular, the obligation is conditioned upon the exporting Member’s objective demonstration of the effectiveness of its SPS measures with regard to the

achieving of the ALOP of the importing Member {1}. In addition, if requested so, reasonable access shall be immediately granted to the importing Member for inspection purposes {2}. The

first prerequisite will be addressed below.

The compelling language of the first paragraph of Article 4 somewhat overshadows the second paragraph of the same Article that advances MRAs through obliging Members to merely enter into

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consultations aimed at achieving bilateral or multilateral agreements regarding the recognition of equivalency of specified SPS measures.

Whether embodied in standalone MRAs or negotiated in the context of regional trade arrangements, third countries might claim an extension of preferential regime provided for in mutual recognition clause by invoking Article 2.3 of the SPS Agreement. Notwithstanding, as will be demonstrated below, an importing Member that adheres to the disciplines set forth in Article 4, can lawfully withhold preferences.

2.2. Operation of SPS Article 4

In practice an exporting WTO Member can either conclude an agreement on equivalence

recognition with an importing Member or seek equivalence through a formal request when it is in

a position to prove that its sanitary or phytosanitary measures are equivalent to those in place in importing Member.

Unless an importing Member desires to enter into agreement on mutual recognition, it is required to examine in good faith whether proposed SPS measures are capable of reaching its acceptable level of risk and, following its own judgment, grant or withhold equivalence recognition.

An exporting Member can alternatively seek an extension of preferential treatment accorded to another exporting Member under mutual recognition regime by invoking the MFN obligation owed to it. A claim will be unsuccessful unless an exporting Member proves that its measures are

bona fide equivalent to those of one of the MRA parties and, therefore, capable of ensuring the

protection level established under the mutual recognition regime at hand.13_{However, it is}

conceivable that an exporting Member can only speak of the MFN obligation owed to it once it has made an application to the importing Member for equivalence recognition for its SPS measures.14

13_{See Joshua Zell ‘Just Between You and Me: MRAs and the Most Favoured Nation Principle’ (2016) World Trade}

Review, 3-23, 5,6.

14_{Similar conclusions were drawn in the context of the TBT Agreement by Lorand Bartels in relation to TRs and}

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A denial of equivalence recognition might lead an exporting Member to file a complaint against an importing country. It can either argue for the breach of Article 4 or file an MFN claim. For both cases, the interrelation between the burden of proof and a standard of review differ.

The issue of equivalence recognition under the SPS Agreement has never been directly addressed by either a panel or the AB. Nor has the Dispute Settlement Body (DSB) shed light on how MRAs on SPS measures relate with Article 2.3 of the SPS Agreement. It has been simply recognized that

measures taken as part of an equivalence regime, subject to Article 4, should also conform with other relevant provisions of the SPS Agreement.15 Thus, the legal test for Article 4 remains yet to be established. The following subsections will address both claims mentioned above.

2.2.1. Consistency with SPS Article 4.1

As stated, equivalence recognition is conditioned on the objective demonstration of the

effectiveness of a proposed SPS measure with regard to the achieving of the ALOP of an importing Member.

One of the controversies that might arise in practice is what is an actual required conduct of a

Member seeking recognition for its SPS measures. The text is straightforward in the allocation of

the burden of proof: A Member requesting recognition shall demonstrate objectively that its

measure satisfies the ALOP of an importing Member- i.e., it bears the burden to produce the

necessary evidence thereof. However, what would amount to - an objective demonstration of the

fulfillment of the ALOP - requires clarification since it constitutes a prerequisite for a successful

challenge under Article 4.1.

Two issues attract particular attention: firstly, whether the determination of the ALOP is an absolute right of an importing Member, or, alternatively, it might become a subject to correction by the DSB {1}, and, secondly, what might be the standard of review {2}.

{1} as defined in Annex A (5) of the SPS Agreement and further corroborated through the DSB practice - it is the prerogative of a Member (rather than that of a panel or the AB) to set a certain

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threshold for what it deems as an acceptable/tolerable level of risk/protection.16 Nevertheless, the Appellate Body (AB) found that the SPS Agreement contains disciplines that a Member is required to respect when it decides its level of protection.17

In particular, Article 5.4 stipulates that a Member is required to take the objective of minimizing

the negative impact on trade into consideration.18Article 5.6, in turn, proscribes a Member from adopting a measure that is more trade-restrictive than required to achieve the ALOP.

