A. Defining SPS-Related Private Standards in the SPS Committee

Despite its common employment at WTO negotiation forums and policy discourse, there is no consensus on the definition of ‘private standards’ in the WTO context. In response to concerns raised by some WTO Members regarding the function of private standards in international trade, the SPS Committee adopted a decision to develop a working definition of SPS-related private standards in March 2011.Footnote ¹⁹ Since then, the SPS Committee's work on private standards has focused on reaching a consensus on a definition of these standards.Footnote ²⁰

The SPS Committee initially discussed a working definition on the basis of draft definitions prepared by the WTO Secretariat in October 2012.Footnote ²¹ As no consensus emerged from these discussions, WTO Members agreed to set up an ‘electronic working group’ (e-WG) to move forward the consultation process. After many rounds of consultation, the e-WG proposed a compromise working definition in September 2014 as follows:

There has been general agreement among WTO Members on the co-Stewards’ proposed text for a working definition, with the exception of the EU and US who remain concerned about the use of the terms ‘non-governmental entity’ and ‘requirement’ in the working definition.Footnote ²³ The EU suggested replacing ‘non-governmental entity’ with ‘private entity’ and deleting the term ‘requirement’. However, the co-Stewards considered it necessary and appropriate to maintain these two terms in the working definition, pointing out that they were used in the SPS Committee Decision from which the mandate of the SPS Committee to develop a working definition of SPS-related private standards originated and that these two terms are generic and not specific to the SPS Agreement. Consequently, the SPS Committee could not reach a consensus on a working definition of SPS-related private standards and so agreed to a proposal from the co-Stewards of the e-WG for a ‘cooling off’ period to reflect on how to overcome the impasse. The failure to build a consensus on the definition had led to a stalemate in the SPS Committee from October 2014 over the adoption of the Fourth Review Report of the SPS Agreement. WTO Members finally reached a compromise in July 2017 by introducing wording which suggested that WTO Members were unable to agree on a working definition of SPS-related private standards.Footnote ²⁴

The stand-off in the negotiation at the SPS Committee seems implausible. Although the terms ‘non-governmental entity’ and ‘requirements’ are the elements of the definition about which the most diverse views were expressed, as China and New Zealand argued, these two terms have been widely used by international standardizing bodies such as the Codex Alimentarius Commission (Codex) and the World Organization for Animal Health (OIE) in their definitions of private standards and they have not previously been objected to. As the chairman of the SPS Committee correctly pointed out, the disagreement on the definition was not a drafting issue but reflected a fundamental divergence of views regarding private standards. Developed countries have held the strong view that private standards fall outside the scope of the SPS Agreement, and hence should have no definition at all, or have an innocuous definition that would not be perceived as acceptance that they should come under the aegis of the WTO.Footnote ²⁵ This position at least partly reflects the fact that most private standards originate from and are applied in developed countries. Most producers and retailers in developed countries benefit from the widespread adoption of private standards whilst the cost of complying with private standards mainly falls on exporters from developing countries.Footnote ²⁶ Moreover, the adoption of private standards is considered normal market behaviour of private economic actors which a government has little control over in domestic law. Therefore, developed countries do not have much incentive to impose additional disciplines on private standards. As the use of the term ‘non-governmental entities’ in the draft definition echoes the language of Article 13 of the SPS Agreement, some developed countries are worried that to accept that term would imply that the private standards fall within the regulatory scope of the SPS Agreement.

In considering a working definition of SPS-related private standards, the WTO Secretariat prepared a useful summary of existing definitions of ‘private standards’ that are used by various international organizations.Footnote ²⁷ Based on the existing definitions, it is possible to summarize the core features defining ‘private standards’. First, private standards are established by non-governmental/private entities, ie any entity that does not possess, exercise or is not vested with governmental authority. There are myriad differences among categories of private standards schemes in terms of scope, objective, content and characteristics. Second, private standards are by definition voluntary in nature in the sense that exporters are not legally required to comply with private standards. Nevertheless, some private standards may be de facto mandatory for access to important markets because of the market power of the non-governmental entities that adopted them. On the other hand, some non-governmental standardizing bodies may enjoy a government franchise/mandate to coordinate standards in their respective countries. The standards adopted by these national non-governmental bodies are not private standards.Footnote ²⁸ For example, the private sector American National Standards Institute (ANSI) has the responsibility to coordinate national standardization activities and to represent the US at the ISO and IEC. American national standards accredited by ANSI are therefore not private standards.

Third, private standards may address any aspects of product characteristics but they predominantly focus on production and process methods. Indeed, one of the defining characteristics of private standards is an increasing focus on the processes by which products are produced.Footnote ²⁹ Fourth, private standards pursue a wide range of objectives, such as environmental conservation, ensuring food safety and protection of social and human rights, as well as promoting good agricultural and manufacturing practices, sanitary safety and animal welfare issues. Finally, unlike international standards such as Codex and ISO, private standards are not primarily aimed at harmonizing heterogeneous national standards.Footnote ³⁰ Non-governmental entities tend to prefer to keep their own brands original and different from others. This is because one important objective of private standards is to provide product differentiation, mainly to support claims about credence characteristics.

