Process and Production Methods - Essay Example

PRODUCTION, PROCESS METHODS IN THE GATT & TECHNICAL BARRIER TO TRADE (TBT) BY WTO Contents Introduction 3 Definition of Process and Production Methods (PPM) 4 GATT 1994 7 Technical Barriers to Trade Agreement (TBT) 9 Process and Production Methods Versus Technical Barriers to Trade 11 Conclusion 12 Bibliography 13 Introduction The end of the Cold War effectively eliminated the bipolar international order whereby nations were split either into one of two camps – East or West or the third world1. This culminated in a situation whereby the international community was co-ordinated by different agreements that aligned nations of similar ideologies. However, the West had prided itself in free-trade, democracy and human rights and these values were upheld through numerous agreements and treaties which included amongst other things, free trade agreements. These free trade agreements go back to 1934 when US President, Franklin D. Roosevelt secured the passage of the Reciprocal Trade Agreements Act which was to help the United States to liberalize trade with other nations around the world within a given framework and a set of standards that promoted ease and speed in trade2. This structure was meant to cut down on the kind of tariffs and restrictions placed on products from nations that were considered friendly. The process was enhanced throughout the period of the Cold War where some nations that were considered to be part of the Western bloc of nations were allowed to trade with each other with little or no restrictions3. The free trade tradition grew and expanded to the 1990s where the Soviet Union collapsed and the international order changed significantly to accommodate changes in the processes and systems around the world4. This culminated in a new generation of agreements that were meant to promote trade between nations around the world. This included the General Agreement on Trade and Tariffs (1994) and the World Trade Organization’s Technical Barriers to Trade (TBT) framework that sought to change and modify the ways and means through which states were to trade with each other and carry out their activities. These international trade agreements of the Post-Cold War world sought to set important standards that would guide and direct the way through which trade was regulated and controlled. And in doing this, the concept of “process and production methods” was introduced define the framework of classifying goods in order to guide and regulate these goods in international trade. The purpose of this paper is to examine the concept of “process and process methods” (PPM) and how it works and operates within the broad framework of international trade and international trade law. Definition of Process and Production Methods (PPM) According to the authoritative works of Robert Read, the processes of regualting international trade went through various forms and levels of transition over the years due to the changes in circumstances and situations that surrounded it. Therefore, during the 1994 Uruguayan Round of talks, there was the introduction of a new approach for examining and regulating the products from other countries around the world on certain generally accepted standards and criterion. “Process and production methods (PPMs) refer to the desire of some countries to regulate international trade in goods and services on the basis of the inputs and process technologies utilised in their production.”5. This implies that PPM is a kind of criteria that has been set by member states of the international trade agreements and that define the way and manner through which products are regulated on the basis of how the products are made. This is to set a criteria that can help to provide an objective standard and system of defining quality and the standards of tariff limits and processes. This is because most countries seek to find ways of controlling the way and manner in which goods are produced in other countries and other territories in order to prevent major issues and matters that might not be accepted within their policy. Hence, a nation will need to ensure and take care that every product that crosses into its territory is properly scrutinized and it is done in a way and manner that is consistent with its values, ethics and ideals. There are many explanations for this. One of them is the fact that it will be hypocritical and detrimental if a state is harsh and tough on its citizens’ production systems whilst they allow other products from other states that are of a sufficiently lower quality and standard to come into their territories through liberal trade standards. This will be in bad faith and local entities will have to sacrifice for other businesses in other countries to benefit from the negative and moral issues they are banned form partaking in. The essence of PPMs was that trade agreements always came with an inherent element that made it illegal to discriminate against “like products”6. The implication is that all products that were similar in a given category of these trade agreement had to be accepted and treated without any form of discrimination. This means that there was a general trend towards the creation of standards to protect these products. However, due to the fact that opening up and allowing the export of products to be done withough any kind of restriction was meant to create some kind of unfairness to all stakeholders. This is because in cases where the citizens of one country set certain production standards based on the inherent beliefs and understanding of the citizens, it would be a fraud on the citizens to allow them to take products that were not produced according to the same standards in the name of free-trade7. Earlier PPM requirements and expectations that were presented in GATT and WTO agreements in 1947 and subsequent years were challenged and questioned8. However, over the years, it was successfully challenged and there have been the justification of making demands for the provision of some kind of leniency to countries on extraction, processing and production of goods that are shipped within their countries when there are active free trade arrangements. The main pointers that are utilized as basis for allowing PPM based restrictions and qualifications include: 1. Health and safety elements of technology; 2. Resource depletion and renewal of products that are extracted; 3. Environmental pollution; 4. Use of child labour, forced labour and prison labour9 Therefore, on any of these grounds, members of free trade arrangements and agreements have the right to qualify the kind of products they admit into their territory and how these products are consumed. This plays a major role in showing whether a country will accept certain products under a free trade agreement into its territory or not. The PPM process started with the GATT of 1994. This culminated in the presentation of a framework through which products could be qualified or restricted within a given free trade agreement. However, over the years, other methods and other approaches have evolved that can be found in other measures and systems. Two of them, the GATT 1994 and TBT are critiqued below to identify their similarities and differences in applying the rules of PPM. GATT 1994 The General Agreement on Trade and Tariff (GATT) was a series of multilateral agreements that was signed by a series of nations around the world through various rounds of talks and activities. It began in 1947 and ended with the Uruguay Round which lasted between 1986 and 199410. GATT 1994 establishes a series of 37 articles that guide the conduct of member states in dealing with member states and their achievement of results. Article 3 of the agreements allows and gives room for “national treatment” rule which requires products of one country to be treated as products manufactured in the importing country11. This is done by defining the concept of “like” products which refers to products of the same and similar form or content. However the main issue of conflict relates to the idea of the creation of special and local rules that are such that these products from other countries cannot compete. Hence the GATT 1994 prevents any extra or additional rules that are created by the domestic government that singles out foreign products for special or negative treatment that makes it difficult for these products to thrive in these