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Nature and Enforceability of WTO-plus SPS and TBT Provisions in Canada's PTAs: From NAFTA to CETA

Published online by Cambridge University Press:  19 October 2015

GONZALO VILLALTA PUIG
Affiliation:
The Chinese University of Hong Kong
ERIC D DALKE
Affiliation:
Dentons Canada LLP

Abstract

Safety standards can function as non-tariff barriers to trade. Canada is a large exporter of goods and so it has an interest in the regulation of safety standards, both at the multilateral level through its membership of the World Trade Organization (WTO) and, most especially, at the bilateral and regional level through its Preferential Trade Agreements (PTAs). Canada has signed PTAs with provisions that go beyond the obligations of WTO Members under the Agreement on the Application of Sanitary and Phytosanitary Measures and the Agreement on Technical Barriers to Trade. This article analyses the nature and enforceability of WTO-plus provisions on sanitary and phytosanitary standards (SPS) as well as product standards (TBT) in Canada's PTAs, from the North American Free Trade Agreement (NAFTA) between Canada, Mexico, and the United States to the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union. First, it finds that the inclusion of WTO-plus SPS and TBT provisions in Canada's PTAs is a relatively recent practice that is still in development. Only about half of Canada's PTAs contain WTO-plus SPS and TBT provisions and, those treaties that do, commonly concern institutions for regulatory cooperation and information exchange arrangements, without much commitment to harmonization. Secondly, it finds that nearly half of the SPS and TBT provisions in Canada's PTAs are unenforceable. They either are in a language that is too imprecise for enforcement or do not allow access to a dispute settlement mechanism. Thirdly, it finds that, by global standards, most of Canada's PTAs are modest in their approach to SPS and TBT issues, with NAFTA and CETA as key exceptions. The article concludes that the extent to which regulatory convergence occurs on safety standards for Canada is dependent more on political cooperation between the parties than on the nature and enforceability of SPS and TBT provisions in its PTAs.

Type
Review Article
Copyright
Copyright © Gonzalo Villalta Puig and Eric D Dalke 2015 

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References

1 World Trade Organization, Canada Trade Profile (September 2014) Statistics Database: Trade Profiles, http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Country=CA.

2 Agreement on the Application of Sanitary and Phytosanitary Measures, opened for signature 15 April 1994 (entered into force 1 January 1995) (SPS Agreement).

3 Agreement on Technical Barriers to Trade, opened for signature 15 April 1994 (entered into force 1 January 1995) (TBT Agreement).

4 For a study of the SPS Agreement and TBT Agreement, see Marceau, Gabrielle and Trachtman, Joel P., ‘A Map of the World Trade Organization Law of Domestic Regulation of Goods: The Technical Barriers to Trade Agreement, the Sanitary and Phytosanitary Measures Agreement, and the General Agreement on Tariffs and Trade’ (2014) 48(2) Journal of World Trade 351432 Google Scholar.

5 North American Free Trade Agreement between the Government of Canada, the Government of the United Mexican States and the Government of the United States of America, signed 17 December 1992 (entered into force 1 January 1994) (NAFTA).

6 Comprehensive Economic and Trade Agreement, Canada–European Union (not yet in force) (subject to legal revision) (CETA).

7 Horn, Henrik, Mavroidis, Petros C., and Sapir, André, ‘Beyond the WTO? An Anatomy of EU and US Preferential Trade Agreements’ (2010) 33(11) The World Economy 1565, 15651588 CrossRefGoogle Scholar.

8 Free Trade Agreement between Canada and the Republic of Korea, signed 22 September 2014 (entered into force 1 January 2015) (Canada–South Korea).

9 At the time of writing, the text of the Canada–Ukraine Free Trade Agreement is not available. However, the agreement outline specifies that it will contain chapters on SPS and TBT. See ‘Government of Canada, Canada‒Ukraine Free Trade Agreement: United in Building a Prosperous and Secure Future’ (2015), http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/ukraine/canada-ukraine.aspx?lang=eng.