B. Private Standards and ‘International Standards’

One particularly confusing element in the definition of private standards is the term ‘non-governmental entities’. As a generic term, it makes no distinction between non-governmental standardizing bodies recognized by WTO Members at either national or international level and other non-governmental organizations not recognized in this way. This conceptual differentiation is not an issue in the context of the SPS Agreement because it explicitly names three international standardizing bodies regarding food safety, animal health and plant health. However, this conceptual differentiation is of critical importance in the TBT Agreement because not all technical standards created by non-governmental entities are equal. In the TBT Agreement, for example, an ‘international standard’ is defined as a standard adopted by an international standardizing body. In order to qualify as an international standardizing body, the entity in question must have recognized activities in standardization and its membership must be open to the relevant bodies of at least all WTO Members.Footnote ³¹ Significantly, standards developed by non-governmental bodies may be recognized as ‘international standards’ in the TBT Agreement if certain conditions are fulfilled.Footnote ³² The ISO, for instance, is a non-governmental standardizing body whose standards are most likely to be recognized as international standards.Footnote ³³ In US – Tuna II, the US also argued that certain non-governmental standard-setting organizations, such as the Institute of Electrical and Electronics Engineers, could qualify as an international standardizing body for the purpose of the TBT Agreement.Footnote ³⁴ An important condition for an international non-governmental standard-setting organization to be recognized as an international standardizing body, is adherence to the core WTO TBT principles of transparency, openness, impartiality and consensus, effectiveness and relevance, coherence, and address the concerns of developing countries.Footnote ³⁵ These principles are further complemented by compliance with the disciplines of Annex 3 of the WTO TBT Agreement Code of Good Practice (CGP) for the preparation, adoption and application of standards.

International standards have assumed special legal significance under both the TBT and the SPS Agreement. WTO Members are obliged to use relevant international standards as a basis for their domestic technical regulations/standards, and domestic standards based on international standards are effectively immunized from challenges in the WTO dispute settlement system. If standards developed by non-governmental entities are endorsed as ‘international standards’, they should no longer be regarded as private standards in view of their special legal status under WTO law. By contrast, some non-governmental entities either do not follow the TBT principles and the CGP in developing voluntary standards, or they are simply not recognized as international standardizing bodies by WTO Members. In both cases, the standards they adopt are properly called private standards.

C. Are Private Standards and Public Standards Two Separate Worlds?

It must be emphasized that the distinction between private and public standards has become increasingly blurred in the context of profound changes in the role of government in market regulation. As a good governance strategy, modern governments have actively engaged the private sector to achieve certain policy goals, and product standardization is no exception.Footnote ³⁶ There are diverse ways through which public standards and private standards may interact. For example, many private standards originate from national or international legislation and then get further specified through a process of private decision-making. In this way, government or intergovernmental regulation forms the framework within which the private standard-setting process takes place. Firms are able to undertake conformity assessment of their own to comply with public regulations. What emerges is not so much a difference between public and private but a standard-setting process in which private actors further operationalize and refine public standards.Footnote ³⁷

In relation to this, many public standards are based on technical specifications and initiatives by private standard-setting organizations. Governments may delegate certain tasks to non-governmental entities, and public standards may incorporate, by reference or verbatim, the content of a private standard on some or all aspects, thereby making compliance with the private standard a part of, or a presumption of, compliance with a public standard.Footnote ³⁸ For example, EU directives covering CE marking for telecommunications and electronic products refer to the voluntary ISO 9000 as a benchmark. The UK Food Standards Agency has instructed enforcement authorities to take account of membership of ‘recognized’ private farm assurance schemes, such as Assured Food Standards and Global Food Safety Initiative (GFSI), in determining the frequency of inspection of product facilities.Footnote ³⁹ More recently, private standards are increasingly integrated in sustainable public procurement policies.Footnote ⁴⁰ In European Commission v Kingdom of Netherlands, the province of Noord Holland in the Netherlands internalized the private standards EKO label (on organic agricultural production) and the Max Havelaar label (on fair trade) in a public tender and compliance with these two private standards was regarded as proof of compliance in the public tender. The ECJ's ruling confirmed that fair-trade principles and a reference to labels developed by private entities can be included in public tenders as award criteria.Footnote ⁴¹ In short, the boundary between ‘public’ and ‘private’ is becoming increasingly blurred and it is better to view the sharp dichotomy as opposite ends of a continuum.Footnote ⁴² In any event, public standards and private standards are not two separate worlds.

