RFG is proud to recognize Diana Hajali (Bush 2020) as the winner of the Dr. Michael Schneider Professional Writing Award for the third quarter of 2023. Check out her award-winning piece below titled, “Standards Environment in the Middle East and North Africa.”

Overview

The Middle East and North Africa (MENA) region has considerable potential value to U.S. commercial and foreign policy interests, particularly when it comes to increasing U.S. exports and assisting in the development of intra-regional economic ties. In 2020, U.S. exports to select MENA countries listed in the 2021 United States Trade Representative (USTR) National Trade Estimate (NTE) report totaled over $50 billion (1). While the MENA region shares a greater volume of trade with the European Union, the U.S. has several Free Trade Agreements (FTAs) with MENA countries, specifically Jordan, Israel, Morocco, Bahrain, and Oman, as well as Trade and Investment Framework Agreements (TIFAs) with many others. 

MENA countries are generally standards takers rather than makers, adopting European standards or those developed through international standards organizations rather than developing their own standards. In recent years, however, the Gulf countries, specifically Saudi Arabia, have been updating existing regulations to bolster their global trade positioning, but have often failed to notify these changes to the World Trade Organization (WTO), have shut U.S. exporters out of the market by rejecting the use of U.S.-based international standards, or have implemented practices that differ from regional and international norms. This has led to several concerns among U.S. industry, as exporters must change their production processes to meet tailored country-specific provisions or undergo additional testing, registration of products, and other conformity assessment procedures to show they meet requirements. Another concern is that the MENA region often utilizes European standards exclusively, due to the influence Europe has on the region. A more flexible approach that relies on internationally accepted standards and recognizes multiple standards where available, as the U.S. system advocates, would be advantageous for both international commerce and for local producers that want to trade their goods in global markets. 

Issues and Recommendations 

Despite previous examples of U.S. projects and relationship-building in the MENA region, some outstanding areas of concern when it comes to standards and conformity assessment include: 

• A lack of U.S. engagement on standards in the MENA region could lead to future market access problems. There is a need to identify more proactive ways to engage with standards actors in these markets. 
• A trend towards greater acceptance of European standards in the MENA region has the potential to affect market access for U.S. exporters. 
• Development of national standards rather than accepting or incorporating existing international standards, including those developed by U.S.-domiciled standards developing organizations (SDOs) has and can lead to barriers to trade. 
• Updated regulations and new conformity assessment procedures in the region often lack transparency and create burdensome requirements and extra costs for U.S. exporters. 
• Countries in the region often fail to notify the WTO of new or updated draft technical regulations, and often do not allow a sufficient comment period for WTO members.

There are several pathways the U.S. could take to increase collaboration and partnership on standards and conformity assessment with the MENA region, including: 

• Encouraging MENA countries to increase their participation in international standards organizations and their committees – Codex, ISO, and others.
• Supporting the Organization for Economic Co-operation and Development (OECD) in its MENA Initiative on Governance and Competitiveness for Development (2,3).
• Sponsoring or hosting in-person or virtual workshops between the U.S. public and/or private sector, including MENA standards bodies, about specific industries, regulations, best practices, etc.
• Incorporating standards-related provisions into FTAs signed with MENA countries, including chapters on Technical Barriers to Trade (TBT), Good Regulatory Practices (GRP), or sectoral issues. 
• Increasing collaboration between the U.S. and MENA countries at the G7 and G20 levels. 

Technical Barriers to Trade

U.S. companies face several technical barriers to trade when exporting abroad, especially in the MENA region where not all countries have well-developed or transparent standards systems and conformity assessment procedures, the technical infrastructure needed for more efficient global trade, or consistent regulatory practices. 

Countries in the MENA region do not always notify new or updated draft technical regulations to the WTO, allow for a sufficient comment period by WTO members, or provide easy access to technical documents, and often require companies to submit confidential business information, multiple test reports, and unnecessary third-party declaration of conformity. This has implications on the application of customs procedures, which include the collection of duties and taxes, conducting shipment inspections, and data collection (4). U.S. exporters often find issue with processing delays, shipment holding costs, unnecessary stamps on documentation, specific import license requirements, required certificates of conformity, and a lack of transparency. 

