The Rise of the Regulatory State: How Good Manufacturing Practice Requirements Can Collide With Obligations Under The WTO Agreement On Technical Barriers To Trade

By Iain MacVay, Christina Markus, and Michael Taylor

I. Introduction

The Agreement on Technical Barriers to Trade (“TBT Agreement”), as agreed to by the members of the World Trade Organization (“WTO”) in 1994, expresses the desire that countries’ “technical regulations and standards, including packaging, marking and labelling requirements, and procedures for assessment of conformity with technical regulations and standards do not create unnecessary obstacles to international trade.”  TBT Agreement at Preamble.  At the same time, the WTO Members recognized when implementing the TBT Agreement that “no country should be prevented from taking measures necessary . . . for the protection of human, animal or plant life or health, of the environment, or for the prevention of deceptive practices, at levels it considers appropriate, subject to the requirement that they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries.”  Id.

Fundamentally, there is no inherent conflict between the goals of promoting unencumbered, non-discriminatory trade in goods and ensuring countries’ ability to implement legitimate health and safety standards.  In reality, however, tension exists when trading partners apply their own domestic standards to goods in international commerce.  One area where this tension recently has been playing itself out is in the context of Good Manufacturing Practice (“GMP”) standards.   Using pharma-ceuticals as an example industry, this article provides an overview of GMPs, discusses how they fit within the framework of the TBT Agreement, and briefly addresses the “conflicts” that can arise when GMPs affect trade.

II. Good Manufacturing Practices – What They Are And How They Are Applied

Good Manufacturing Practices are part of a quality assurance system to generate products that consistently meet specifications for potency, purity, and stability of characteristics over time.  Commonly, GMPs include controls over personnel, ingredients, facilities and equipment, manufacturing process steps, analytical testing, ongoing review for anomalies (out-of-specification results, signals from complaints or adverse event reports), restriction of changes, and processes for corrective and preventive actions.

Because GMP laws and regulations are intended to govern a wide range of products and businesses (and also to accommodate scientific and technical advances over time), they often are written in general terms and elaborated upon in related guidance documents.  Often regulators’ expectations and interpretations of GMP laws are revealed through inspection interactions and comments or reports that are shared with individual companies concerning their facilities and individual products.  A country’s GMP provisions are thus established not only through codified laws and regulations, but also effectively are developed through less formalized procedures and day-to-day administrative actions.

III. Overview Of The WTO Agreement On Technical Barriers To Trade

The TBT Agreement defines “technical regulations,” which are covered by rules in the Agreement, as documents laying down “product characteristics or their related process and production methods, including the applicable administrative provisions, with which compliance is mandatory.”   TBT Agreement at Annex 1, Paragraph I (also providing that the technical regulation may “include or deal exclusively with terminology, symbols, packaging, marking, or labelling requirements as they apply to a product, process or production method”).   National GMP provisions, as implemented by administrative agencies, clearly fall within this definition.

The essential aspect of the provisions of the TBT Agreement is that covered technical regulations should not have the effect of creating discriminatory or unnecessary obstacles to trade.  TBT Agreement at Art. 2.2 (emphasis added).  While regulations for the protection of human health or life are clearly appropriate in an abstract sense, the TBT Agreement explains that “technical regulations shall not be more trade-restrictive than necessary” to fulfill that legitimate objective.  Id.

The TBT Agreement encourages, but does not require, mutual recognition of technical regulations such as GMP provisions, and it also encourages involvement in international standardization and harmonization exercises.  TBT Agreement at Art. 2.6 and 2.7.  A country’s obligation to eliminate technical barriers to trade, however, is not dependent on those efforts.  Stated differently, the obligation to eliminate technical barriers to trade is not dependent on mutual recognition by countries of the underlying technical standards that implement GMP provisions.  This creates room for international conflict, when countries implement their own laws and regulations in a manner that differs from the GMP expectations of their trading partners

Notably, the TBT Agreement has rules specifically applicable to conformity assessment that require acceptance of results of procedures undertaken in other WTO Member states “whenever possible” and as long as Member states “are satisfied that those procedures offer an assurance of conformity with applicable technical regulations or standards equivalent to their own procedures.”  TBT Agreement at Art. 6.1.  This obligation also is conditioned on “adequate and enduring technical competence of the relevant conformity assessment bodies.”  Id. at Art. 6.1.1.