A. Explaining the Rise of Private Standards in International Trade

While private standards initially emerged in the area of food safety, they now encompass environmental protection, ethical trading, animal welfare, organic production and so on. It has also become standard practice for an individual food safety standard to govern a wide array of product attributes. It is therefore increasingly difficult to make a distinction between food safety standards, environmental standards and social or ethical standards.Footnote ⁴³ Since food standards are predominantly private, and formal negotiations on private standards have mainly taken place in the SPS Committee, this part will take private food standards as an example but the same logic applies to private standards in other areas as well.

The proliferation of private food standards in international trade is closely linked to the economic environment as well as institutional and legal frameworks in which the firms operate on the global market. The first factor is the structural and institutional transformation of global agricultural and food markets. Thanks to rapid progress in information and communication technology and a favourable policy environment that encourages more liberal international trade, the supply chain for agricultural and food products has extended beyond national borders. Global sourcing reduces food costs and supplies new food to consumers but also creates new risks as food is increasingly subject to greater transformation and transportation and supply chains are fragmented across multiple enterprises. Private standards are therefore a useful tool for multinational enterprises to coordinate their supply chain through standardization of product and process requirements on an international level.Footnote ⁴⁴ Moreover, the expansion of supermarkets in food retailing, both nationally and internationally, has increased retailer market concentration and market power. The OECD estimates that in Europe the five largest retailers accounted for more than half of all food sales.Footnote ⁴⁵ This structural shift has given food retailers greater bargaining power vis-à-vis other businesses in the supply chain, enabling them to impose private standards on their suppliers.

Second, high-profile food scandals, such as the infamous bovine spongiform encephalopathy (BSE) incident in a number of developed countries, have fuelled consumer concerns over food safety risks and eroded consumer confidence in prevailing mechanisms of food safety control which focused predominantly on public regulation.Footnote ⁴⁶ Some advances in food technology, such as genetically modified food, have generated further concerns among consumers in the form of so-called ‘technological risks’.Footnote ⁴⁷ In order to counter food scares and offer confidence, firms sign up to voluntary private standards or develop their own. Private standards help differentiate their products and protect or even enhance their market share in national and international markets which are increasingly driven by quality-based competition.Footnote ⁴⁸

Third, broader demographic and social trends have altered the expectations and demands of consumers with respect to food safety and quality. Nowadays many of the quality attributes expected by consumers go beyond the physical traits of food and include process and production aspects such as animal welfare, environment, labour conditions and health.Footnote ⁴⁹ Civil society and consumer advocacy groups have also influenced the agendas of private companies by targeting their procurement policies through a variety of media strategies, including media campaigns, organized boycotts or protests against certain retailers, and league tables announcing the most ethical supermarkets.Footnote ⁵⁰ By implementing private standards in this context, firms can supply blends of product and process attributes and communicate them to consumers which set them apart from their competitors. The adoption of private standards can thus be an important mechanism to minimize reputation risks, to earn and maintain customer loyalty and to enhance the overall quality image of a firm's brand.

Finally, the legal requirements on companies to demonstrate due diligence in the prevention of food safety risks are also a driving force behind the adoption of private standards. For example, in the wake of a number of food scares the UK passed the Food Safety Act in 1990 under which any supplier of a branded product is responsible for the safety of that product. Accordingly, enforcement action could be taken against a wholesaler or a retailer even if the offence was committed by other parties in the food chain (eg overseas exporters and food importers) unless the retailer could provide due diligence demonstrating that he had been proactive in ensuring that food from suppliers conformed to legal food safety standards.Footnote ⁵¹ Major food retailers in the UK then responded to the new law by developing private food safety protocols for their suppliers that were enforced through third-party audits. This due diligence requirement was later adopted in the EU Food Law Regulation of 2002 and most recently in the US Food Safety Modernization Act in 2011.Footnote ⁵² More broadly, in recognizing the limits of the traditional command-and-control approach in the global food supply era, governments in OECD countries have been increasingly engaging the private sector in the implementation of good practices to ensure product safety and quality. This partial and progressive shift of responsibility from public authority to the private sector has prompted business to develop internal food safety management systems and reduced the reliance on government inspection services. In this context, private standards may be seen as a reflection of private firms assuming and extending this responsibility.Footnote ⁵³

In summary, private food standards are institutionalized market instruments to address food chain governance challenges. They appear to be simultaneously a useful tool for the private sector to regulate supply chains, a substitute for inadequate public regulation, a response to increasingly stringent government regulation and potential litigation, and a means of exceeding public regulations to provide credible product differentiation.