In addition, MENA countries frequently adopt European standards, and at times refuse to accept other international standards that would be more conducive to U.S. exporters and in line with international best practices. Many U.S. exporters have also found concerns with some MENA countries’ labeling requirements. For instance, the Gulf Standardization Organization (GSO) notified a technical regulation in 2016 requiring specific labeling for energy drinks, though there are still differences in labeling requirements among Gulf Cooperation Council (GCC) member states. Depending on their level of economic development and involvement in global trade, many countries also have inconsistent or unclear regulatory practices, and require paper registration and documents rather than electronic or digital versions. 

The most impacted U.S. goods and services when it comes to technical barriers to trade faced in the MENA region include: automobiles; pharmaceuticals; alcohol; pork; halal products; electrical goods; energy drinks; agricultural products, such as food and pesticides; energy drinks; telecommunications equipment; and media. The Gulf countries in particular have implemented regulations in these sectors that unnecessarily restrict trade and incur more costs on U.S. exporters. 

European Influence

The MENA region has grown in geopolitical and economic importance over the last decade (5), and although the total value of U.S. exports to the region totaled $15 billion in 2018, Europe remains the region’s top trading partner. The EU and MENA countries consistently cooperate on trade and investment, climate change, energy and environment, and research and development. The European Union (EU) and GCC trade in goods in 2020 alone amounted to 97.1 billion euros (6). The EU has become a leader in spreading its standards worldwide through regulatory power, the strength of its internal market and institutions, and promotion of its standardization system, which differs significantly from the U.S. system (7). The ‘Brussels Effect,’ often used to describe the EU’s power to unilaterally regulate global markets, suggests that the bigger and more affluent the consumer market, the more likely exporting companies will comply with its standards. Many companies prefer the benefits of market access, considering the large market size of the EU, compared to the cost of adjusting to the EU’s standards. The EU has effectively built in institutional architecture and policies that allow it to enforce its regulations, induce compliance, and deter violations (8). 

Unlike the U.S., with its bottom-up, private-sector led, voluntary, consensus-based approach to standards development, the EU relies on a more top-down approach with standards development following requests from the European Commission to meet essential requirements of EU-wide directives. The EU also actively incorporates standards provisions into its Free Trade Agreements (FTAs) with other countries, specifically labor and environmental standards, will name specific standards development organizations that must be used, and require the withdrawal of non-EU standards from technical regulations to facilitate greater harmonization with EU Directives. The EU also initiates economic and commercial alliances with the MENA region through its Neighborhood Policy, which creates cooperation agreements with other countries to achieve close political association and economic integration with the EU. This includes financial support and technical assistance to align standards, legislative systems, and infrastructure. Within the MENA region, the EU has neighborhood action plans with Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Palestine, Syria, and Tunisia. The EU also offers a significant amount of technical assistance to MENA countries to encourage the development of good regulatory practices, institution building, market surveillance, and standardization efforts. 

Closer EU-MENA cooperation on standards has immediate and long-term implications for U.S. trade, particularly for small and medium sized U.S. manufacturers. Countries with partnership agreements with European standards bodies could limit both the voluntary standards choices possible in the market and standards referenced in mandatory technical regulations. More widespread acceptance of European standards in the region will disadvantage U.S. manufacturers who produce to other international standards. U.S. manufacturers could also face new testing and certification requirements in order to have their products accepted in the marketplace. Varying standards and conformity assessment requirements already present significant non-tariff barriers for small and medium-sized enterprises. Larger firms that produce for multiple markets may not face as much difficulty with the growing use of European standards, but smaller firms could be adversely impacted as they do not always have the appropriate resources or finances to retool their products to comply with changes in regulations. 