10 Because the negotiations for NAFTA occurred before the establishment of the WTO and the entry into force of the SPS Agreement and TBT Agreement, the text of NAFTA is a stand-alone regime on SPS and TBT issues. NAFTA does refer to certain obligations under the old General Agreement on Tariffs and Trade (GATT) (General Agreement on Tariffs and Trade (GATT), signed on 30 October 1947 (entered into force 1 January 1948)), including ‘interpretive notes’ and ‘successor agreement(s)’, but provides that its terms prevail to the extent of any inconsistency (Article 103). NAFTA's TBT chapter also refers to the GATT Standards Code but does not incorporate its terms (Article 903). Obviously, unlike Canada's post-1995 PTAs, NAFTA does not refer to the SPS Agreement and TBT Agreement.

11 The nature and consequence of inconsistencies between PTA and WTO rules are a question that has generated some debate but one that is beyond the scope of this article. For a valuable discussion of the relationship between SPS and TBT rules in PTAs and the WTO, see Joel P. Trachtman, ‘The Limits of PTAs: WTO Legal Restrictions on the Use of WTO-plus Standards Regulation in PTAs’ in Kyle W. Bagwell and Petros C. Mavroidis (eds.), Preferential Trade Agreements: A Law and Economics Analysis (Cambridge University Press, 2011) 115; Trachtman, Joel P., ‘Toward Open Recognition? Standardization and Regional Integration under Article XXIV of GATT’ (2003) 6(2) Journal of International Economic Law 459 CrossRefGoogle Scholar.

12 Commentators have used a variety of iterations of the ‘WTO-plus’ methodology. This article adopts the methodology of Horn, Mavroidis and Sapir (Horn, Mavroidis and Sapir, above n. 7, 1565), which compared provisions in select US and EU PTAs. In addition to a ‘WTO-plus’ classification, the authors employed a ‘WTO-X’ classification to describe PTA provisions on matters that the WTO does not cover. SPS and TBT provisions, however, are strictly ‘WTO-plus’ in that they are on matters that the SPS Agreement and TBT Agreement do indeed cover. For a similar methodology, see Kleimann, David, ‘Beyond Market Access? The Anatomy of ASEAN's Preferential Trade Agreements’ (2014) 48(3) Journal of World Trade 629, 629682 Google Scholar.

13 Free Trade Agreement between the Government of Canada and the Government of the State of Israel, signed 31 July 1996 (entered into force 1 January 1997) (Canada–Israel).

14 Free Trade Agreement between the Government of Canada and the Government of Chile, signed 5 December 1996 (entered into force 5 July 1997) (Canada–Chile).

15 In 2015, Canada announced the conclusion of negotiations to modernize Canada–Israel and Canada–Chile. This modernization will introduce a new SPS chapter in Canada–Chile and both a SPS chapter and a TBT chapter in Canada–Israel. See Government of Canada, Background Information: Canada – Chile Free Trade Agreement (August 2015), http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/chile-chili/info.aspx?lang=eng; Government of Canada, ‘Harper Government Announces Modernization of Free Trade Agreement with Chile’ (10 April 2015), http://www.international.gc.ca/media/aff/news-communiques/2015/04/10b.aspx?lang=eng. See Government of Canada, Canada‒Israel Modernized Free Trade Agreement: Bringing the Canada‒Israel Economic Partnership into the 21st Century (August 2015), http://www.international.gc.ca/trade-agreements-accords-commerciaux/assets/pdfs/israel-b-eng.pdf.

16 Free Trade Agreement between the Government of Canada and the Government of the Republic of Costa Rica, signed 23 April 2001 (entered into force 1 November 2002) (Canada–Costa Rica).

17 Free Trade Agreement between the Government of Canada and the States of the European Free Trade Association (Iceland, Liechtenstein, Norway, and Switzerland), signed 26 January 2008 (entered into force 1 July 2009) (Canada–EFTA).

18 Free Trade Agreement between Canada and the Republic of Peru, signed 29 May 2008 (entered into force 1 August 2009) (Canada–Peru).

19 Free Trade Agreement between Canada and the Republic of Colombia, signed 21 November 2008 (entered into force 15 August 2011) (Canada–Colombia).

20 Free Trade Agreement between Canada and the Republic of Panama, signed 14 May 2010 (entered into force 1 April 2013) (Canada–Panama).