B. The Effects of Private Standards on International Trade

A. Possible Attribution of Private or Hybrid Standards to Government

Since the WTO is an international treaty, only actions (or omissions) by WTO Members can be challenged in the WTO dispute settlement system. Nevertheless, it is well established in WTO jurisprudence that private actions may be attributable to a WTO Member because of some governmental connections to or endorsement of those actions.Footnote ⁷⁷ If a private standard is deemed to be a governmental (public) standard, then the WTO Member will be fully responsible for its compliance with the WTO disciplines. In Japan – Film, the panel commented:

The main function of the rule is to prevent a WTO Member from circumventing WTO disciplines by instructing or simply allowing private entities to carry out activities that are normally prohibited.Footnote ⁷⁹ As noted by the WTO Secretariat, possible examples include where a government authority decides to incorporate a standard developed by a private body into its SPS regulation or a government permits the entry of imports that are certified to comply with a private standard that incorporates or even exceeds the official SPS requirements.Footnote ⁸⁰

Under what circumstances will private conduct trigger the application of WTO rules and render a WTO Member liable to its trading partners? In Japan – Semiconductors, a GATT panel held that two criteria are critical to the attribution analysis: whether there are reasonable grounds to believe that sufficient incentives or disincentives by the government exist for the measures to take effect; and whether the operation of the measures is essentially dependent on government action or intervention.Footnote ⁸¹ The first inquiry can be understood as a refined version of the effectiveness test first outlined in Japan – Agricultural Restrictions in which the panel held that if some degree of governmental involvement is present in private actions, the fundamental concern is to evaluate whether private measures are as effective as legally binding ones.Footnote ⁸² Arguably, the effectiveness can be discerned from an examination of the incentives or disincentives associated with the compliance with a private measure.Footnote ⁸³ In addition, societal structure, cultural expectations and other circumstances which help shape incentives or disincentives in a particular society play an important role when evaluating the effectiveness of a private measure. For instance, given the deferential disposition of the private sector to the wishes of governmental authorities in Japan, the panel in Japan – Agricultural Restrictions found that the measures at issue proved as effective as legally mandatory directives.Footnote ⁸⁴

The second inquiry focuses on the level of government involvement in the private action. The panel in Japan – Film required sufficient government involvement to render a private action as a governmental action. However, it remains unclear how ‘sufficient’ ought to be determined in practice. The panel held in Japan – Film that the conditions were met when it found that the Japanese government collaborated with the photographic film and paper industry in formulating the practices at issue, and then endorsed such practices once developed.Footnote ⁸⁵ The panel also stated that it would be insufficient to merely prove the government provision of some organizational assistance, including the provision of initial start-up funds, or a simple government expression of hope that a private measure be respected and observed by those to whom it was to be applicable.Footnote ⁸⁶ From the panel's approach in Japan – Film, in order to render an otherwise private standard governmental it appears essential for the government to play a role in developing and then providing its stamp of approval on the standard under scrutiny, or for there to be evidence of some other kind of involvement showing an actual contribution to the creation of the standard accompanied by supporting expressions which demonstrate it is government-sanctioned.Footnote ⁸⁷

Other than the general attribution principle articulated in the GATT/WTO jurisprudence, the SPS Agreement and the TBT Agreement contain more specific provisions addressing standards developed and implemented by non-governmental entities. The next two parts of this article will explore the applicability of these provisions to private standards.

B. Private Standards in the SPS Agreement

C. Private Standards in the TBT Agreement

A. Is There a Normative Case for WTO Oversight over Private Standards?

As can be seen from the discussions above, the legal analysis cannot take us very far in delineating the role of the WTO in regulating private standards. A more fundamental question that emerges is whether there is a normative case for the WTO to regulate private standards. Why is it not desirable to leave private standards unregulated? One view holds that, in view of their market-driven nature and complex economic welfare effects, WTO Members should ensure that the trade regime leaves transnational policy space for private standard-setting rather than trying to create additional rules on what private standards to accept.Footnote ¹²¹ By contrast, the opposing view argues that private standards may distort trade as much as government conduct and that the governance role of such private standards is too great to allow them to remain unregulated.Footnote ¹²² In failing to explicitly address the increasingly important non-traditional patterns of regulation, such as those reflected in soft norms created by non-State actors, there is a risk that WTO law becomes ‘under-inclusive’.Footnote ¹²³

The starting point to discuss the potential role of the WTO in private standards is to appreciate the important regulatory function of private standards in international trade and international standardization harmonization. As detailed in Part II of this article, private standards have far-reaching consequences in global trade patterns and affect a wide range of actors. In particular, although private standards tend to have positive effects on food safety and quality to some extent, they also create negative trends toward the marginalization of small farmers and retailers and subsequently an increase in economic inequality in developing countries.Footnote ¹²⁴ Further, the proliferation of private standards has undermined the process of international harmonization of standards through international governmental organizations, introducing a new layer of governance that further fragments national markets with which exporters must comply. As Argentina complained at the SPS Committee:

The OIE shared Argentina's concerns and warned that private standards may undermine the science-based and democratically-adopted standards of public international organizations. It also said that there was reason to believe that ‘many private standards are not consistent with SPS obligations’.Footnote ¹²⁶