Article 5.4 does not impose an affirmative obligation on WTO Members; instead, the provision is of a hortatory nature;19 Nonetheless, it has been acknowledged that the objective stipulated therein is to be taken into account in the interpretation of other provisions of the SPS Agreement.20 Moreover, the Panel in EC-Hormones found that disciplines set out in Articles 5.4 to 5.6 may be viewed as specific applications of the basic obligations provided for in Articles 2.2 and 2.3.21

The AB clarified further that an exclusive right to set an acceptable level of risk entails an implicit

obligation incumbent upon the importing Member to do so.22 Moreover, according to the AB in

Australia-Salmon, Members are not free to determine their ALOP so as the application of, inter

alia, SPS Article 4 becomes impossible.23_{Likewise, the Guidelines to Further the Practical}

Implementation of Article 5.5 suggests that Member should indicate the ALOP ‘in a sufficiently

clear manner so as to permit examination of the extent to which any measure achieves that level.’24

But in case it still fails to do so, a panel will determine an unexpressed ALOP by deducing it from the measure being applied by that Member.25

Indeed, a measure ‘inherently reflects or achieves a certain level of protection …at least as high

as the ALOP of that Member.”26And a measure needs to be not more trade-restrictive than

16_{See, AB Reports, US/Canada – Continued Suspension, para. 523.}

17_{Ibid, 1088.}

18_Ibid.

19_{Panel Report, US – Animals, paras. 7.399-7.404.}

20_{Panel Report, EC – Hormones (Canada), para. 8.169; Panel Report, EC – Hormones (US), para. 8.166.} 21_{Panel Reports, EC – Hormones (US), para. 8.99; and EC – Hormones (Canada), para. 8.96.}

22_{AB Report, Australia – Salmon, paras. 205-207.} 23_{Ibid, 206.}

24_{G/SPS/15, para. A.1.}

25_{AB Report, Australia – Salmon, paras. 205-207. See also AB Report, Australia – Apples, para. 343.}

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necessary to reach the ALOP.27 In other words, there is a presumption that a measure applied is at

least as high as the ALOP but not higher than needed to fulfil the ALOP. What follows is that equivalence recognition that sustains dissimilar measures inherently affects the ALOP of an importing Member.

Typically, weight is to be accorded to Member’s articulation of its ALOP since it is ‘generally

better placed (…) to know what objective it has set in terms of the level of SPS protection it wishes to achieve.28

Notwithstanding, should it find that the ALOP declared differs from the ALOP actually applied, a panel must ascertain the ALOP ‘on the basis of the totality of the arguments and evidence on the

record.’29 Whether a measure proposed as equivalent reaches the ALOP of an importing Member, most likely will be examined by a Panel against the actual, rather than promulgated ALOP of an importing Member. This, though, hinges on the mandate of a Panel.

{2} The enforceability of the right to have SPS measures recognized as equivalent is inevitably linked with the standard of review. While the importing Member has broad discretion to determine what it regards as its ALOP, the provision indicates that the fulfillment of the ALOP of its own can be demonstrated objectively. Thus, it is an objective criterion, that is to say - an actual

condition, subject to the assessment and verification by a panel. Such language is in contrast with

the "provided they (the importing Member) are satisfied" language of the TBT Agreement that leaves a degree of discretion to the importing Member and, as a consequence, the standard of review is considerably diminished.

While the mandate of a Panel has never been addressed for the purposes of Article 4, certain clarifications were made in the context of Article 6 of the SPS Agreement.30

The AB held that while the type of evidence required under Article 6.3 may be assessed on a case-by-case basis, the ALOP of the importing Member may inform the nature, quantity, and quality

27_{Article 5.6 of the SPS Agreement requires Members to ensure that measures are not more trade restrictive than}

required to achieve their ALOP.

28_{AB Report, India – Agricultural Products, para. 5.221.} 29_{Ibid, para. 5.221.}

30_{Article 6 of the SPS Agreement lays down a general obligation for Members to adapt their measures to the SPS}

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of the evidence.31 It went on to highlight that the mandate of a Panel is limited in this respect: it is simply called upon to verify whether the evidence produced by an exporting Member allows the importing Member to decide of the pest or disease status of an exporting Member; thus, it is not a Panel’ role to make the determination on the status on its own.32_{This clarification should not be}

understood as authorizing a Panel to defer entirely to importing Member’s judgment; instead, as restricting its mandate to the examination whether the judgment made by an importing Member adequately responds to the evidence produced by an exporting Member seeking to obtain a certain status.

The role of a Panel must be comparably modest for Article 4.1. It should not engage in the fact-finding process whether there is an equivalence between two sets of SPS measures; rather, it must evaluate whether the decision reached by an importing Member is reconcilable with the evidence provided for by a Member seeking equivalence. If not, it may well become subject to correction by a Panel.

Likewise, the question regarding the fulfillment of the ALOP has never been addressed by a Panel for the purposes of Article 4.1. However, the AB elaborated on the matter in the context of Article 5.6, which might be instructive.