21 Free Trade Agreement between Canada and the Republic of Honduras, signed 5 November 2013 (entered into force 1 October 2014) (Canada–Honduras).

22 The Trans-Pacific Partnership may, in the future, set the new benchmark for regulatory convergence.

23 See Steger, Debra P., ‘Institutions for Regulatory Cooperation in “New Generation” Economic and Trade Agreements’ (2012) 39(1) Legal Issues of Economic Integration 109126 Google Scholar.

24 For a study of TBT-plus provisions in PTAs, see Rigod, Boris, ‘TBT-plus Rules in Preferential Trade Agreements’ (2013) 40(3) Legal Issues of Economic Integration 247270 Google Scholar.

25 For a study of Canada–Israel, see Hofley, Randall J. and Gudofsky, Jason L., ‘The Canada–Israel Free Trade Agreement ‒ Levelling the Playing Field’ (1997) 31(2) Journal of World Trade 153174 Google Scholar. Canada is in negotiations to modernize the text of Canada–Israel and Canada–Costa Rica.

26 Canada–EFTA, Article 7.

27 Ibid., Article 7.4.

Ibid

28 Ibid., Article 7.4.

Ibid

29 Canada–Costa Rica, Article IX.5; Canada–Honduras, Article 7.3.

30 Canada–Costa Rica, Article IX.6; Canada–Honduras, Article 8.4.

31 Canada–Costa Rica, Article IX.5.2.

32 Ibid., Article IX.6.2.

Ibid

33 Canada–Honduras, Article 7.1, 8.2.

34 Canada–Panama, Article 6.01, 7.02.

35 Ibid., Article 6.02.1.

Ibid

36 Ibid., Article 6.03.

Ibid

37 Ibid., Article 6.02.

Ibid

38 Ibid., Article 6.03.5.

Ibid

39 Ibid., Article 7.04.

Ibid

40 Ibid., Article 7.04.3.

Ibid

41 Ibid., Article 7.07.

Ibid

42 Ibid., Article 7.06.

Ibid

43 Ibid., Article 7.06.4.

Ibid

44 Ibid., Article 7.06.7.

Ibid

45 Ibid., Article 7.06.9.

Ibid

46 Canada–Colombia, Article 503, 602; Canada–Peru, Article 503, 602.

47 Canada–Colombia, Article 504; Canada–Peru, Article 504.

48 Canada–Colombia, Article 505; Canada–Peru, Article 505.

49 Canada–Colombia, Article 505.4; Canada–Peru, Article 505.4.

50 Canada–Colombia, Article 503; Canada–Peru, Article 503.

51 Canada–Colombia, Article 604; Canada–Peru, Article 604.

52 Canada–Colombia, Article 605; Canada–Peru, Article 605.

53 Canada–Colombia, Article 606.2; Canada–Peru, Article 606.2.

54 Canada–Colombia, Article 606.3; Canada–Peru, Article 606.3.

55 Canada–Colombia, Article 607; Canada–Peru, Article 607.

56 Canada–Colombia, Article 607.4; Canada–Peru, Article 607.4.

57 Canada–Colombia, Article 608; Canada–Peru, Article 608.

58 TBT Agreement, Article 2.9.

59 Canada–Colombia, Article 609; Canada–Peru, Article 609.

60 TBT Agreement, Article 10.1, 10.3.

61 Canada–Colombia, Article 610.1; Canada–Peru, Article 610.1.

62 Canada–South Korea, Article 5.5.

63 Ibid., Article 5.4.

Ibid

64 Ibid., Article 6.3.

Ibid

65 Canada–South Korea, Article 6.4.4. See Yen, Huai-Shing, ‘Beyond Tariffs: EU Trade Policy, Service Trade Regulations and TBT in the KOREU FTA’ (2013) 43(2) EurAmerica 353 Google Scholar.

66 Canada–South Korea, Article 6.6.5.

67 Ibid., Article 6.7.

Ibid

68 Ibid., chapter 21.

Ibid

69 For a study of regulatory convergence under NAFTA, see Irish, Maureen, ‘Regulatory Convergence, Security and Global Administrative Law in Canada‒United States Trade’ (2009) 12(2) Journal of International Economic Law 333355 CrossRefGoogle Scholar.