It is precisely because of the significant regulatory power of private standards and their associated economic and social costs that the legitimacy of private standards should be assessed. Drawing on Weber, power relations are legitimate where those engaged in them perceive or believe them to be so.Footnote ¹²⁷ In a regulatory context, a claim to legitimacy requires that the regulator is perceived as having a right to govern both by those it seeks to govern and those on behalf of whom it purports to govern.Footnote ¹²⁸ In view of their powerful governance role, naturally there are legitimacy concerns about private standards along the same lines as government regulations, such as whether it is proportionate to the risk; whether it is scientifically based; whether it is adopted through a democratic and open process; and whether the burden of compliance is distributed fairly. The underlying proposition is that all power-wielders within any regulatory regime, regardless of whether they are to be qualified as public or private, should be viewed as legitimate by those who are affected by their rule-making.Footnote ¹²⁹

This inquiry throws into sharp relief acute legitimacy concerns about private standards. The term ‘legitimacy’ has a plurality of models, and actors deploy it at all levels of the international system to refer to different meanings.Footnote ¹³⁰ Nevertheless, the existing research on legitimacy in global governance often explicitly or tacitly understands it as democratic legitimacy. Democracy is ‘the touchstone of legitimacy in the modern world’ and it is the democratic character of a norm that makes it legitimate.Footnote ¹³¹ Therefore, public regulation is considered legitimate because of the congruence between an elected government and the public through democratic mechanisms to ensure that a government is accountable to its citizens who can participate in rule-making through representations and can punish the elected government by voting it out of office.Footnote ¹³² By contrast, private regulations are widely claimed to suffer from a ‘legitimacy deficit’ because of their lack of electoral mandate or democratic representativeness.Footnote ¹³³

Scholars have designed various analytical frameworks to appraise the democratic legitimacy of different forms of global governance arrangements beyond the State. This article does not intend to introduce a full checklist of possible indicators for such a legitimacy assessment but just highlights the two most often cited indicators used in all analytical frameworks—participation and accountability. The notion of democratic legitimacy, at its core, is a simple idea that regulatory authority ultimately rests with the people (government by the people). It is therefore concerned with the relationship between a governing institution and the public it intends to govern.Footnote ¹³⁴ For norms with regulatory impact to be viewed as legitimate, prospectively, the governing institution must allow inclusive and egalitarian participation of the stakeholders in its governing activities in order to take account of the public's preferences, interests and concerns and seek to reflect public deliberations in making governance decisions. Retrospectively, the public must be entitled to require the governing institution to render account of its activities and to exercise effective control and sanction over the governing institution for the way it has conducted its governance functions.Footnote ¹³⁵ The prospective dimension of participation and the retrospective dimension of accountability, if effectively implemented, are more likely to generate norms that are viewed as legitimate.Footnote ¹³⁶

As a normative yardstick, participation should include all stakeholders who are affected by the decisions of the governing entities.Footnote ¹³⁷ In the field of private food governance, for example, one could argue that business actors, including food retailers, food producers and processors, and third party certification companies as well as the general public, arguably represented by civil society organizations, are directly impacted by private food standards. Ideally, all stakeholders affected by the private food governance institutions have an equal chance of participation in the decision-making process in the central governing organ of the institution. In addition, one needs to consider the equal representation of all regions of the globe, ie the distribution of decision-making power between representatives of the south and those of the north. It is true that the use of the ‘all affected principle’ in practice may lead to challenging questions of identification, representation and feasibility in designing functional democratic governance processes, for example, because of the problem of many hands.Footnote ¹³⁸ However, not all these problems are insurmountableFootnote ¹³⁹ and in any case they should not be used as excuses to disregard the public's entitlement to democratic governance.Footnote ¹⁴⁰ Turning to accountability, at its core it is a particular type of relationship between different actors in which one gives account and another has the power or authority to impose the resulting consequences.Footnote ¹⁴¹ In the regulatory context, it is a fundamental idea of democratic legitimacy that the affected stakeholders should be able to hold the governing institution accountable to its decisions through various control and sanction mechanisms, including removing decision-makers from office if they perform poorly.Footnote ¹⁴²

Applying these two criteria to a range of private food standards, researchers found that they are either lacking or in need of major improvement.Footnote ¹⁴³ The case study of GlobalGAP, the most widely implemented farm certification scheme worldwide, is particularly illuminating. In respect of participation, research shows that, whereas certain categories of internal stakeholders such as producers and retailers are awarded direct participation in the decision-making process, other stakeholders such as consumers, small producers from developing countries, and environmental and labour organizations, are confined to participate through informal and non-binding consultation procedures.Footnote ¹⁴⁴ The disparity with respect to participation is more apparent considering that the geographical distribution of members is quite unequal. The result is overwhelming domination of European producers in the decision-making process.Footnote ¹⁴⁵ Similarly, with regard to accountability, only fully-fledged registered members, such as retailers, producers and suppliers, have access to strong accountability mechanisms. In contrast, the accountability of GlobalGAP to the public at large, ie the stakeholders not included within its corporate structure, is diffuse and only operates along erratic market and reputational lines. Certain categories of stakeholders such as small producers from developing countries are even excluded from any retrospective accountability relationship.Footnote ¹⁴⁶ These features do not guarantee inclusive and egalitarian participation by all affected stakeholders, nor do they ensure strong accountability relationships as required by democratic legitimacy standards.

