The Furniture Sector in Pakistan: Export performance and ... - TRTA i

Agreement on the application of sanitary and phytosanitary measures
(SPS)
Member countries of the WTO are allowed under Article XX of the GATT 94 to regulate
trade with a view to protecting human, animal or plant life or health. Under the Agreement on
Sanitary and Phytosanitary measures (SPS), the WTO has disciplined the exercise of discretion
by member countries by disallowing them to discriminate or misuse this authority serving as a
form of disguised protectionism.
Members of the WTO are allowed to establish their own standards but it is stipulated that the
relevant regulations must be based on science and applied only to the extent necessary to
protect human, animal or plant life or health. They are not allowed to arbitrarily or
unjustifiably discriminate between countries, where identical or similar conditions prevail.
Member countries are encouraged to use international standards, guidelines and
recommendations if these are available.
In order to make the process fair from the perspective of exporters, standards different from
those already prescribed, can be applied. Similarly, different methods of inspecting products
can be adopted. In order to make this happen exporters demonstrate that the measures which
exporting countries have applied are at the same level of “health protection” as adopted by
importing countries. Once that is done, an importing country is expected to accept the
exporting country’s standards and methods. The Agreement also lays down that governments
must provide advance notice of new or changed SPS regulations. They are also required to set
a national enquiry point to provide up-to-date information.
Relevance for the furniture sector
Apparently, this agreement should not be relevant for the furniture sector. However,
protectionist’s interests can assume any garb and come up with objections as to the imported
furniture on the ground of it being harmful to human, animal or plant health. In particular,
such a stand can be taken somewhat easily in respect of the components of furniture and ready
to assemble parts. It may be argued, for example, that inputs or polish on the furniture are
emitting certain substance or the wood used have been treated with a material (say anti-termite
treatment carried out by the manufacturer) which is harmful to the human, animal and plant
life. In such a situation, it would be open for our exporters to approach the Government of
Pakistan (GOP) to press into service provisions in the agreement against untenable standards.
(Action: Furniture Industry and GOP)
Customs Valuation under the GATT – Implementation of Article VII of
the GATT
The Provisions regarding customs valuation under the GATT seek to establish a fair and
uniform system for the valuation of goods that provides protection to international traders from
fixation of arbitrary values by customs authorities of importing countries. The agreement lays
down that the customs value of the imported goods in the case of unrelated parties (additional
considerations apply where the importer and exporter are related entities) will be the
“transaction value”, which really means the price actually payable for the goods when sold for
exports. Some costs such as: freight, packaging, commissions etc. may be added for the
purpose of working out customs value. The agreement however excludes items that are
regarded irrelevant for fixing custom value, e.g. the price of goods in domestic market of the
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