In particular, the AB established a three-prong test for the Panel to determine whether an

alternative measure (which is reasonably available taking into account technical and economic feasibility33_{) achieves a WTO Member's ALOP. Based on the factual findings and undisputed facts}

on the record, a panel needs to:

1. identify the ALOP of an importing Member;

2. determine what level of protection would be achieved by the proposed alternative measure; 3. determine whether the level o/f protection achieved by alternative satisfies an importing

Member’s ALOP.34

For Article 4.1, a Panel could apply a similar test that would focus on the comparison between the ALOP set by an importing Member and the level of protection achievable through a measure

31_{AB Report, Russia – Pigs (EU), para. 5.65.} 32_{Ibid. 5.66.}

33_{See footnote 3 of Article 5.6 of the SPS Agreement.} 34_{AB Report, Australia – Apples, para. 368.}

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proposed as equivalent. A panel will likely identify the actual ALOP of an importing Member and determine whether the evidence provided for by an exporting Member could allow an importing Member to accept equivalency of proposed measures.

Whether the ability of an exporting Member to demonstrate continuous effectiveness of its measures with regard to achieving the ALOP of an importing Member should affect its right to equivalence recognition remains uncertain. AB considerations drawn with respect to Article 6.2 might appear helpful in this regard.

The AB noted that importing Member’s capability to ensure that its measure is adapted correctly would depend on exporting Member’s compliance with Article 6.3.35_{Thus, a failure to recognize}

a territory as an area of a lower level of/free of risk does not automatically yield to inconsistency under paragraph 1; the breach arises only once an exporting Member demonstrates that its territories are, and are likely to remain, pest- or disease-free areas or areas of low pest or disease prevalence.36

By contrast, Article 4.1 makes no express reference to assurances as to the continuous effectiveness of measures concerned. Rather, once an exporting Member furnishes an importing Member with sufficient evidence as to the achievement of its ALOP, equivalence recognition of measures concerned is, arguendo, unconditionally due to it.

Notwithstanding, the EU position, discernible from the highly complicated process of Brexit, somewhat differs on this particular matter. Specifically, the EU has been unequivocal that the UK’s withdrawal from the EU acquis, the internal market and the Customs Union, would inevitably result in creating barriers to trade; moreover, it has stressed that the same frictionless trade conditions existing between the EU Member States cannot be reasonably expected by UK.37

In particular, the EU has claimed that its relations with UK will be built upon and will go beyond what WTO, Codex Alimentarius, IPPO and OIE provide; it has nevertheless stressed that there will be no exceptions or equivalency and systematic controls will fully apply to imported food, animals and plants.1

35_{Panel Report, US – Animals, para. 7.664.}

36_{AB Report, India – Agricultural Products, para. 5.156-5.157.}

37_{Future EU-UK Partnership, Questions and Answers on the negotiating Directives, <}

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As it has been claimed it is the UK's ability to diverge rather than the divergence itself that complicates the access to EU market for the UK.38_{Indeed, the EU has maintained that mutual}

recognition can only be granted between participants of ‘EU ecosystem;’ accordingly, frictionless trade conditions are offered on the basis of adherence to a full ‘ecosystem’ of rules, including the Treaties, and their supervision and enforcement mechanisms, including the jurisdictional system under the Court of Justice of the EU.39

To remain faithful to the intent of the drafters, it is more probable that a Panel will interpret the provision against the textual difference between the provisions rather than in light of the subsequent approaches employed by countries, as VCLT 31(3)(b) dictates. Hence, the approach employed by any WTO Member that ipso facto excludes the possibility of the conclusion of MRAs, might prove problematic under SPS Article 4.

2.2.2. Application of SPS Article 4 in practice

As already noted, WTO Members do not necessarily adhere to the provisions concerning equivalence determination set out in Article 4.1 as they negotiate MRAs on SPS measures. While countries might seek on an ad hoc basis to demonstrate by means of risk assessment, that their SPS measures achieve the ALOP of the importing Member as set forth in Article 4.1, equivalence is mostly established bilaterally or multilaterally in the context of RTAs, between, for instance, EU Member States, NAFTA Member States etc.

Article 4.2 requires WTO Members to enter into consultations with the aim of achieving equivalence recognition for specific pre-defined SPS measures. Albeit, this provision is merely aspirational in nature: no country is obliged to actually conclude equivalence agreement, either bilaterally or multilaterally.

It has been recognized that equivalence agreements may take different forms, ‘ranging from the acceptance of the equivalence of particular sanitary and phytosanitary measures to protect against

38_Ibid. 39_Ibid.

