Question

Do trade rules permit action to be taken against the method used to produce goods (rather than the quality of the goods themselves)?

Answer 1

Technical Barriers to Trade (TBTs) and Sanitary and Phytosanitary Measures (SPS) are a form of Non-Tariff measure in international trade that sometimes tend to interfere with the smooth flow of trade. TBT measures take the form of standards, technical regulations and conformity assessment procedures. And SPS measures may include ensuring products are being imported from a disease-free area, setting the maximum residual limits (MRL) for pesticides, allowing only a few types of additives in food, etc.

Process and Production Methods (PPMs) are a part of the TBTs and SPSs measures that place emphasis on the way a product is manufactured. For instance, a country may have set MRL for the apples it grows. The MRL will also apply to every exporter of apples to this country. In case, the exporter fails to deliver apples carrying the set MRL, the consignment may be cancelled, leading to disruption of trade. Hence, it is important to pay attention to the PPMs that countries follow for ensuring the smooth delivery of goods across borders.

Real-life Example:

The WTO lists an important case in international trade that very clearly communicates the importance of PPMs. USA imposed a ban on the import of shrimps in the harvesting of which many sea turtles had died. An exporter of shrimp had to show that no or little sea turtles were killed while harvesting shrimp in order to be successful with the consignment.

Hence, it can be understood that certain trade rules covered by various WTO trade agreements like TBT and SPS contain provisions for insisting on the use of certain production processes (PPMs) in the manufacturing of goods, the non-adherence to which can lead to a trade dispute.