IV. Conflict And Potential Recourse

WTO Members’ GMP regimes must avoid being more trade restrictive than necessary.  This obligation could result in a country’s GMP practices coming under scrutiny where it denies approvals for importation of products that have been approved by reputable regulatory bodies in other jurisdictions, such as the European Union, the USA, or Canada.  Unwelcome scrutiny of GMP regimes could also arise from slow processing of GMP applications where technically trained inspectors are in short supply and mutual recognition is not in place. Such problems in application of GMP regimes can result in serious delays in getting medicines to patients.

It is widely recognized that WTO Members have a right, even a duty, to ensure that medicines and other products covered by GMP requirements are safe for use.  There is, however, considerable scope for disagreement over the application of GMP provisions, such as, for example, , if Indian regulators were to reject a production facility or its medicines, contrary to the views of other leading jurisdictions.

With respect to exports, the implementation of non-harmonized GMP standards creates the risk for India,. for example, thatIndian-origin products may lose access to certain markets if trading partners do not accept the GMPs of Indian manufacturers. There are additional internationally-recognized pathways toward cooperation and harmonization of GMP provisions.  First, there is the Pharmaceutical Inspection Convention and the Pharmaceutical Inspection Co-operation Scheme (jointly referred to as “PIC/S”).  Forty-six government authorities, including the U.S. Food and Drug Administration (“FDA”), currently are Participating Authorities in PIC/S.  See Pharmaceutical Inspection Co-operation Scheme; Members and Partners, available at  India is not currently a member, although PIC/S has identified India as one of the “key players” in terms of the pharmaceutical industry and GMP inspections that is being targeted for PIC/S membership.  See PIC/S Blueprint, PS/W 8/2005 at para. 39 (Dec. 23, 2005), available at  The main conditions for membership are to have a law on medicinal products, a GMP Guide equivalent to that of PIC/S, a GMP inspectorate that fulfils PIC/S quality system requirements, and experienced GMP inspectors. PIC/S helps membership candidates to bring their GMP systems up to international standards and the process of membership can be accomplished in two to three years.  See  Risk for disagreement about the application of GMP standards is currently greater than it might be if India were a PIC/S member.  While PIC/S standards are not a requirement under TBT, the application of GMPs without active international relationships contributes to the potential for the inconsistent interpretations and application of GMPs among India and its trading partners.

Presumably with this context in mind, India has begun to consider the possibility of joining PIC/S, in part to support access to export markets for Indian manufacturers.  Media reports confirm that in 2013, India’s Commerce Ministry “began discussions with officials of the Drugs Controller General of India (DCGI) and the health ministry to examine the likely impact of joining the [PIC/S].”  See India Is Considering Joining the Pharma-ceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme to Safeguard its Drug Exports, BioSpectrum, available at (Sept. 5, 20).  Although Prime Minister Modi is reportedly developing policies to enhance pharmaceutical exports (particularly in the area of bulk drug ingredients), it is currently unclear whether, or how, participation in PIC/S may be involved.  See DoP Declares 2015 as “Year of Active Pharmaceutical Ingredients, available at

Perhaps just as relevant, the WTO TBT Committee increasingly is engaging in detailed discussions of specific trade restrictions.  This Committee process, which has no relationship to dispute settlement and should not be considered a first step toward dispute settlement, has the virtue of raising the profile of an issue in a technical context and bringing international pressure to bear.

The TBT Committee is one of the great success stories of the WTO, at a time when success stories are strangers to most parts of that institution other than the dispute settlement system.  The TBT Committee is increasingly engaging in detailed discussion of regulatory issues that affect trade.  This discussion is conducted with technical experts through diplomatic channels and largely outside public view, but the discussions are recorded in the published minutes of the Committee.

Through the use of the TBT Committee process, India can engage in detailed technical debate over its application of GMPs and other TBT measures.  This technical debate also can result in pressure being placed on India by its international trading partners to come into line with international norms.  The detailed scrutiny of regulatory methods in the TBT Committee is a very important element in the process of encouraging reasoned, evidence-based regulation in all areas, including GMP.  It also can be a path for close and sometimes uncomfortable scrutiny of regulatory measures implemented unilaterally without consultation and cooperation with international trading partners.