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specific risks in a specific product, to formal systems-wide or broad-ranging agreements on equivalence.’40_{And while equivalency requires neither duplication nor sameness of measures, it} has been nevertheless noted that ‘the more broad-ranging the equivalence agreement, the more difficult it may be to conclude.’41

Article 4.2 does not refer to any specific process or criteria for the conclusion of MRAs. Thus, WTO Members are free to develop their own processual norms or sets of criteria through which they enforce this provision. Suggestions have been made that a determination of equivalence may occur in a variety of ways depending on what is being compared. In particular, two sets of measures are clearly equivalent as long as their equal achievement of concrete ALOP is scientifically proven.42_{Whereas, a comparison of inspection systems or proficiency/competence of respective} personnel of two countries may introduce subjective bias to the outcome.43

So, the question arises as to whether countries need to adhere to objective basis for comparison when determining the equivalence of SPS measures; and if so, what can be regarded as such basis. The Equivalence Decision in paragraph 7 contains clarifications with regard to the examination of scientiﬁc and technical information to determine equivalence of SPS measures. It stipulates that ‘Members should consider the Codex approach of establishing an objective basis for comparison

or the similar OIE approach when determining the equivalence of sanitary measures.’44

It reads further that ‘If the exporting Member demonstrates by way of an objective basis of

comparison (…) that its measure has the same effect in achieving the objective as the importing Member's measure, the importing Member should recognize both measures as equivalent.’45

According to the Codex Alimentarius, SPS measures, for the purposes of equivalence determination can be categorized into three groups: infrastructure (legislative base and

40_{Committee on Sanitary and Phytosanitary Measures, Equivalence: Consideration of Article 4 of the SPS}

Agreement: Summary of Informal Discussions on Equivalence. Second Report by the Chairman, G/L/445, March 21, 2001

41_Ibid.

42_{Denise Prevost and Peter Van den Bossche, ‘The Agreement on the Application of Sanitary and Phytosanitary}

Measures’ (2005) 231-330, 328.

43_Ibid.

44_{WTO Committee on SPS Measures, ‘Decision on the Implementation of Article 4 of the Agreement on the}

Application of SPS Measures’ (adopted on 23 July 2004), para. 7.

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administrative systems); programme design, implementation and monitoring; and specific requirements.46

The footnote clarifies that the objective basis for comparison for measures categorized as

‘infrastructure’ could entail the evaluation of the ability of food legislation to achieve broad safety

goals.47 The objective basis of comparison of ‘specific requirements’ is more likely to be quantitative in nature: an importing Member might compare the levels of risk control achievable; Whether principles associated to food safety are applied in the correct manner is the most pertinent question as for the programme designs being compared.48

In practice, a mechanism for equivalence recognition is often established in regional trade instruments which lay down specific criteria for the acceptance of specific products or sectors as equivalent. The EU allows equivalence recognition for non-EU Members but this comes with a significant price tag. As an example, the Deep and Comprehensive Free Trade Agreement (DCFTA) between the EU and Georgia lays down a mechanism for equivalence recognition in Article 57. Article 57.4 of DCFTA Georgia foresees the fact of achieving approximation to SPS, animal welfare and other legislative measures to that of the Union as a basis for a request of Georgia to initiate the process of equivalence determination.

Article 57.8 clarifies that the recognition or withdrawal of equivalence rests solely with the

importing Party acting following its administrative and legislative framework. The effectiveness of the inspection and control system related to the commodity in the exporting Party, the effectiveness of the competent authorities as regards inspection and control systems, are elements

laid down in Annex VIII(2)(a) that need to be considered before equivalence will be established. Similarly, Article 5.6 of the Comprehensive Economic Trade Agreement (CETA) practically mirrors the language of SPS Article 4.1 in providing an exporting Member a conditional right with regard to equivalence recognition for its measures. But Article 3 nevertheless states that for some

46_{Codex Alimentarius Commission, ‘Guidelines on the Judgement of Equivalence of Sanitary Measures Associated}

with Food Inspection and Certification Systems,’ (2003), para. 13.

47_{Ibid, footnote 11.} 48_Ibid.

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areas exporting Member’s SPS measures cannot independently achieve the ALOP; rather ‘the

specified special conditions’ need to be fulfilled as well.

Thus, even if the EU does not preclude non-Members from achieving equivalence for their measures, it certainly makes it much more onerous than Article 4.1 might suggest. Nevertheless, what matters most is that an objective basis of comparison was consistent, rather than arbitrary, so as to not introduce unjustifiable discrimination.

B. Distinction between Discriminatory and Non-Discriminatory Regulatory Cooperation

1.1. MFN Claim under Article 2.3 of the SPS Agreement

While a complaint under Article 4.1 can hardly be successful unless proposed measures objectively achieve the ALOP of an importing Member, a panel has a wide margin of discretion under SPS Article 2.3 to evaluate SPS-consistency of an MRA and draw conclusions whether unjustifiable discrimination has actually occurred.