It should be noted that participation and accountability are not related to output legitimacy, which refers to the problem-solving quality of a governance institution and addresses the effectiveness and efficiency of norms in remedying collective problems.Footnote ¹⁴⁷ This is simply because it is extremely difficult to assess output legitimacy or the effectiveness of a private standard. As a precondition to assessing effectiveness, it is essential to define the objectives against which the performance of the governance institution can be evaluated. Yet different stakeholders will tend to define different objectives or even similar objectives differently.Footnote ¹⁴⁸ As such, who gets to decide what objectives a private standard should seek? In practice, one may expect that the interests of the strong will turn into officially-desired objectives, leaving the weaker fringes of global society to bear the burden of the costs thereof. For example, large food retailers may pursue objectives of food safety and the turnover of their supply chains while paying little consideration to the necessary balance with the equally legitimate objective of enhancing developing countries’ market access or reducing unnecessary costs for consumers. Therefore, output legitimacy as a normative value would require a norm or institution to pursue the public or general interest, not merely self-interest. Accordingly, input legitimacy and throughput legitimacy, reflected by a participatory, transparent and responsive deliberation process involving all affected stakeholders, are expected to result in output legitimacy in an ideal situation.Footnote ¹⁴⁹

Admittedly, many of the accusations levelled against the legitimacy of private standards are at least debatable. To begin with, for reasons of limited resources and efficient operation, it will never be realistic to ensure a fully open and participatory process for all potential stakeholders in setting standards, public or private. Even intergovernmental standardizing organizations do not meet the requirements used to assess the legitimacy of private standard-setters.Footnote ¹⁵⁰ Take the Codex as an example. It has long been questioned to what extent the Codex is truly representative of stakeholder interests, particularly within developing countries. An independent evaluation of it found that 69 per cent of low-income countries and 87 per cent of middle-income countries participate less than they would like.Footnote ¹⁵¹ While the Codex does allow significant participation from non-governmental organizations as observers, various procedural and power-allocating practices at the Codex skew the decision-making in favour of State interests. Within the non-State groups present at the Codex, there is a heavy bias towards industry interests, with far fewer active consumer and public interest groups.Footnote ¹⁵² The elevation of Codex standards to being quasi-binding in an effort to harmonize heterogeneous product standards in international trade in the SPS and TBT Agreements has further exacerbated the existing deficiencies in Codex decision-making.Footnote ¹⁵³ On the other hand, some private organizations such as GlobalGAP, GFSI and the International Social and Environmental Accreditation and Labelling Alliance (ISEAL) have become significantly more open over time and come to incorporate a wider range of stakeholders to the extent that some argue that the interests of developing-country producers are heard more loudly in GlobalGAP than in the Codex.Footnote ¹⁵⁴

Furthermore, even though too much focus on output legitimacy has some inherent conceptual difficulties, there is evidence that private standards are more efficient and effective than public standards in a number of ways. For example, the lack of speed and complexity of the standards-setting process within the Codex has long been a cause of concern. By contrast, with the limited membership, narrower focus and more common interests of the firms and organizations involved, private standards are often developed more rapidly and are more agile in responding to a wide range of continually evolving consumer preferences than Codex standards are, and at a rate that standard-adopters require them.Footnote ¹⁵⁵ In addition, as discussed above, despite their negative trade effects on some producers, it is also widely acknowledged that private standards have made a positive contribution to enhanced food safety and quality in the food supply chain, as well as producing spillover effects into the domestic markets of the exporting country. Some even argue that the positive impact of private standards may actually outweigh the costs to comply with them.Footnote ¹⁵⁶

Moving on to the allegation that the rise of private standards has undermined public regulations, in particular international standards adopted by intergovernmental standardizing organizations, this is far from a foregone conclusion. To begin with, it is important to ascertain whether the relation between public standards and private schemes is competitive or complementary.Footnote ¹⁵⁷ Existing research reveals that by and large private standards are considered to be complementary to, rather than a substitute for, public standards. In many cases, private standards build on the existing public standard infrastructure. Public standards usually establish the minimum requirements for food products and the results to be achieved while private standards translate the requirements into specific tools and operationalizing processes, laying out a roadmap to be followed by private firms in order to meet or even exceed public standards.Footnote ¹⁵⁸ Moreover, private standards frequently ‘fill a void’ as a substitute for missing or ineffective public regulations. For example, private standards may extend to ethical trade, environmental impact and social accountability which are not covered or not effectively governed by public regulations.Footnote ¹⁵⁹ It has also been reported that private standards developed by some multinational food retailers for their home markets have been applied in less developed countries where public regulations are ineffective and not to the advantage of local consumers. In this way, private and public standards are less antagonistic and can be mutually reinforcing, contributing to total system efficacy and resulting in higher-quality food being available in national and global markets.Footnote ¹⁶⁰ Finally, the fact that public and private standards overlap as potentially competing regulatory spheres at the transnational level may actually help enhance the legitimacy of private standards because the regulatory competition is arguably a source of continuous improvement of private standards, pushing them to be more accountable by displaying a high commitment to food safety and other values appreciated by consumers.Footnote ¹⁶¹