U.S. Efforts

The U.S. offers standards technical assistance to many MENA countries, through the provision of specialized advice and support on standards development, good regulatory practices, and conformity assessment procedures to help other countries meet their WTO TBT requirements and promote the use of internationally accepted standards. The U.S. also works with its FTA partners in the region to meet agreement obligations. The U.S. has several FTAs with MENA countries, with Israel and Jordan being among the earliest agreements negotiated. However, these earliest FTAs do not contain TBT provisions that provide a mechanism for addressing standards-related matters. More recent FTAs, such as those with Morocco and Bahrain, do contain TBT principles that go beyond those contained in the WTO TBT Agreement. In addition to FTAs, the U.S. has TIFAs with Bahrain, the GCC, Iraq, Kuwait, Lebanon, Libya, Oman, Qatar, Saudi Arabia, Tunisia, Turkey, the UAE, and Yemen. The TIFAs provide strategic frameworks and principles for dialogue on trade and investment issues, including market access issues, labor, the environment, enforcement of intellectual property rights, and capacity building (9). The National Institute of Standards and Technology (NIST) also administers several programs and administers workshops that provide standards experts from other countries training opportunities on the U.S. standards and conformity assessment systems in a variety of industry sectors. 

The American National Standards Institute (ANSI) and the U.S. Agency for International Development (USAID) also have a public-private partnership, Standards Alliance, which was announced in 2012 as a new funding facility to provide capacity building assistance to developing countries, specifically related to the implementation of the WTO TBT Agreement (10). This includes capacity building projects in the MENA region, specifically in Morocco and Jordan. Priority industry sectors for such work include renewable energy, healthcare technology and medical devices, and information and communication technology (ICT), environmental technologies, building and construction, and biotechnology (11). For example, in 2017, the Standards Alliance partnered with the Office of the U.S. Trade Representative (USTR) and the GCC GSO to hold a workshop on U.S.-Gulf GRP and Regulatory Impact Assessment (RIA) with a focus on GRP principles, the use of international standards and conformity assessment procedures, public consultation, and more. Participants included representatives from MENA-based standards organizations, U.S. government agencies, U.S.-based SDOs, and U.S. industry (12).

Further, in 2019, ANSI and the International Trade Administration (ITA) at the U.S. Department of Commerce (DOC) conducted a standards-specific trade mission to Saudi Arabia and the UAE with the primary goal of facilitating increased commercial ties between the U.S. and Gulf markets through business connections and deeper engagements. The mission’s goal was to support more effective cooperation between U.S. organizations and their Gulf counterparts on standards-related issues (13). During the mission, the delegation conducted more than 15 meetings with government agencies and private sector organizations in the UAE and Saudi Arabia, discussing standards development and participation processes for the European Securities and Markets Authority (ESMA), the Saudi Standards, Metrology, and Quality Organization (SASO), and the GSO. The American Petroleum Institute (API) also signed a MoU with the GSO focused on technical cooperation during the mission (14). 

Conducting more public and private led projects in the MENA region, specifically in the Gulf, can lead to a more positive relationship between the U.S. and the region over the long-term and can benefit the economies and trading sectors of both regions.

Footnotes

(1) https://ustr.gov/sites/default/files/files/reports/2021/2021NTE.pdf

(2) https://www.oecd.org/mena/

(3) https://www.oecd.org/mena/economies/morocco/

(4) https://www.cbic.gov.in/resources//htdocs-cbec/rhs-misc/bnb-lecture.pdf

(5) https://www.ansi.org/trade-development/standardization/regions/middle-east-north-africa#.YJmXELVKhPY

(6) https://ec.europa.eu/trade/policy/countries-and-regions/regions/gulf-region/

(7) https://www.gfmag.com/magazine/february-2020/brussels-effect-eu-rules-world-anu-bradford

(8) https://www.foreignaffairs.com/articles/europe/2020-02-03/when-it-comes-markets-europe-no-fading-power

(9) https://ustr.gov/trade-agreements/trade-investment-framework-agreements

(10) https://standardsalliance.ansi.org/Default.aspx

(11) https://standardsalliance.ansi.org/Countries/MENA/Default.aspx

(12) https://standardsalliance.ansi.org/Countries/Yemen/Gulf-Conference.aspx

(13) https://share.ansi.org/Shared%20Documents/Meetings%20and%20Events/ANSI%20Past%20Events%20Archive/ANSI-ITA-Trade-Mission-2019/ANSI-ITA%20Certified%20Trade%20Mission.pdf

(14) https://www.ansi.org/news/standards-news/all-news/2019/03/ansi-vice-president-joseph-tretler-leads-itacertified-trade-mission-to-gulf-focused-on-standards-and-29#.YKgIfahKhaQ