For an MRA to pass the legal test of Article 2.3 it must stay in line with two obligations: it shall

not discriminate arbitrarily and unjustifiably between Members where identical or similar conditions prevail {1}; it shall not be applied in a manner that would constitute a means of disguised restriction on trade {2}.49

It has been recognized that three cumulative elements of the first obligation (discrimination;

arbitrary and unjustifiable; the same prevalent conditions) inform each other;50_{the chapeau}

analysis for Article XX of the GATT makes clear that the facts put forward to establish that discrimination was arbitrary/ unjustifiable can inform whether the same conditions prevail.51 To examine the presence of discrimination, the focus will be placed on whether a measure changes the conditions of competition to the detriment of products originated in a complaining country.52

49_{AB Report, Australia – Salmon, para. 252.} 50_{AB Report, India – Agricultural Products, para. 5.261.}

51_{Panel Report, India – Agricultural Products, para. 7.460.} 52_{Panel Report, US – Animals, para. 7.573.}

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Discrimination will be likely discerned if Members, where the same conditions prevail, are treated differently {1}, or the application of a measure complained of does not allow for an inquiry into the appropriateness of the regulatory program for the conditions prevailing in exporting country [2}.53

WTO Member that grants equivalence recognition to SPS measures of some countries while rejects requests of other countries clearly changes the conditions of competition to the detriment of the latter since the former can lawfully place their products on the market of an importing Member. In contrast, the latter needs to go through compliance assessment procedures. However, this can only be regarded as discrimination to the extent an exporting Member is in a position to argue that within its territories the same conditions prevail with regard to the level of risks, or mutual recognition clause or an MRA at hand a priori excludes the possibility for the complaining Member to seek equivalence, as discussed above.

The regulatory distinction between two sets of imports that is not rationally connected to the stated objective is a strong indication of arbitrary and unjustifiable discrimination.54Thus, any distinction in treatment that principally stems from other considerations but the underlying pre-defined risks as set out in Annex 1 of the SPS Agreement is hardly reconcilable with the finding that a measure is free from discrimination.

Relevant prevalent conditions can be identified in light of the regulatory objective of the measure

at hand.55_{Apart from the prevailing risks or disease status assigned to countries concerned, a}

comparison might take account of the effectiveness and credibility of SPS measures in place as well as the ability of the complainant country to meet the ALOP of the respondent country.56

Arbitrary and unjustifiable discrimination readily unveils disguised trade restrictions.57 Likewise, the fact that a measure does not pay due account to risk assessment rather it is based on subjective criteria, reveals that a measure rather than being concerned with the objective of protection of

53_Ibid. 54_{Ibid, 7.589}

55_{Ibid, 7.575 (quoting AB Report, EC – Seal Products, para. 5.300).} 56_{Ibid, 7.581.}

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human/ animal/ plant life or health - constitutes a means of trade restriction taken in the guise of

an SPS measure. 58

Those considerations directly address the question of whether SPS measures in an exporting Member can satisfy the preconditions in SPS Article 4, discussed above.

1.2. Matters of GATT-Consistency

Under Article XX (b) of the GATT, a WTO Member is entitled to adopt or enforce measures to address particular concerns about human, animal, or plant life or health. This right shall be enforced to the extent necessary and following the chapeau requirements. Scientific and procedural requirements for the invocation of Article XX (b) are furthered for a subset of measures that qualify as SPS measures under Annex 1of the SPS Agreement. The disciplines contained in the SPS Agreement thus can be regarded to flesh out Article XX (b). According to Interpretative Note to Annex 1 (A) Agreements, in the event of a conflict between the provisions of the GATT 1994 and another Annex 1A Agreement, the latter prevails. Nevertheless, such conflict can hardly arise between the GATT provisions and SPS disciplines since the GATT-compliance is presumed in the case Members conform with the provisions SPS Agreement.59

C: Regulatory Cooperation in the Field of Sanitary and Phytosanitary Measures in the Context of Regional Trade Arrangements

The shift in the rationale for recent preferential trade agreements (PTAs), from reciprocal tariff reductions to non-tariff measures, raises concerns as to the legality of intra-regional equivalence and MRAs concerning, inter alia, SPS measures.

58_{Ibid, 7.475.}

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Generally, parties to PTAs are not ipso facto restricted from granting preferential treatment to goods sourced from their PTA partners. Just the opposite: the economic rationale for regional trade arrangements lies in securing preferential market access conditions through a lawful derogation

from the MFN clause through the invocation of Article XXIV defense.

Conventional view has been that successful invocation of the defense necessitates the fulfilment of cumulative preconditions identified by the AB in Turkey-Textiles: the challenged measure must be introduced upon the formation of Customs Union that fully conforms with the requirements set

out in sub-paragraph 8(a) and 5(a) of Article XXIV;60_{and the measure must be necessary for the}

formation of Customs Union.61

Notwithstanding, to assess whether a measure is capable of affording a defense as part of CU or FTA under Article XXI:5, AB in Turkey-Textiles referred to the probative purpose set out in Article XXIV:4 according to which the purpose of a customs union or an FTA is trade facilitation

between the constituent Members; not a raise of barriers to the trade vis-à-vis third countries.62

The AB in Peru-Agricultural Products clarified that this reference cannot be reconciled with an interpretation of Article XXIV as a ‘broad defense for measures in FTAs that roll back on

Member’s rights and obligations under the WTO covered agreements.’63

The recent AB Report in Brazil-Tyres elucidates further certain aspects concerning the interrelation between PTAs and WTO-law; core issues relating to the operation of GATT Article XXIV, though, remain vague.

