STC Number - 265

Regulatory process economic analysis requirement

Maintained by: United States of America
Raised by: Brazil
Supported by:
First date raised: April 2008 G/SPS/R/49, paras. 24-25
Dates subsequently raised:
Number of times subsequently raised: 0
Relevant documents: Raised orally
Products covered:
Primary subject keyword: Other concerns
Keywords: Control, Inspection and Approval Procedures; Other concerns; Risk assessment
Status: Not reported
Solution:
Date reported as resolved:

Extracts from SPS Committee meeting summary reports

In April 2008, Brazil indicated that before an import permit final rule was approved, the US regulatory process required not only a health risk assessment but also economic analysis of the imported product. This longstanding Brazilian concern had previously been discussed bilaterally but remained unresolved despite the establishment of a bilateral committee. The analysis was done to see if there would be damage to small US businesses, however it was unclear what happened when an economic impact was detected. This time-consuming step resulted in delays in the final assessment, which caused economic losses to the exporting Member. Brazil considered that this requirement was not in compliance with Article 5 of the SPS Agreement, according to which only certain economic factors were to be considered in risk assessments. These did not include the analysis of possible economic harm that could be caused by the imported goods. Brazil requested the United States to eliminate this economic analysis requirement.
The United States noted that Brazil's concerns appeared to be based on misperceptions. The US Administrative Procedures Act of 1946 established the regulatory process for all regulations. This included public participation in the rule-making process, but ensured the scientific basis of final decisions. Many stakeholders had requested that the process be expedited. The relevant US agencies made every effort to expedite the process, but were required to comply with the legislation. The economic analysis provided important information on the likely impact of a proposed regulatory change. But SPS measures were not determined on the basis of the economic analysis - this was simply a part of the internal transparency requirements.