countries. However, the principle of “process and production methods” includes the design, production and operation of a product and how it relates to the national framework of the ideal standards and expectations of the product that is being imported. GATT 1994 has a pointer in Article XX (g) where there are general exceptions or pointers that are made in such a way that nations and communities could set up some kind of controls and checks to prevent uncertainties from being abused in various ways and forms12. This makes it possible for nations to restrict products on the basis of the processes and potential risks that would come up if those products are used. This includes various products that have important limitations and credible risks that a nation foresees but has no concrete evidence to deal with the actual issues and risks. For instance the use of species that are considered endangered in the national context. In this case, there is room for a country to come up with measures and activities that are positive and potentially prevent or ban products that might be similar to the products they have on their local markets which are not compliant with these high-risk or relevant products that contains the uncertainty and risk factors and variables. Therefore, as part of protecting the national sovereignty of a nation, a nation can define the kind of products within this category without having any hindrance from the international community. This can be done by making clear identifications of important pointers and issues that ought to be considered in defining these products through the specification in a technical regulation. This therefore sets an objective standard and an objective set of rules and requirements that must be placed upon all products that are imported into a given jurisdiction. And according to the GATT 1994, it is equally as applicable to the local context as well as the international context according to the national regulations and laws of a country. The implication of this in GATT 1994 is that there are some national interests that are within a nation that ought to be preserved and protected in all situations and contexts13. This will include the creation of national standards that helps to preserve the moral and environmentalist standards and targets that are necessary for the achievement of national targets and national laws. Technical Barriers to Trade Agreement (TBT) In the Tokyo round of negotiations in 1979, there was the question of setting up a set of universalist standards and rules that will guide the conduct of all member states and set the ambit for the regulation of certain products and services. The Standards Code came to prominence and use in 1993 which defined standards and rules in standards to animals, plant health and human life14. The Technical Barriers to Trade include agreements that ensure that technical regulations, standards, testing and certification are limited so they do not cause obstacles to trade15. This also includes the provision of rights to WTO members to implement measures that are legally acceptable to meet legitimate objectives and goals that protects the rights, safety and environment within which they operate. The TBT Agreement lays out a blueprint for the presentation of a universal set of regulations and rules that can be applied to the different countries that operate within the framework16. However, in some cases, there are some options for nations to move towards adherence to their own national standards and targets for the achievement of results and proper targets and standards in trade. There are technical as well as standard regulations that are presented by nations and other authorities for the prevention of abuse and misuse of systems and processes. Standard rules refer to the universally accepted regulations that guide the way and manner in which a given nation carries out its regulations and control of products from other countries. This includes a list of expressly accepted and banned products within the broad framework and broad code of affairs and systems that ought to be followed to determine what is permissible and what is not. This cut across countries and all members of a given agreement will have to adhere to it and live by it. There are also technical regulations and rules that guide the technical barriers to trade. A “technical regulation” is defined as “a document which lays down product characteristics or their related processes and production methods, including the applicable administrative provisions, with which compliance is mandatory. It may also include or deal exclusively with terminology, symbols, packaging marking or labelling requirements as they apply to a product, process or production method”17. This implies that every nation or community has the right to define which products that can be considered as acceptable and which ones are not appropriate. This should be within a framework of rules and regulation that are used to define the code and the features of a given process and system. This includes the presentation of product characteristics that must be considered admissible in a given country based on the communal activities and processes that provide the parameters for the achievement of specific policy goals and policy objectives in terms of products within the relevant category. There are also some voluntary standards that complement the technical rules and standards because they are such that they can be chosen selectively in the case of dealing with the best of results18. This allows a nation to adopt standards that are appropriate to the domestic policy and domestic systems and processes of achieving results and activities. Technical regulations and standards are such that they are implemented to prevent the achievement of the best results in order to deal with the achievement of national policies and standards. Process and Production Methods Versus Technical Barriers to Trade There are various limits in defining the framework and extent of achieving the main goals and the main extent for regulating and preventing the presentation of The Process and Production Method (PPM) are connected to technical and special limitations that are placed however, there is a lack of clarity in the process and the definition of the whole process and how it must be done19. Article XX(b) provided a limitation and a right to implement limitations, which could be PPM or TBT “only to the extent necessary”20. This means the scope of the achievement of this goal was limited to situations where it was n obligation to implement these standards and rules to achieve results that are clearly defined. This means that a government will have to take care in order to avoid being more restrictive than necessary. Therefore, it can be established that there is a commonality of PPM and TBT in that they are to achieve definite goals and these goals must be achieved in the best and the most appropriate manner and framework since this allows the countries to get more objective and a consistent approach for the achievement of specific goals and ends. In other cases, there are important limits to packaging and labelling as a requirement to ensure that consumers are informed of what they are purchasing. This is because in some cases, there might be the lack of the competency and ability to make requirements or ban a given product through the regulations. However, in these situations, there might be the option and the ability to inform consumers of what they are consuming in order to achieve specific moral goals and ends. Conclusion The GATT provides the opportunity for the provision of a national treatment of products as different based on the production, process and methods of creating certain products being presented. On the other hand, the Technical Barriers to Trade (TBT) includes universal agreements that are moral and legal in nature but nations are required to implement them as and how they are supposed to do so. PPM is mainly based on the government’s plans and policies. On the other hand, TBT is meant to be a multilateral set of standards that ought to be implemented by each state. However, PPM could be any kind of law and regulation. On the other hand, both of these situation are such that it must be implemented only when it is necessary. In some cases, moral requirements like labelling must be more appropriate. 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