The following subsections seek to elaborate on the following points: the availability of a defense

under Article XXIV for GATT- inconsistent SPS measures; availability of a defense under Article XX for GATT-inconsistent SPS measures with the emphasis on the chapeau requirements.

60_{AB Report, Turkey-Textiles, para 58.} 61_Ibid.

62_{Ibid, para. 57.}

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2. Availability of a Defense under Article XXIV for GATT-Inconsistent SPS Measures

The first condition identified in Turkey-Textiles is often dismantled into two sub conditions: the

legality of CUs and the timing of the introduction of the measure.

As for the first sub condition, intra-regional equivalence regimes that set out, on the whole. more stringent criteria to establish equivalence than that in place before the formation of CUs or FTAs can hardly stay in line with the requirements of Article XXIV:5 (a) and (b), respectively. Whereas regimes, that seek to alleviate the burden of SPS measures, are exposed to the risk of running afoul of the MFN principle unless preferential policies are extended to third countries. Equivalence regimes, if closed to third countries, introduce a standard through which third countries are effectively denied market access they enjoyed priorly, contrary to the prohibition of overall increase in trade-restrictiveness vis-à-vis third countries enshrined in XXIV:5.64 Same considerations apply to intra-regional MRAs.

Scant jurisprudence on GATT Article XXIV has led to controversies with respect to the timing of

the introduction of the measure. Since the defense applies specifically to measures adopted upon the formation of customs unions and free-trade areas, a question arises as to whether WTO

Members are precluded from subsequent deepening of regulatory integration process.

A rigid interpretation of the timing precondition as defined in Turkey-Textiles would hardly allow any measures, except for the ones introduced shortly after the notification of CUs or FTAs pursuant to Article XXIV:7, or those introduced within the operation of interim agreements leading to the formation of CUs or FTAs, to afford a defense of Article XXIV.65

It would also negate an explicit right of WTO Members with regard to significant changes and/or

developments in the RTAs as set forth in paragraph 11 in the Text of the Understanding on the

Interpretation of Article XXIV of the GATT 1994. This right is further affirmed in the Text of the Transparency Mechanism for Regional Agreements that in paragraph 14 requires subsequent

notification of changes affecting the implementation of an RTA or the operation of an already

64_{Robert Howse, ‘Regulatory Cooperation, Regional Trade Agreements, and World Trade Law: Conflict or}

Complementarity?’ (2015), Law and Contemporary Problems, 137-151, 142. (Howse).

65_{Reasonable length of time as contemplated for the formation of CUs and FTAs shall not exceed 10 years}

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implemented RTA; and clarifies that this requirement extends to modifications to the preferential treatment between the parties to RTA.

Authors have been persistent in their attempts to reconcile inflexible findings in Turkey-Textiles with the analysis of the panel in US-Line Pipe according to which a measure introduced subsequent

to the formation of regional trade arrangement is not ipso facto excluded from the scope of Article

XXIV defense as long as the mechanism for the measure was present upon the formation. For instance, to examine the applicability of Article XXIV defense to TRs in the EU mutual

recognition clause, Lorand Bartels has sought to assess how the dictum of US -Line Pipe applies

to the EC institutions that seek to implement a set of subsequent measures to fulfil the objectives set out in the EC Treaty.66

As for the second condition, Article XXIV can justify the adoption of GATT-inconsistent measure

‘only to the extent the formation of the customs union would be prevented if the introduction of the measure were not allowed.’67

In his attempt to complete the analysis on Article XXIV in Brazil-Tyres, Tegan Brink has suggested that the sole way to reconcile Turkey-Textiles with US-Line Pipe is to consider Article XXIV as an excuse as long as it is necessary to establish a PTA under Article XXIV.68

Indeed, the dictum above could barely tolerate the idea of subsequent introduction of a measure unless the formation of RTA was explicitly foreseen as evolving process in its constituent

instrument.

The GATT requires elimination of restrictive regulations of commerce between the parties to an RTA at least with respect to substantially all trade in products originating in the constituent territories.69 Thus, whether preferential treatment with respect to regulatory measures is an essential nuance to the formation/operation of regional trade arrangements is far from

unequivocal, though, feasible argument.70

66_{[2], Bartels, 713.}

67_{AB Report, Turkey-Textiles, para. 46.}

68_{See. Tegan Brink, ‘Which WTO Rules Can a PTA Lawfully Breach? Completing the Analysis in Brazil-Tyres’}

(2010), Journal of World Trade, 813-846, 839.

