International Trade (OIE, GATT, NAFTA)

Andrea M. Morgan, DVM, MS
Senior Staff Veterinarian
National Center for Import and Export
USDA, APHIS

The North American Free Trade Agreement (NAFTA), a trilateral trade pact between the United States, Canada and Mexico, went into effect in January 1994. The General Agreement on Tariffs and Trade (GATT) Uruguay Round Agreement, a global trade pact involving 120 plus countries, went into effect in January 1995. The same month that GATT went into effect, the U.S. Administration and 33 leaders from Central and South America and the Caribbean made a joint declaration of their commitment to building a hemispheric free area, known as the Free Trade Areas for the Americas (FTAA), by the Year 2005. These trade initiatives are all aimed at liberalizing and expanding regional and global trade.

In both the GATT and NAFTA negotiations, countries made a historic decision to reform agricultural trade. In addition to cutting tariffs and reducing other trade distorting practices, such as export subsidies, the NAFTA and GATT established a set of rules to control the use of technical health barriers. Most significantly, countries are required to document, in a transparent fashion, the scientific basis for any regulations which affect trade. Countries also agreed that import requirements should, to the greatest extent possible, be based on international standards. For this reason, countries agreed to establish a code or set of disciplines to condition the use of sanitary and phytosanitary measures in trade. The end result was the GATT Uruguay Round Agreement on the Application of Sanitary and Phytosanitary (SPS) Measures. When U.S., Mexican and Canadian officials met to negotiate the NAFTA in 1990, they addressed many of the same objectives which were being pursued in the GATT negotiations, including the goal of reforming agricultural trade and the use of technical health standards. In the end, the NAFTA replicated the same SPS rules and principles established under GATT.

The seven rules of the game, the key provisions of the SPS agreements in the NAFTA and GATT, are as follows:
(1) Basic Rights-A country has the right to adopt and maintain any measures it believes are necessary to protect the health of its plants and animals as long as the measures are based on science; do not arbitrarily or unjustifiably discriminate between its goods and like goods of another party where identical conditions prevail; and based on international standards whenever possible.
(2) Risk Assessment-Import decisions must be based on these using relevant data such as scientific evidence, processes and production methods; inspection sampling and testing methods; ecological and environmental conditions; economic factors and treatments including quarantines.
(3) Equivalence-Encourages importing countries to recognize that different procedures can be used to achieve the desired level of protection.
(4) Regionalization-Recognition of pest-and disease-free or low incidence areas to allow trade from those areas. Need data to evaluate an exporting country's infrastructure; the exporting country's disease control capabilities; the exporting country's surveillance and monitoring systems; and its import policies.
(5) International Standard Setting-For animal health, the International Office of Epizootics (OIE). Established in 1924, it is the world's oldest veterinary organization. The OIE develops norms for disease reporting and standards for trade in animals and animal products.
(6) Transparency-Greater openness and clarity of the domestic rulemaking process. Provide advance notice of rules which affect trade. A contact point must also be identified.
(7) Dispute Settlement Process-Bilateral consultations. If no resolution, the complaining party may go to the World Trade Organization's SPS Committee. Expert panels can be formed to review technical trade disputes. If no resolution at the SPS Committee, the complaining party may elevate the issue to the appropriate dispute settlement body.

There are four major points about this process:
(1) The emphasis is placed on resolving technical disputes and
complaints at the technical level.
(2) The challenging party has the burden of proof.
(3) The panels formed are advisory.
(4) If the panel concludes a SPS measure is in violation, the
country has the option to change the inconsistent measure, or keep the measure while being subject to sanctioned retaliation.

As you can see, the trade policy that we have adopted in the United States, and which most nations seem to have embraced, is to promote an open, rules-based international trading system. The NAFTA and GATT set the foundation for liberalized agricultural trade by establishing basic rules which allow regulatory agencies to impose the necessary health-related controls while guarding against the abuse of such measures for unjustified protectionist purposes.

With this in mind, APHIS intends to focus on the development of our internal risk assessment system so that assessments are transparent, flexible, and trade consistent. Our goal is the development of a risk assessment process which our domestic industries and foreign veterinary counterparts understand and support. The quality of our risk assessments will depend on the information and data generated by existing surveillance and monitoring systems as well as other sources. The challenge will be to find an internationally acceptable way to assures that third countries, such as the U.S., must meet in order to export aquaculture animals and products to the EU. The decision to import from third countries depends on the rules of the third country for the prevention and control of diseases of aquaculture animals; the structure of the official services in the third country and their powers; and the organization and implementation of measures to prevent and control infectious or contagious diseases of aquaculture animals. The U.S. is finalizing an equivalency agreement with the EU that will provide for the mutual recognition of regulatory systems that protect public and animal health, thereby allowing trade in commodities, including aquaculture animals and products, to continue and expand.

The key provisions of EU Directive 91/67/EEC that require a national aquaculture program to be established are the following: the state of health of the aquaculture animals, particular attention paid to exotic diseases, and the environmental health situation in the country which might endanger the health of livestock in the Member States; the regularity and rapidity of the information supplied by the country relating to the existence of infectious or contagious diseases of aquaculture animals, especially OIE List B diseases; the rules of the country on the prevention and control of diseases of aquaculture animals; the structure of the official services in the country and their powers; the organization and implementation of measures to prevent and control infectious or contagious diseases of aquaculture animals; and the presence of a national reference laboratory which is able to determine the type, subtype and variant of pathogens, and to confirm results obtained by regional diagnostic laboratories; that is responsible for coordinating diagnostic standards and methods, and for the use of reagents; that provides diagnostic reagents to approved labs; that controls the quality of all diagnostic reagents used in the country; that is responsible for coordinating diagnostic standards and methods laid down by each lab for diagnosis of disease; that periodically arranges comparative tests; that holds isolates of the pathogen of the disease from cases confirmed in the country; and that ensures confirmation of positive results obtained in approved diagnostic labs.

For additional information on the topics addressed in this summary please contact Dr. Morgan at 301/734-8068 or email: ammorgan@aphis.usda.gov