70 Agreement on Technical Barriers under the General Agreement on Tariffs and Trade (GATT Standards Code), opened for signature on 12 April 1979 (entered into force on 1 January 1980).

71 NAFTA, Article 903, 103.

72 NAFTA, Article 714.1. 14. See Wiler, Todd, ‘The Treatment of SPS Measures Under NAFTA Chapter 11: Preliminary Answers to an Open-Ended Question’ (2003) 26(2) Boston College International and Comparative Review 229 Google Scholar.

73 NAFTA, Article 714.2.

74 Ibid., Article 714.4.

Ibid

75 Ibid., Article 718.

Ibid

76 Ibid., Article 1802.

Ibid

77 Ibid., Article 1803.

Ibid

78 Ibid., Article 718.6.

Ibid

79 SPS Agreement, annex B.

80 NAFTA, Article 722.

81 Ibid., Article 723.

Ibid

82 Ibid., Article 723.5.

Ibid

83 Ibid., Article 720.

Ibid

84 Ibid., Article 720.2.

Ibid

85 Ibid., Article 716.6.

Ibid

86 Ibid., Article 716.5.

Ibid

87 Ibid., Article 905.3.

Ibid

88 Ibid., Article 906.2.

Ibid

89 Ibid., Article 908.3.

Ibid

90 Ibid., Article 906.3.

Ibid

91 Ibid., Article 906.5.

Ibid

92 Ibid., Article 909.1.

Ibid

93 Ibid., Article 909.2.

Ibid

94 Ibid., Article 913.

Ibid

95 Ibid., Article 914.

Ibid

96 Ibid., Article 907.

Ibid

97 For a study of the potential impact of CETA on non-tariff barriers to trade, see Krstic, Stanko S., ‘Regulatory Cooperation to Remove Non-tariff Barriers to Trade in Products: Key Challenges and Opportunities for the Canada–EU Comprehensive Trade Agreement’ (2012) 39(1) Legal Issues of Economic Integration 328 Google Scholar. See also Biuković, L. and Mathis, J., ‘Enhanced Regulatory Cooperation in the Canada: EU Comprehensive Trade Agreement’ (2012) 39(1) Legal Issues of Economic Integration 12 Google Scholar and Mathis, James, ‘Multilateral Aspects of Advanced Regulatory Cooperation: Considerations for a Canada–EU Comprehensive Trade Agreement (CETA)’ (2012) 39(1) Legal Issues of Economic Integration 7391 Google Scholar. See, more generally, Mathis, James H., ‘Mutual Recognition Agreements: Transatlantic Parties and the Limits to Non-tariff Barrier Regionalism in the WTO ’ (1998) 32(6) Journal of World Trade 531 Google Scholar.

98 Agreement between the European Community and the Government of Canada on Sanitary Measures to Protect Public and Animal Health in Respect of Trade in Live Animals and Animal Products and Confirm Their Intention to Continue This Work under the CETA (entered into force 17 December 1998).