69_{See Article XXIV :8 (a)(i) and Article XXIV :8(b) of the GATT.} 70_{[58] Howse, 142.}

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In any event, though, whether a measure is introduced upon the formation or a mechanism for this measure is laid down upon the formation, in cases where RTAs explicitly require GATT-consistency in the application of sanitary or phytosanitary measures, GATT-inconsistent SPS measures can hardly be seen as necessary condition for the formation.

Since such an explicit reference to GATT-consistency is not infrequent, it bears noting that intra-regional MRAs/equivalence regimes that are set up pursuant to the requirements of Article 4 of the SPS Agreement (grounded upon purely objective demonstration of equivalence, as elaborated

above), are presumed to be GATT-consistent. Indeed, MRAs/equivalence regimes that allow

recognition only pursuant to the judgment of equivalence, as explicitly provided for under Article 4.1, accord preferential market access conditions to countries that had sought to establish equivalence through a lengthy and costly process of equivalence determination.

Firstly, third countries cannot claim for the extension of the MFN treatment unless they also go through comparable process of equivalence determination; this is because, otherwise the threshold of advantage for the purposes of GATT Article I:1 can hardly be reached.

And secondly, Members that reject equivalence recognition solely in accordance with the results of the judgement of equivalence, can easily justify differential treatment by referring to the fact that difference in the effectiveness in the reaching of their ALOP renders the prevailing situation in countries at issue different.

3. Availability of a Defense under Article XX for GATT-Inconsistent SPS Measures

It is absolutely legitimate for WTO Members to conclude intra-regional MRAs or set up systems for equivalence recognition subsequent to the formation of RTAs with the aim to further integration vis-à-vis their regional trade partners provided such MRAs/systems are not inherently discriminatory.

Neither are Members precluded from applying different measures towards products of different origin; this is because applying different measures does not necessarily imply applying different ALOPs to products concerned. The text of Article 4.1 further corroborates that measures, although

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But discrimination would clearly be present where equivalence is established absent objective circumstances or where arrangements a priori prevent third countries from the opportunity to demonstrate equivalence.71

Howse recalls the AB findings in US-Shrimp case according to which to pursue regulatory cooperation with some WTO countries to the exclusion of other WTO countries goes against the

good faith obligation contained in the chapeau of GATT Article XX.72_{Drawing from}

Shrimp-Turtle cases, author concludes that regulatory cooperation must be open to all WTO Members and any conditions attached to preferential market access must be justified by objective dissimilar

circumstances that prevail in countries.73

The issue has been addressed by the AB for the purposes of SPS Article 6. It has been recognized that regulatory schemes that a priori exclude the possibility to recognize/develop the concepts under Article 6.2 cannot stay in line with Article 6.2.74 Likewise, any arrangement, whether it be a mutual recognition arrangement restricted to some WTO Members or national legislation that effectively deprives exporting Members to have their measures recognized as equivalent, would be in breach of Article 4.1 and in turn in breach of Article 2.3.

The idea that mere membership of regional agreements cannot serve as a justification of MFN breach is further corroborated through the AB statement in Brazil-Tyres that the exemption of Mercosur countries from the import ban goes against the chapeau requirements of GATT Article XX given the exemption is unrelated to the goals pursued by the environmental and health objectives.75

71_{Ibid. 140.} 72_Ibid. 73_{Ibid. 141.}

74_{AB Report, India – Agricultural Products, para. 5.138.}

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4. Withdrawal from Equivalence Recognition – Pitfalls of Applying Subjective MRAs

According to the AB in US-Gasoline, the principle of effective treaty interpretation requires that meaning and effect is given to all the terms of a treaty.76_{In particular, an interpreter is not free to}

adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility.77 Article 4 paragraph 1 of the SPS Agreement will necessarily be deprived of its effet utile if an importing Member is allowed to withdraw equivalence recognition at any time freely.

Rather, a practical interpretation of Article 4.1 implies that once established, the provision set forth in the first paragraph shields equivalence unless its underlying circumstances change or cease to

exist.

While unjustifiable withdrawal from equivalence recognition constitutes an apparent breach of SPS Article 4.1, maintenance of equivalence for measure that fails to reach the ALOP of importing Member can yield to the breach of Article 5.5 and Article 2.3 in turn.

In particular, once objective circumstances upon which the recognition of equivalency is grounded change, the obligation arises to withdraw equivalence recognition to ensure continuing consistency with SPS Article 5.5 that proscribes inconsistent application of the concept of ALOP and SPS Article 2.3 that ensures that unjustifiable discrimination is not involved in the application of SPS measures.

