THE BENEFITS OF THE WTO TBT AGREEMENT

& NEW OPPORTUNITIES FOR

RUSSIA-U.S. TRADE

Joe Wereszynski

March, 2012

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Today’s Presentation

• Russian Economic Highlights • Russia’s WTO Accession-What it means for U.S.

Companies • WTO TBT Agreement • ITA’s Trade Agreements Compliance Program • Models of successful events worldwide • Overview of Russia Standards and

Conformity Assessment Project • Questions & Answers

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Economic Brief

• World’s 7th largest economy (PPP)

• Real GDP growth: 3.6% in 2012 – (avg. +7% from ‘99-’08)

– Projected annual GDP growth between 3-4% from 2012 to 2015.

• World’s 5th largest foreign exchange reserves.

• Population: 141.9 million

• Highest per capita income of “BRIC” countries $13,377.

Impressive growth in household consumption per capita vs. BRIC peers

2000-2011

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Russian Credit Card Market 2007 - 2012

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Opportunity Drivers • Massive infrastructure needs - Road building upgrade and expansion - Railroad upgrade and expansion - Information & communications • Sochi Winter Olympics 2014

• FIFA World Cup 2018 – 11 Russian Cities

www.rus-18.com • Russia Far East Development

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Russia’s WTO Accession

New Market Opportunities

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WTO Membership

Doesn’t mean special benefits for Russia.

Rather, accession means Russia must play by the same rules as other major trade partners.

U.S. Companies are poised to gain via: • Lower tariffs for numerous product categories

• More protections for service-providers, IP-rightholders;

• Better predictability & increased transparency in regulations;

• Ability to leverage the WTO’s Dispute Settlement process.

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Tariff cuts & ceilings • Average bound tariff rate for goods will decline from almost 10% to

under 8%. • Approximately 38 percent of Russia’s final tariff rates were bound

upon accession.

• Over 80 percent will have their final bound rates implemented within 3 years.

• Should Russia increase a tariff above its “bound” rate, WTO Members can require that Russia reduce the tariff to the agreed level or else provide compensatory tariff cuts on other products.

• WTO tariff rate bindings will provide for more predictability and

stability, preventing Russia from arbitrarily raising tariff rates.

The WTO Agreement on Technical Barriers to Trade

(TBT)

Understanding Your Company’s Trading Rights

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The Objective of the WTO Agreement on Technical Barriers to Trade (TBT)

Prevent the use of technical regulations,

standards, or conformity assessment as an unnecessary barrier to trade.

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Scope of the WTO TBT Agreement

• Standards (voluntary): U.S. policy supports a “market-driven approach” to standards development.

• Technical Regulations (mandatory) • Conformity Assessment Procedures: (e.g., testing,

inspection, registration, accreditation, and verification)

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Core provisions of the WTO TBT Agreement

• Ensure that technical regulations are not prepared, adopted, or applied with a view to or the effect of creating unnecessary obstacles to trade

• Base technical regulations on relevant

international standards as much as possible • Fulfill legitimate regulatory objectives in a manner

that is no more trade-restrictive than necessary • Provide non-discrimination: national treatment

(NT); most favored nation (MFN)

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Core provisions of the WTO TBT Agreement

Transparency: • Publish a notice at an early appropriate stage • Provide copies of relevant documents (upon request) • Notify draft regulations/amendments to the WTO • Allow for reasonable time for comments while

amendments can be still be introduced • Take written comments/discussions into account in

the final regulation • Allow a reasonable interval between publication and

entry into force so producers may adapt • Establish and maintain a national inquiry point

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Common TBT compliance problems

• Requirements are difficult to find, vague, or simply not published

• Regulations are implemented/revised without any advance notice, opportunity to comment, or sufficient time to adjust production lines.

• Product approvals mandate unwarranted, unnecessary, or duplicative in-country testing

• Alternatives such as, voluntary standards or post-market surveillance, will meet regulatory objectives and facilitate trade.

Market Access and Compliance (MAC) Mission: • “Identifies and works to eliminate or reduce

foreign barriers to trade, investment and business operations; enforcing trade agreements; and promotes global growth.”

• Our experts work with foreign governments to resolve trade barriers by ensuring compliance with U.S. trade agreements.

