How can health and safety regulation become a trade barrier?

How can health and safety regulation become a trade barrier?

After World War II, there was an outcry for free markets and international trade globally. Many countries were suffering from strict restrictions to business, especially if they did not belong to the economic bloc they earned to trade. By opening up of countries territories to international trade has had a significant boost in sales. Having great success has also brought disadvantages that countries are grappling to control. In attempts to protect their business locally and internationally, countries have put exceptional measures to protect locally produced products, disguised as non-tariffs barriers.

An example of the non-tariff barriers includes passing laws that would require strict adherence to health and safety regulations. Since these countries do not want to place as those against free trade by other developed nations, imposing of non-tariffs enable them to enjoy supremacy of interest in their territories. These non-tariff regulations take the form of, subsidies, technical barriers, custom delays, import quotas, among others. These measures do not apply to an increase in taxes for imports. They do, however, affect the flow of products coming in, for example with import quotas. While policies such as subsidizing of locally produced products are adopted, international trade is bothered as their products seem expensive.

So as not to be evident in their fight against the free market and international trade, policies on environmental health and safety have been enacted. No policy on health and safety is the same. Each country has its measure, which is considered standard. This leaves room for exploitation by federal governments which affect negatively free flow of trade. A case example is the Family Smoking Prevention and Tobacco Control Act of 2009. On its provision was the banning of all flavoured cigarettes except menthol. When enacted this would kick out of business all imported flavoured cigarettes, except for menthol ones which were produced locally. Indonesia at the time was the largest exporter of flavoured tobacco known as Kretek. A suit filed by Indonesia to World Trade Organisation argued that just as Kretek was a flavoured so was menthol and Kretek should have market rights in the USA. WTO ruled in favour of Indonesia citing to be same product although the U.S. did not lift the ban against them.

2. How can different environmental circumstances make one country’s regulation inefficient in another country?

Tight environmental laws that govern industrial processes of manufacture put a competitive disadvantage to domestic products than imports. On the other hand, when a country has weaker regulations on environment acts as an advantage to local products because the cost of compliance is lower. When governments with almost similar environmental and health policies support their manufactures financially to meet export standards, then it is perceived as a disadvantage to the local market. Should the U.S. consider counter-actions or other trade measures when it is apparent they are at a dilemma when competing countries that aren’t as strict on environmental laws?

Any counter-actions, for example, filling suits with WTO may seem like a remedy, but its impact limited because of different standards set by competing countries. Various options that include national backing for research and development, imposing states to improve their laws, and providing technical expertise to production, may require ample consideration if the U.S. wants to maintain relevance in international trade.

To remain productive, a country’s policy of management to a degree must incorporate imported goods. These policies of manufacture would subject the same standards on imported goods and manufactured on the basis of the kind of product, usage and disposal

. Products intended to be used in one country might not meet another country’s criteria. When this set standards are harmonized, trade becomes more open, suits more isolated.

As earlier discussed, it is

quite challenging to argue that environmental policies have a specific measure on the impact on trade of commodities. This is because the intention of the system policies cannot be easily said to benefit one and not the other directly.  A trade dispute erupted between Canada and the U.S over lobsters. The Americans have a standard size of lobsters can be sold to the market while that of Canada is smaller. Canadian lobsters achieve reproductive age while they are quite small, and legislation has enabled Canada to sell them in those sizes. This hindered trade of lobsters in the two countries. America could not allow such small sizes to be sold in its market because it contradicted with the environmental policy to protect growing lobsters. This illustrates some of the difficulties when different countries cannot harmonize policies to enable free trade. Both countries’ laws came up with the right size for lobsters, ensuring they reached the correct maturity age in reproductivity before being harvested. Even with such an agreement, America proceeded with its initial ban on Canadian lobsters. It was argued that it could not control shrewd farmers who would take advantage of the new minimum size and sell domestic grown lobsters before reaching maturity set by law. Canada viewed this being as improper trade barrier, arguing that American had more to benefit if the ban stayed. To them, it was not just a ban to protect lobster stocks. The bilateral panel that heard the case upheld the ban by America arguing that the lobsters in both countries were subjected to the same requirements for growth; therefore, they should not be an issue of size harvesting. No consideration was presented before the panel to establish which conservation policy had a higher advantage than the other, to disrupt trade between the two countries.

What are some reasons why the government might not be willing to make allowances for different countries?

It is not uncommon for governments to step in to restrict trade. As seen above in the lobster case, Americans were not willing to step down its lobsters’ size to accommodate Canadians. It is a way to control the lobster market. What sway might a state have in restricting trade? If international companies can completely take over the domestic market, then i is the responsibility of the government to intervene and control the domestic industries cannot compete against foreign industries, the government will restrict trade to help the domestic industries develop. Governments may also restrict trade to foster business at home rather than encouraging business to move out of the country. These protectionist policies encourage prices to stay high and help domestic industries to develop.