There seems to be growing interest in the politics of trade and regulation. In the past few years, there have been protests over the Transatlantic Trade and Investment Partnership; Donald Trump threating to slap a 45 percent tariff on Chinese imports, and demanding two regulations be cut for every new one; and the Brexit vote, with some on the “Leave” side hoping that Brexit will bring new trade deals and a “bonfire of regulations.”
But lurking under the surface – binding trade and regulation – is harmonization and the role of international standards bodies. Modern trade deals go beyond cutting tariffs (average global tariffs are already under three percent), with the real gains coming from the removal of non-tariff barriers to trade. Divergent regulatory systems are one such barrier, and their removal through the adoption of international standards features in many modern trade deals. Indeed, countries are obliged by the World Trade Organization’s Technical Barriers to Trade Agreement to use relevant international standards “as a basis for their technical regulations.” Pharmaceutical regulations feature as part of this trend towards common standards, as revealed by a number of EU trade agreements. Looking at the EU-South Korea deal, Annex 2-D, Chapter Two reads, “The Parties will take into account, as appropriate, international provisions, practices and guidelines for pharmaceutical products or medical devices, including those developed by the WHO, the OECD, the ICH, the GHTF [Global Harmonization Task Force] and the Pharmaceutical Inspection Convention and Pharmaceutical Inspection Cooperation Scheme (PIC/S).” The same paragraph also appears, nearly word for word, in the EU-Singapore Free Trade Agreement, and Japan has agreed to “refer to the ICH as the international standard-setting body and use ICH guidelines as [the] basis for its legislation” as part of an EU trade deal. Beyond the EU, in the Trans-Pacific Partnership, Annex 8-C of the section on pharmaceuticals, reads: “The Parties shall seek to collaborate through relevant international initiatives, such as those aimed at harmonization, as well as regional initiatives that support those international initiatives, as appropriate, to improve the alignment of their respective regulations and regulatory activities for pharmaceutical products.” “If you want large volumes of goods moving from one country to another, you can’t inspect everything at the border,” says Lezotre. “The best way to make sure goods are safe and effective is to have common standards and agreements over inspections – this is why harmonization underpins modern trade deals.” But this may pose a problem for those hoping to deregulate and sign new trade deals simultaneously. If there is an agreement to harmonize standards as part of a trade deal, there’s only a limited amount of deregulation possible before a deviation from agreed common standards.
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