99 CETA, Article 6.1, annex II.

100 Ibid., Article 6.4.

Ibid

101 Ibid., Article 6.2, annex III.

Ibid

102 Ibid., Article 6.5.

Ibid

103 Ibid., Article 7.2, annex IV.

Ibid

104 Ibid., annex V.

Ibid

105 Ibid., Article 8.

Ibid

106 Ibid., Article 8.2, 8.3.

Ibid

107 Ibid., Article 8.4, annex VI.

Ibid

108 Ibid., Article 8.7, annex VII.

Ibid

109 Ibid., Article 9, annex VIII.

Ibid

110 Ibid., Article 10, annex IX.

Ibid

111 Ibid., Article 11, annex X.

Ibid

112 Ibid., Article 12.1.

Ibid

113 Ibid., Article 13, 14.

Ibid

114 Ibid., Article 15.

Ibid

115 Ibid., Article 2.1.

Ibid

116 Ibid., Article 2.4.

Ibid

117 Ibid., Article 3.

Ibid

118 Ibid., Article 4.1.

Ibid

119 Ibid., Article 4.2.

Ibid

120 Ibid., Article V, Annex: Cooperation in the Field of Motor Vehicle Regulations.

Ibid

121 Ibid., Article 5.1.

Ibid

122 Ibid., Article 6.3.

Ibid

123 Ibid., Article 6.5.

Ibid

124 Ibid., Article 6.6.

Ibid

125 Ibid., Article 6.8.

Ibid

126 Ibid., Article 8.

Ibid

127 Ibid., chapter 33.

Ibid

128 Ibid., chapter 26.

Ibid

129 Ibid., chapter 27.

Ibid

130 A full discussion of the nature and enforceability of these bilateral institutions is beyond the scope of this article. Provisions relating to their design can be found in their respective chapters. In terms of regulatory convergence and harmonization, these bilateral institutions provide institutional support for deeper integration on SPS and TBT matters. Ultimately though, the extent to which regulatory convergence and harmonization will be achieved will depend on the political will of the parties.

131 CETA, chapter 30, Article X.02.

132 This methodology assesses enforceability on the basis of the language of the provisions without reference to other practical implementation issues that might impact provision enforceability. For a commentary on the methodology of the study, see World Trade Organization Secretariat, World Trade Report 2011 ‒ The WTO and Preferential Trade Agreements: From Co-Existence to Coherence (World Trade Organization, 2011).

133 Horn, Mavroidis and Sapir, above n. 7, 1572.

134 Horn, Mavroidis and Sapir, above n. 7, 1572‒1573.

135 Horn, Mavroidis and Sapir, above n. 7, 1575.

136 Canada–Colombia, Article 505.1; Canada–Peru, Article 505.1; Canada–Panama, Article 6.02.1.

137 Canada–Colombia, Article 505.2; Canada–Peru, Article 505.2.

138 NAFTA, Article 714.1.

139 Canada–Panama, Article 6.02.2.

140 Canada–Colombia, Article 6.04.3; Canada–Peru, Article 6.04.3; Canada–Panama, Article 7.04.3.

141 Canada–Panama, Article 7.06.2.

142 NAFTA, Article 906.

143 Much of the mandate and many activities of the TBT Committee appear as ‘may’ obligations and would be unenforceable.

144 Studies that compare the enforceability of SPS and TBT provisions across PTAs are difficult. And they are rare. Accordingly, a comprehensive overview of global SPS and TBT provisions is beyond the scope of this article. Instead, the article takes a broad overview of the world's PTAs in order to compare their basic provisions to Canada's WTO-plus SPS and TBT provisions. For a review of the enforceability of WTO-plus provisions generally, see Horn, Mavroidis and Sapir, above n. 7.

145 For a full list of WTO PTAs, see World Trade Organization, Regional Trade Agreements Information System (August 2015) Statistics Database: Regional Trade Agreements, http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx.

146 For a discussion of both SPS and TBT issues, see Andrew L. Stoler, ‘TBT and SPS in Practice’ in Jean-Pierre Chauffour and Jean-Christophe Maur (eds.), Preferential Trade Agreement Policies for Development: A Handbook (World Bank, 2011). See also Kenneth Heydon and Stephen Woolcock (eds.), The Rise of Bilateralism, Comparing American, European and Asian Approaches to Preferential Trade Agreements (United Nations University Press, 2009)

147 US–South Korea and Canada–South Korea have many similar provisions, including a limited SPS chapter and similar rules on TBT transparency, equivalence, and mutual recognition. Canada–South Korea is deeper on sector-specific rules and equivalence and mutual recognition rules for the automotive sector. EU–South Korea is less of a force for economic integration than its Canadian and American counterparts. It largely affirms WTO SPS and TBT rules. See Free Trade Agreement between the United States of America and the Republic of Korea, signed 30 June 2007 (entered into force 15 March 2012); Free Trade Agreement between the European Union and Its Member States and the Republic of Korea, signed 16 September 2010 (entered into force 1 July 2011).

148 For a comparative study of TBT provisions, see Michele Budetta and Roberta Piermartini, ‘A Mapping of Regional Rules on Technical Barriers to Trade’ in Antoni Estevadeordal, Kati Suominen, and Robert Teh (eds.), Regional Rules in the Global Trading System (Cambridge University Press, 2009). See also Caroline Lesser, ‘Do Bilateral and Regional Approaches for Reducing Technical Barriers to Trade Converge Towards the Multilateral Trading System?’ (OECD Trade Policy Papers No. 58, 2007); Lee Ti-Ting, ‘Technical Barriers to Trade Provisions in Regional Trade Agreements’ (3rd Biennial Global Conference of the Society of International Economic Law, Working Paper No. 12, 2012).