Notably, the TBT Committee could be one of the most effective avenues for addressing systemic GMP issues that present significant problems for exporters, created to some degree by variation in GMP regulation and enforcement.  There are some limitations, however, to use of the TBT avenue.  First, because only WTO Members have standing before the TBT Committee it is not readily suited for an individual company’s challenge that a regulatory agency has inappropriately applied the law to its case unless there is a systemic issue raised by that individual case.  Second,   there may be difficulty invoking the legal obligations of the TBT Agreement when national standards applied by WTO Members are informal or written vaguely (if written, at all) with detailed application left to the discretion of regulators.  In such cases, marshalling evidence of a WTO Member’s informal or unwritten national “standard” can require the development (through documentation) of patterns of practice in order to demonstrate the WTO Member is acting inconsistently with the TBT Agreement.  Finally, the TBT Committee cannot deploy the levels of technical expertise that PIC/S can deploy consistently as a specialized body, but the TBT Committee can highlight specific problems with application of a WTO Member’s GMP regime without resort to formal dispute settlement proceedings.

Ultimately, the TBT Agreement calls for recognition of “relevant international standards” (Art. 2.4), and where a WTO Member’s measures are taken in accordance with relevant international standards, the measures are presumed to be in compliance with TBT under Art. 2.5.  Thus, irrespective of whether a given standard, such as PIC/S, would actually meet the requirement of being a “relevant international standard” under Arts. 2.4 and 2.5, the soft power of the WTO norms, combined with the scrutiny in the TBT Committee by peers from technical bodies around the world, increasingly may encourage WTO Members to cooperate with international standard setting efforts such as PIC/S.  Although membership of PIC/S is not a guarantee against challenges to Indian GMP decisions, cooperation through the PIC/S body and positive engagement at the TBT Committee make it much less likely that any issue will become the subject of a dispute settlement proceeding.

V. Conclusion

As a growing source of influence in the international trading community, and as major exporters of  pharmaceuticals and other products covered by technical regulations, India and the United States should take leading roles in encouraging the trend toward international coherence, even convergence, in international regulatory practice.  The WTO is not only about legal disputes but also is a very important source of good regulatory practice that encourages international dialogue and cooperation in setting and implementing regulations in the interests of all countries.  India and the United States, therefore, should continue to take a leading role in developing this alternative vocation of the WTO through the TBT Committee.  Finally, engagement by India with PIC/S on GMP issues would be a helpful step in this direction.


Iain MacVay is a partner in King & Spalding’s International Trade Group in London.  Mr. MacVay is a leading expert on international trade disputes and negotiations in the WTO and in various bilateral or regional trade agreements.  He advises on market access and regulatory matters, and on EU free movement of goods disputes, export controls, sanctions, customs compliance, and EU regulatory compliance, with experience in a number of sectors, including pharmaceuticals, alcoholic beverages, petrochemicals and agriculture.  He can be reached at

Christina Markus serves as Deputy Chair of the FDA & Life Sciences Practice Group and is a partner in King & Spalding’s Washington, D.C. office. Her practice focuses on the regulation of drugs, biologics, and other products by the Food and Drug Administration (FDA), the U.S. Drug Enforcement Administration (DEA), and related state agencies (e.g., boards of pharmacy). She represents companies and institutions in a range of regulatory compliance, enforcement, licensing, and business transactions involving product development and approval, safety, labeling, marketing and advertising, competition, and supply chain (including distribution, import/export, and dispensing). She can be reached at

Michael Taylor is a partner in King & Spalding’s International Trade Practice Group in Washington, D.C.  He represents manufacturing interests in international trade remedy proceedings and counsels clients on complex regulatory trade compliance issues and international shipping matters.  The regulatory compliance aspect of Mr. Taylor’s practice involves advising clients on customs and homeland security matters in a range of industry sectors, including pharmaceuticals, medical devices, chemicals, textiles, agriculture, aerospace, energy, and consumer products. He assists clients with audits, internal investigations, prior disclosures, penalty mitigation, obtaining customs rulings, developing logistics and compliance programs, and assessing the trade-related aspects of international mergers and acquisitions. He can be reached at


Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s