This will not affect the allocation of burden of proof under Article 4.1: ‘who asserts a fact, (…) is responsible for providing proof thereof.’78 Since the inconsistency only arises if the withdrawal

was unjustified, the complainant meets the initial burden to make the case of inconsistency with Article 4.1 as long as it demonstrates that relevant circumstances giving rise to equivalence

continue to be the same. Once prima facie case is established, though, an importing Member must

prove the case it seeks to make in response: that the withdrawal of recognition was nevertheless lawful.

76_{AB Report, US – Gasoline, para 23.} 77_Ibid.

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Noteworthy, that similar conclusions were reached by the AB with respect to Article 6.79 It found that in view of the continuing nature of the requirement in Article 6.1, WTO Members shall seek

- to adapt appropriately at the time SPS measure is adopted; and, to adapt accordingly once

relevant SPS characteristics either in importing or in exporting Member change.80

While generally, the risks of MRAs not grounded upon objective equivalence significantly outweigh the benefits - those risks only materialize if third Members are in a position to claim for MFN treatment81 (i.e. they have measures comparable in effect to at least one of MRA parties.) In other words, while 'subjective' MRAs hold risks, there will hardly be any country confident enough in the effectiveness of their measures to seek extension through the DSB.

On the other hand, though, when a Member withdraws RTA, it will logically aspire to claim continuation of equivalence unless withdrawal from RTA bears specifically on the factors giving rise to equivalence recognition. In this scenario, a Member is in a position to know and to argue. It does not need to establish equivalence anew (which would require to prove objective fulfillment of the ALOP). Rather the country simply needs to demonstrate that equivalence has

never ended in the first place by referring to the status-quo of the pertinent original circumstances.

This understanding is discernible from, inter alia, the Guidelines on the Judgement of Equivalence of Sanitary Measures Associated with Food Inspection and Certification Systems, according to which ’information already available to the importing Member should not be sought again with

respect to procedures to determine the equivalence of measures proposed by the exporting Member.’82

Here lies the difference: former RTA partners will necessarily seek the continuation under 4.1, and in case they succeed, they will maintain subjective MRA - equivalence without objective grounds.

79 _{It is arguable that, similarly to Article 5.5, Article 6 can also be viewed as specific application of Article 2.3, since}

the provisions set forth therein seek to ensure that discrimination is not involved in situations where the same conditions do not prevail.

80 _{AB Report, India – Agricultural Products, para. 5.154.} 81 _[_{2], Bartels, 707.}

82_{Codex Alimentarius Commission, ‘Guidelines on the Judgement of Equivalence of Sanitary Measures Associated}

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Furthermore, if they do, equivalence based on mutual trust within RTA Members will slip out of the hand of its exclusive beneficiaries. The latter will face reality where they either need to set a higher ALOP and conclude corresponding MRAs (restricted to RTA participants) anew or, as an alternative, they can simply suffer the consequences brought by the decreased achievement of their declared ALOP.

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Part III: Regulatory Cooperation under the TBT Agreement

Similarly, the TBT Agreement seeks, inter alia, to minimize costly trade frictions through the incorporation of positive integration tools - harmonization, mutual recognition, and equivalence.83

These disciplines are likewise concerned with the reconciliation of divergent regulatory regimes across countries.

In contrast, though, under the TBT Agreement, the WTO Members are accorded with a broader specter of trade facilitation mechanisms through equivalence recognition; this is attributable to the fact that the TBT provisions distinguish between three sets of measures – technical regulations,

standards and conformity assessment procedures. In contrast, such differentiation is absent in the

SPS Agreement.84

In particular, a Member seeking for equivalence for its products has a variety of options: firstly, it might request the acceptance of equivalence of its TRs – that is, the effectiveness of its TRs to the level equivalent to that of TRs in place of an importing Member; the latter is required to give

positive consideration to such a request if it is satisfied that TRs in question adequately fulfill the objectives of its own regulations.85

The TBT Agreement also enables Members to request the acceptance of results of their CAPs. In other words, Members can seek equivalence for their CAPs. Members requested shall ensure,

when possible, that results are accepted in case when conformity procedures concerned offer an assurance of conformity with applicable TRs or standards to the same extent as their own procedures.86

Lastly, the TBT Agreement encourages the conclusion of MRAs aimed at the recognition of the results of each other’s CAPs. Interestingly enough, in this scenario, Members may require that

83_{Du Ming, ‘What is a Technical Regulation in the TBT Agreement? Some Reflections on EC-Seal Products’}

(2015) 6(3) European Journal of Risk Regulation 396-404, 397.

84_{Humberto Zúñiga Schroder, ‘Harmonization, Equivalence and Mutual Recognition of Standards in} WTO Law’ (2011) Kluwer Law International, 123.

85_{Article 2.7. of the TBT Agreement.} 86_{Article 6.1. of the TBT Agreement.}

Enhanced Regulatory Cooperation Under the Auspices of the WTO: The Reintroduction of Conditionality?