149 See Budetta and Piermartini, above n. 148. See also Lesser, above n. 148; Ti-Ting, above n. 148. For a comparative study of SPS provisions, see Stoler, above n. 146.

150 Canada‒Israel and Canada‒Chile are in the process of modernization. It is likely more substantive bilateral institutions will be added in the SPS and TBT areas.

151 Ti-Ting, above n. 148, 28. See also Lesser, above n. 148, 19.

152 Ti-Ting, above n. 148, 28. See also Lesser, above n. 148, 20‒21.

153 Canada likely lags in this regard. For examples of SPS harmonization, see generally Stoler, above n. 146.

154 Ti-Ting, above n. 148, 27‒28. See also Lesser, above n. 148, 18.

155 Scholars note that the EU tends to favour the harmonization of standards, regulations, and conformity assessment, while the US favours equivalence and mutual recognition in the TBT area. See Budetta and Piermartini, above n. 148, 291. See also Ti-Ting, above n. 148, 19; Lesser, above n. 148, 30.

156 Ti-Ting, above n. 148, 28. See also Lesser, above n. 148, 21.

157 Ti-Ting, above n. 148, 28‒29.

158 Ti-Ting, above n. 148, 29. See also Lesser, above n. 148, 24.

159 Ti-Ting above n. 148, 29. See also Lesser, above n. 148, 23.

160 The extent to which dispute settlement is actually utilized remains to be seen. NAFTA practice shows that the use of dispute resolution by Canada on SPS and TBT measures is limited and the WTO's panels and Appellate Body continue to be the venue of choice for dispute settlement. For a discussion of the effectiveness of the WTO dispute settlement system and Canada's avoidance of NAFTA dispute settlement on SPS and TBT issues, see Davey, William, ‘The WTO Dispute Settlement System: The First Ten Years’ (2005) 8(1) Journal of International Economic Law 1750 CrossRefGoogle Scholar. Moreover, for a study of the impact of the WTO dispute settlement system on the regulatory agenda of Canada, see Jacqueline D. Krikorian, International Trade Law and Domestic Policy: Canada, the United States, and the WTO (University of British Columbia Press, 2012).

161 For a discussion of the factors that affect PTA depth in the TBT area, see Budetta and Piermartini, above n. 148.

162 It is beyond the scope of this article to discuss the nature of WTO-plus SPS and TBT implementation in Canada's PTAs. For a discussion of Canada's experience with NAFTA implementation, see RMA Loyns, Karl Meilke, Ronald D Knutson and Antonio Yunez-Naude (eds) Keeping the Borders Open: Proceedings of the Eighth Agricultural and Food Policy Systems Information Workshop (Texas A&M University, University of Guelph, El Colegio de México, 2004).

163 For a discussion of the challenge that regulatory integration poses beyond PTAs, see Quick, Reinhard, ‘Regulatory Cooperation: A Subject of Bilateral Trade Negotiations or Even for the WTO?’ (2008) 42(3) Journal of World Trade 391406 Google Scholar. For a discussion of the Canadian context and the challenge of cooperation, see Steger, above n. 23. See also Lester, Simon and Barbee, Inu, ‘The Challenge of Cooperation: Regulatory Trade Barriers in the Transatlantic Trade and Investment Partnership’ (2013) 16 Journal of International Economic Law CrossRefGoogle Scholar. See further Thomas J. Bollyky, ‘Regulatory Coherence in the TPP Talks’ in C. L. Lim, Deborah K. Elms, and Patrick Low (eds.), The Trans-Pacific Partnership: A Quest for a Twenty-first Century Trade Agreement (Cambridge University Press, 2012) 176.

164 See Spencer Henson and Maury Bredahl, ‘Policy Options for Open Borders in Relation to Animal and Plant Protection and Food Safety’ in Loyns et al., above n. 162, 132.

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