Trade and Health Law: Regulatory Harmonization Convergence

In contrast to other fields, international health law and health regulation is not harmonized. Each country has its own regulatory framework with its own specific requirements, which significantly increases the cost of bringing products to the market. Regulatory harmonization in this sense is the Holy Grail for companies. However, a major and relatively unnoticed development in international law has recently taken place in relation to human health and trade law. In a global context, this normative innovation could result in a similar shift that took place more than two decades ago, when IP was first incorporated to international trade law.

The first precedent would be the negotiation and adoption of the 1994 NAFTA treaty, which had a profound impact on the Mexican regulatory framework. Prior to NAFTA, the 1984 General Health Law (GHL) in Mexico required all regulated products to be subject to a prior marketing authorization. Thanks to the adoption of measures based on science and risk, the GHL was amended and the majority of products were released from a premarket approval and were moved to a simple notification system. The second precedent came as a result of the arbitration mechanism created under another FTA, this time with our southern neighbours. In that case, Mexico was forced to change its regulatory framework applicable to medicines, resulting in the removal of the local manufacturing plant requirement. Now, the international paradigmatic change in FTAs highlighted here has been carefully introduced through a dual mechanism, comprised of a softer and a harder approach. Combined, they represent the most advanced form of regulatory convergence.

The softer approach has consisted of adding to an FTA a Chapter on Regulatory Improvement (CRI), which refers to the array of procedural tools aimed at reducing regulatory divergences and promoting regulatory coherence, including transparency, inter-institutional coordination, public consultation, best regulatory practices and international cooperation.

The harder approach consisted first, of framing human health regulation not as a sanitary and phytosanitary issue under the respective FTA, but rather as a technical

barrier to trade (TBT); and second, in identifying and agreeing Product Specific Annexes (PSAs) as part of the TBT Chapter, which contain an array of substantial tools to promote regulatory coherence.

Earlier versions had been first incorporated to other bilateral FTAs. On the one hand, the procedural tools of regulatory coherence were first introduced to the Comprehensive Economic and Trade Agreement (CETA) signed between the European Union and Canada. On the other hand, an earlier version of the dual mechanism, containing both procedural and substantial tools, was first incorporated to the FTA between the European Union and South Korea. The scope of these PSAs continues to grow. The products covered in the PSAs include pharmaceuticals, medical devices, cosmetics, organic produce, information technology products, food products, alcoholic beverages and chemicals. Considering that most of these products are regulated under health law instruments, this normative development has a particular significance for the international regulation of life sciences.

The most advanced version of this form of regulatory convergence is that contained in two FTAs: the Pacific Alliance and the now relaunched Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). By incorporating both a CRI and PSAs, and framing this directly as a TBT matter, these two treaties most likely constitute the fresh new template for a new generation of regional FTAs. The new model incorporates significant provisions disciplining aspects of human health regulation, offering the best chances so far to allow the birth of a new era of regulatory harmonization, and with it, the possibility to restructure and reshape supply chains.

At the same time, it invites professionals of different disciplines to increase collaboration and mutual understanding. To effectively help life sciences companies navigate these complex times of uncertainty and opportunity, law firms require lawyers from different legal specialties to create the right mechanisms to work more closely, more internationally and with an industry focus.