Consignment Based Conformity Assessment and Pre-Export Verification of Conformity to Standards programmes in SADC countries
In a new tralac Trade Brief, Abrie du Plessis discusses CBCA/PVoC programmes in the SADC region within a GATT, WTO and SADC context
The significant increase in imported consumer goods into SADC countries over the last decade has caused several SADC Governments to implement or to consider implementing Consignment Based Conformity Assessment (CBCA) or Pre-Export Verification of Conformity (PVoC) programmes. CBCA/PVoC programmes are generally described as having the following objectives:
To protect consumers from dangerous, substandard or counterfeit products.
To protect the environment.
To protect domestic industry from unfair competition from non-compliant goods.
To facilitate trade through the avoidance of consignment testing upon arrival or multiple testing requirements.
CBCA/PVoC programmes could indeed achieve all of these objectives, but they pose challenges to governments in terms of design and execution in order to avoid them being in breach of the provisions of the General Agreement on Trade and Tariffs (GATT), other applicable WTO agreements and certain aspects of regional trade arrangements.
What are CBCA/PVoC programmes?
CBCA/PVOC programmes put in place conformity assessment procedures which take place on a pre-shipment basis, in other words before the goods in question leave the exporting country. They therefore fall squarely within the provisions of Articles 5 and 6 of the WTO Technical Barriers to Trade Agreement (the TBT Agreement) and the WTO Agreement on Pre-shipment Inspection (the PSI Agreement).
The WTO Agreement on Pre-shipment Inspection recognises the need for developing countries to have recourse to Pre-shipment Inspection (PSI) for as long and in so far as it is necessary to verify the quality, quantity of price of imported goods.
Pre-shipment Inspection is by definition carried out on the territory of exporter Members of the WTO, and it is established practice to appoint inspection companies such Bureau Veritas, Cotecna, Intertek and SGS to conduct such inspections.
From the inception of Pre-shipment Inspection the emphasis was on verifying mainly three issues, all related to fiscal and foreign exchange matters, in that the contracted inspection companies would verify the stated quantity of the goods shipped, their customs classification and their stated price.
The PSI Agreement did not create its own administering body, so its progress is being monitored by the Committee on Customs Valuation of the World Customs Organisation (WCO). The Committee has been maintaining a standing agenda item on PSI and has noted that the objective of government mandated PSI programmes has evolved since the early 1960s. Initially PSI was used almost exclusively to address exchange control concerns, but in more recent years, as trade has become more liberalized and exchange controls have been removed, the emphasis of PSI programmes has shifted to revenue collection. Primarily PSI aims to detect false invoicing and ensure that governments receive the correct revenue.
The defining legal impact of CBCA/PVoC programmes is that they effectively make compliance with certain standards and labelling requirements mandatory or, in other words, turn them into technical regulations as defined in the TBT Agreement. This raises significant questions about the potential of technical regulations and conformity assessment as non-tariff barriers to trade (NTBs), and also about national treatment (or the lack thereof) under the GATT. These programmes by their very nature also give rise to further concerns about other NTBs recognised in the multilateral trading system, including the following: Technical Regulations and Standards; Requirements pertaining to Transparency, as well as unfair and arbitrary Application of Trade Measures; Customs Formalities and Procedures; Pre-shipment Inspection; Import Licensing Procedures; and Trade Facilitation.
CBCA/PVoC programmes: The Southern African Development Community (SADC) context
There is a clear increase in CBCA/PVoC programmes relating to quality (standards and technical regulations) amongst the Southern African Development Community (SADC) and other African countries. In just the past two years countries such as Tanzania, Kenya, (not a member of SADC) Botswana and Zimbabwe have either instituted, strengthened or announced an intention to take further action on such programmes. It is important for exporters to take note of these developments and for other WTO Members to consider whether they are consistent with the obligations of these states under the applicable WTO Agreements.
The increase in the use of CBCA/PVoC programmes by SADC Members may have a significant impact on trade between SADC countries. It is therefore important that these programmes should also be evaluated against the treatment of standards, technical regulations and conformity assessment procedures envisaged in the TBT Annex to the SADC Protocol on Trade.
As currently used by some SADC Members, CBCA/PVoC programmes appear to be a convenient short-cut which allows governments to make a list of (sometimes vaguely described) product standards mandatory without having to resort to appropriate national legislative measures. It is further questionable whether CBCA/PVoC programmes which effectively turn non-binding standards into technical regulations and then only apply them to imported and not to locally manufactured goods, will pass muster in terms of the legal framework set out above. On top of this, the SADC countries which have put CBCA/PVoC programmes in place have chosen widely diverging, contradictory and inconsistent approaches which create legal uncertainty and make matters worse for exporters.
In order to alleviate the impact of CBCA/PVoC programmes on trade both within SADC and with other WTO Members those SADC countries which have put such programmes in place or are contemplating doing so, should evaluate such programmes against the legal framework described above. The objective must be to ensure that they are consistent with their WTO obligations and are as uniform as possible.
SADC countries which have put such programmes in place or are contemplating doing so should consider the reaction of their major trading partners to such programmes and should take into account the general requirement that such programmes should not continue for longer than necessary.
SADC should put extra emphasis on the implementation of the Technical Regulation Framework in the TBT Annex to the SADC Protocol on Trade, and it will certainly be beneficial if the issue of conformity assessment by way of pre-shipment inspection in the form of CBCA/PVoC programmes is added to discussions about the implementation of the Technical Regulation Framework.
As part of such a discussion SADC should also consider whether the dispute resolution mechanisms currently available to exporters are sufficient or should be addressed within the SADC context, where there is currently no functioning SADC Tribunal and where national courts cannot normally provide judicial remedies in these instances.