These paradoxes do not necessarily indicate that private standards are free from legitimacy concerns but they may call for a reconceptualization of the legitimacy of non-State actors in global governance. It is obviously not possible to discuss critically all possible alternative bases of legitimacy for private standards even though this article has hinted above at the possibility of output legitimacy as well as how a private actor may utilize various techniques to enhance its legitimacy in a particular institutional setting. Instead, the argument is made that, if properly designed, the WTO may play a legitimacy-enhancing role for private standards as a governance tool in international trade without excessive legalization.

First, due to the lack of effective public regulation, private bodies often have greater power and importance in the global sphere than in the national law context. Indeed, despite the lack of any relevant delegation of authority, their acts may not be much different in kind from many public norms based on delegations of authority, and may often be more effective.Footnote ¹⁶² This is precisely the case for private food standards adopted by private bodies such as the GlobalGAP. In view of their significant regulatory role and profound impact, at least some private standards can be regarded as a functional equivalent to a public regulation. Consequently, it may no longer be appropriate to view these private standards as ‘private’ and they should be reconceptualized as ‘public’ in character precisely because these private standards are exercising international public authority.Footnote ¹⁶³ If this holds true, then those private standards should be amendable according to public law controls, such as participation, transparency, reasoned decisions, proportionality, means–ends rationality and avoidance of unnecessary restrictive means, within a model of global administrative law.Footnote ¹⁶⁴

The TBT and SPS Agreements and their associated decisions impose extensive global administrative law requirements of transparency, participation and accountability on standard-setting bodies in order to ensure both a rigorous standard-developing process and high-quality standards. These requirements constitute what is probably the most highly developed and profoundly transformative administrative law programme of any global regime and are widely adhered to by international standardizing organizations.Footnote ¹⁶⁵ Therefore, it is appropriate to use the TBT and the SPS Agreements as a benchmark against which some private standards are gauged.

Second, voluntary compliance with WTO disciplines will help boost the legitimacy of private standards. Due to the absence of enforcement power by way of a hierarchical relationship, legitimacy is particularly crucial to non-State regulators because they depend on the voluntary cooperation of others to be effective.Footnote ¹⁶⁶ A central dimension of the legitimacy of a private regulator is the acceptance and recognition by those in its sphere, including other rival regulators cohabiting the same regulatory space and in particular States and intergovernmental organizations.Footnote ¹⁶⁷ One strategy used by private actors to facilitate such recognition is to demonstrate equivalence (not sameness) to accepted procedural norms of standard-setting in international institutions. To illustrate this point, although WTO Members have been reluctant to pressure private standards bodies to comply with the CGP, private standard-setting bodies who aspire to make their standards recognized by the WTO have been engaging in increasingly proactive efforts to show that they develop their standards through an open, transparent and accountable process.Footnote ¹⁶⁸ They voluntarily comply with, or even go beyond, the specific requirements of the CGP and TBT Principles where appropriate. For example, ISEAL claims that its own Code of Good Practice, which defines effective standard-setting processes for setting social and environmental standards, is consistent with the CGP and TBT Principles.Footnote ¹⁶⁹ Similarly, in order to win WTO recognition, ISO has consistently emphasized that its standards are developed according to the CGP and TBT Principles.Footnote ¹⁷⁰ Their motivation is, of course, in the expectation that such normative connectivity will enhance their own legitimacy as a transnational regulatory actor. In this sense, WTO disciplines may be regarded as a ‘meta-regulation’ for all private standard-setting schemes, providing guidelines on best practices and lending them legitimacy to realize better regulation objectives.Footnote ¹⁷¹

If there is a normative case for the WTO to play an oversight role on private standards, then how could such a function work in practice? To answer this question, it is essential to review the discussions by WTO Members at the SPS Committee on possible actions regarding SPS-related private standards. This is addressed in the next section.