Case study 1: China Refrigeration Container Unit Restrictions

“When Chinese customs officials impounded U.S. products destined for re-export to Australia, the International Trade Administration made sure that China honored commitments it had made under international trade agreements, thereby ensuring that a Pennsylvania-based company’s business was not jeopardized by the improper application of regulatory standards….” (see video) http://trade.gov/publications/ita-newsletter/0311/pennsylvania-company-international-sales.asp

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Strategy Development for Resolution

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Additional Diplomatic Tools: Bilateral discussions TBT Report/NTE Multilateral/ WTO fora FTA negotiations

Meetings with foreign officials TBT Inquiry point: Phone calls and letters Non-papers Visits by Washington officials

Methods for leveraging trade agreements:

As a last resort: Team may recommend referral to USTR for WTO Dispute Settlement Body when appropriate

Previous Models of Standards Engagements and Results:

China: •Team resolves six; advances three, and initiates nine new cases at follow-up roundtable •Increased Transparency through facilitation of standards portal.

Saudi Arabia: •Increased Transparency and compliance with WTO TBT obligations resulting in a more predictable business environment. (as a result the Kingdom notified 170 measures in the following three months)

India: •In deliberations with the Government, helped lay the ground work for the 2012-13 U.S.-India Commercial Dialogue (business roundtables) on transparency, trade, and investment; •Advanced U.S. industry concerns with India’s new chemical policy and three other compliance actions.

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Taiwan Standards Engagement

Highlights: • Provided opportunity to develop contacts

and confidence between the key players on the two sides.

• Informed “what TBTs are and what rights companies have under the WTO Agreement”.

• Resolution and reduction of market access concerns including: Opening $4.5 million, and $100 million annual market.

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June, 2010 Cosmetics Regulatory Information Exchange

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Encouraged more trade facilitative regime of post market surveillance

Increased transparency Expedited product approvals Protected proprietary information

September, 2011 chemical dialogue

Russia and the Reset

• Russia Enters WTO August, 2012 • PNTR established December, 2012 • US companies now should receive full benefits of

the WTO • BDERWG work plan • TBT is the #1 trade barrier by volume • Commence engagement in the area of standards

and conformity assessment. • Unique opportunity to cooperate with Russia at

the onset of WTO membership.

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U.S.-Russia Standards Cooperation Engagement Event U.S. and Russia to hold a best practices exchange event on technical barriers to trade and regulatory frameworks Time Frame: May 2013 Goals: 1. Better understand each country’s standards and

certification systems. 2. Eliminate or prevent unnecessary obstacles to trade. 3. Explore areas for potential cooperation for mutual

economic growth.

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1. Presentations on set-up of respective standards systems

2. Best practices of implementing the WTO TBT Agreement to create a better business environment.

3. Suggested standards related themes for potential cooperation:

Tentative Event Agenda:

A. Russian presentations B. US presentations C. Regulatory coherence

A. Russian presentations B. U.S. presentations C.WTO transparency road map

• Best practices for operating an inquiry point • Industry panel TBT transparency benefits to business

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3. Suggested themes standards related sub-topics for potential cooperation:

Topics might include: standards portal cooperation, private sector conformity assessment exchange, Sector Based cooperation: heavy machinery/oil gas, construction equipment, autos, IT/telecom standardsetc.

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U.S.-Russia Standards Cooperation Engagement Event Please join USG and USRBC! Help us identify key questions, issues, and problems in Russia market access. Consider areas for U.S.-Russia standards-related cooperative activities. Participate in future ITA-led U.S. industry roundtables with the Government of Russia

Resources:

NIST: Notify US: https://tsapps.nist.gov/notifyus/data/index/index.cfm Russia WTO accession sector opportunity reports: http://www.trade.gov/mas/ian/tradeagreements/multilateral/wto/tg_ian_003531.asp Factsheets for U.S. states: http://www.ustr.gov/countries-regions/europe-middle-east/russia-and-

eurasia/russia/economic-benefits-states-russia Factsheets for industry sectors: http://www.ustr.gov/countries-regions/europe-middle-east/russia-and-eurasia/russia-

0 Goods & services schedules and commitments by Russia in its WTO

accession: http://www.ustr.gov/node/7301

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Market Entry & Access Questions? Contacts:

Joe Wereszynski Office of Russia, Ukraine & Eurasia Market Access & Compliance Unit International Trade Administration Washington, D.C. Tel: 202-482-4729 Joseph.Wereszynski@trade.gov

John McCaslin Minister Counselor for Commercial Affairs U.S. Commercial Service U.S. Embassy – Moscow Tel: (011) 7-495-728-5580 John.McCaslin@trade.gov www.export.gov/Russia

Bryan O'Byrne WTO & Technical Barriers to Trade Market Access and Compliance Unit International Trade Administration Washington, D.C. Tel: 202-482-0705 Bryan.O’Byrne@trade.gov

Kenneth Duckworth Principal Commercial Officer U.S. Consulate – St. Petersburg Tel: (011) 7-812-326-2563 Kenneth.Duckworth@trade.gov www.export.gov/Russia

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