B. The Prospect of Private Standards Governance in the WTO Framework

In response to widespread concerns raised by WTO Members regarding private standards in the agri-food trade sector, an ad hoc working group was established in 2008 to identify possible actions for the SPS Committee regarding SPS-related private standards. In 2010, 12 possible actions, ranging from the development of a working definition of private standards to an examination of the regulatory scope of the SPS Agreement, were set out.Footnote ¹⁷² The SPS Committee later agreed in March 2011 to pursue five recommended practical actions, whilst no consensus could be reached on the other seven possible actions.Footnote ¹⁷³

Apart from Action 1 which relates to the development of a working definition of SPS-related private standards, the other four adopted actions are exclusively about information exchange between the SPS Committee and other entities that are relevant to the development of SPS-related private standards. Since 2011 the SPS Committee's discussions on private standards have been limited to the five actions and, in particular, to Action 1. The SPS Committee also discussed how to address the seven outstanding proposed actions on which consensus had not been reached. Some Members were keen to move forward on outstanding Actions 6 to 12 through a voluntary working group.Footnote ¹⁷⁴ However, other Members indicated that they were not prepared to work on those actions as there had been no consensus.

Action 8 recommends that the SPS Committee should develop guidelines on the implementation of Article 13 of the SPS Agreement, in particular the terms ‘non-governmental entities’ and ‘reasonable measures as may be available to Members’. Action 10 encourages WTO Members to explore the prospect of introducing a Code of Good Practice, similar to the CGP of the TBT Agreement, for all private SPS standards to enable Members to better implement SPS provisions and improve market access.Footnote ¹⁷⁵ It is hard to disagree that these are sensible proposals. The proponents for WTO intervention in private standards have strong evidence demonstrating that private standards are too significant to be left unregulated. Concurrently, the proposals will leave sufficient transnational regulatory space for private standards without excessive legalization suppressing its development and operation. The essence of the proposal is merely to replicate widely-accepted minimum criteria and best practices that standards-setters are expected to follow and to make the WTO play the role of a ‘meta-regulator’ with no enforcement power.Footnote ¹⁷⁶ Indeed, this is also the role that international standardizing organizations expect the WTO to play in responding to the adverse effects of private standards. The OIE, for example, suggested that the SPS Committee should be used as a forum for countries to identify and discuss specific problems that they have experienced relating to private standards. On the basis of such a discussion, the SPS Committee may develop recommendations on future action for consideration by Members.Footnote ¹⁷⁷

Nevertheless, there seems to be little chance of this proposal being accepted by all WTO Members. During the Third Review of the SPS Agreement, China reported that it was in the process of drafting a paper on ‘Best Practice Guidelines regarding Private Standards’ and argued that its application by private standard-setters and Members hosting them would help private standards make positive contributions while avoiding the creation of unnecessary barriers to trade.Footnote ¹⁷⁸ However, the EU, US and Canada indicated that they were not prepared to support the initiative, citing fundamental divergences among WTO Members on private standards.Footnote ¹⁷⁹

More recently, Mavroidis and Wolfe tabled a similar proposal that WTO Members interested in regulating private standards should draft a standards ‘Reference Paper’ based on the model of the Telecommunication Reference Paper that can be inscribed in the services Schedules of participating Members. These additional commitments are binding on countries that made them and are enforceable through WTO dispute settlement.Footnote ¹⁸⁰ However, applying this approach to private standards in practice will meet the same practical hurdles as discussed above. Under Article XVIII of GATS, parties are allowed to schedule commitments in addition to market access and national treatment commitments. The only issue is to find a legal mechanism that allows new regulatory principles in the reference paper to be legally binding. Rather than amending the WTO text, the choice of treating the regulatory principles as additional commitments that Members can choose to include in their schedules under Article XVIII was a good approach and had the advantage of containing built-in flexibility which allows countries to pick and choose from a common set of rules.Footnote ¹⁸¹ By contrast, the SPS Agreement does not contain a similar provision to XVIII of GATS, and it is even controversial among WTO Members whether, without a proper mandate, the SPS Committee is the proper venue to discuss potential regulatory approaches.

Looking forward, given the challenge of reconciling divergent views on private standards, it might be more practical to take a plurilateral approach, bringing together only like-minded WTO Members to draft a Code of Good Practice or reference paper for private standards, based on the CGP and the TBT Principles.Footnote ¹⁸² These additional commitments could then be built into the bilateral or regional free trade agreements. Similar to the Telecommunication Reference Paper approach, States should be allowed flexibility in picking and choosing from the best practices contained in the Code of Good Practice. However, if States agree to be bound, the relevant provisions are enforceable through the dispute settlement mechanism. It is further hoped that inclusion and voluntary compliance may serve as a catalyst for a snowball effect, leading it to be debated and followed by other international instruments and in other international fora. Another potential pathway is for a developing country to identify a specific private standard which is arguably not consistent with the SPS disciplines, such as by not being based on science and being excessively restrictive of international trade, and bringing the dispute before the WTO dispute settlement body.Footnote ¹⁸³ The dispute will create an opportunity for the AB to shed more light on the ambiguous SPS provisions and uncertain boundary of the obligation of WTO Members regarding private standards.