Market Access: Some Aspects for Tanzania Lecture 9

Market Access: Some Market Access: Some Aspects for TanzaniaAspects for TanzaniaMarket Access: Some Market Access: Some Aspects for TanzaniaAspects for Tanzania

Lecture 9Lecture 9

What are the Preferential access available for Tanzania?

• Tanzania is a member of the EAC.• It is also part of the Regional Integration Facilitation Forum

(RIFF).• It receives non-reciprocal trade preferences by the EC under the

Cotonou Agreement and the Everything-but-Arms (EBA) initiative.

• The U.S. AGOA is another preferential scheme.• The GSP schemes benefit its export in Australia, Canada, EC,

Japan, New Zealand and the United States.• Tanzania is also engaged in the Southern African Development

Community (SADC). • Tanzania has participated in the Agreement on the Global

System of Trade Preferences among Developing Countries (GSTP) since 19 April 1989. Under the GSTP, India and Turkey grant preferential access to Tanzania.

How Good is Tariff Reform Process?

• Agriculture: Uruguay Round Formula to be used • SDT: lower tariff reduction be the developing

countries• Implications for the LDCs?• Non-Agriculture: Swiss Formula to be used• SDT: larger coefficient for the developing

countries• Tariff Binding• Sectoral tariff reform• Preference Erosion: Concern area for the LDCs

Uruguay Round Formula Period Startin

g TariffStarting Tariff

Starting Tariff

Starting Tariff

Starting Tariff

Starting Tariff

Starting Tariff

150% 125% 100% 75% 50% 25% 10%

% cut 36 36 36 36 36 36 36Year 0 150 125 100 75 50 25 10Year 1 141 117.5 94 70.5 47 23.5 9.4Year 2 132 110 88 66 44 22 8.8Year 3 123 102.5 82 61.5 41 20.5 8.2Year 4 114 95 76 57 38 19 7.6Year 5 105 87.5 70 52.5 35 17.5 7Year 6 96 80 64 48 32 16 6.4Annual steps (% points)

10.8 9 7.2 5.4 3.6 1.8 0.72

Comparison: Swiss formula, year 6, with coefficient=25

21.43 20.83 20 18.75 16.67 12.5 7.14

Uruguay Round Approach

Source: WTO

Swiss Formula ApproachPeriod Startin

g TariffStarting Tariff

Starting Tariff

Starting Tariff

Starting Tariff

Starting Tariff

Starting Tariff

150% 125% 100% 75% 50% 25% 10%

Coefficient 25 25 25 25 25 25 25Year 0 150 125 100 75 50 25 10Year 1 128.57 107.64 86.67 65.63 44.44 22.92 9.52Year 2 107.14 90.28 73.33 56.25 38.89 20.83 9.05Year 3 85.71 72.92 60 46.88 33.33 18.75 8.57Year 4 64.29 55.56 46.67 37.5 27.78 16.67 8.1Year 5 42.86 38.19 33.33 28.13 22.22 14.58 7.62Year 6 21.43 20.83 20 18.75 16.67 12.5 7.14Annual steps (%age points)

21.43 17.36 13.33 9.38 5.56 2.08 0.48

% cut over 6 years

85.71 83.33 80 75 66.67 50 28.57

Comparison: Year 6 “Uruguay Round” cut

96 80 64. 00 48 32 16 6.4

Swiss Formula Approach

Source: WTO

Agriculture: December 2008 Draft …

• Tariffs would mainly be cut according to a formula, which prescribes steeper cuts on higher tariffs.

• For developed countries the tariff cuts would be:• 50 percent for tariffs in (0-20 percent range)• 57 percent for tariffs in (20-50 percent range)• 64 percent for tariffs in (50-75 percent range)• 70 percent for tariffs above 75 percent• Subject to a 54 percent minimum average.• The reform will be undertaken over 5 years. • Developing countries need to cut tariff in each tier by

two thirds of the equivalent tier for developed countries, subject to a maximum average of 36 percent.

SDT for developing countries• For developing countries the tariff cuts would be:• Two-third of the cut undertaken by developed countries

for tariffs in (0-30 percent range) [50 / 57 percent]• Two-third of the cut undertaken by developed countries

percent for tariffs in (30-80 percent range) [57 / 64 / 70 percent]

• Two-third of the cut undertaken by developed countries percent for tariffs in (80-130 percent range) [70 percent]

• Two-third of the cut undertaken by developed countries percent for tariffs in (>130 percent range) [70 percent]

• Subject to a 36 percent minimum average.• The reform will be undertaken over 10 years.

Opportunity for LDCs \ SVEs• Obtain duty-free and quota-free market access for at least 97 per

cent of products originating from LDCs• Ensure that preferential rules of origin applicable to imports from

LDCs will be transparent, simple and contribute to facilitating market access in respect of agricultural products

• Special subsidy reduction for cotton• The small, vulnerable economies shall be entitled to moderate the

cuts by a further 10 ad valorem percentage points in each band.• Alternatively, they may chose not to apply the tiered formula but

simply meet an overall average cut of 24 per cent through having in effect opted to designate as many tariff lines as they choose as Special Products.

• The tariff lines so chosen need not be subject to any minimum tariff cut and need not be guided by the indicators.

• However, what impact of other’s reform??

NAMA: December 2008 Draft• Coefficient 8 for developed countries (tariff reduction

over 5 years)• 20, 22 or 25 for developing countries (tariff reduction

over 10 years)• However, there are various exception clauses suggested

by the WTO if a country is adopting 20 or 22.• For 25, there is No flexibility available.• For a developing country, after getting the flexibilities,

full formula tariff reductions shall apply to a minimum of either 20 percent of national tariff lines or 9 percent of the value of imports of the Member in each HS Chapter.

December 2008 Draft ..• If 20 is used by a developing country, then it can:• Either use less than formula cuts for up to 14

percent of non-agricultural national tariff lines (subject to at least half the formula cuts in them) and they do not exceed 16 percent of the total value of its non-agricultural imports

• Otherwise, it may keep 6.5 percent of non-agricultural national tariff lines unbound, or not apply formula cuts provided they do not exceed 7.5 percent of the total value of its non-agricultural imports

December 2008 Draft ..• If 22 is used by a developing country, then it can:• Either use less than formula cuts for up to 10

percent of non-agricultural national tariff lines (subject to at least half the formula cuts in them) and they do not exceed 10 percent of the total value of its non-agricultural imports

• Otherwise, it may keep 5 percent of non-agricultural national tariff lines unbound, or not apply formula cuts provided they do not exceed 5 percent of the total value of its non-agricultural imports

LDCs• LDCs shall be exempt from tariff reductions. • However, as part of their contribution to the DDA, LDCs

are expected to substantially increase their level of tariff binding commitments.

• Individual LDCs shall determine the extent and level of tariff binding commitments in accordance with their individual development objectives.

• All new tariff binding commitments shall be on an ad valorem basis.

• For existing bindings which are not on an ad valorem basis, LDCs are encouraged to convert them to ad valorem equivalents on the basis of the methodology outlined in document TN/MA/20 and bind them in ad valorem terms.

LDCs• Obtain duty-free and quota-free market access for at least

97 per cent of products originating from LDCs• Sectoral? High tariffs on healthcare products impede access

to quality health care, especially in developing countries, which have the lowest life expectancy and highest disease burden.

• Therefore, all WTO Members, including LDCs, are encouraged to evaluate the benefits of participating in this healthcare sectoral to ensure that they gain access to affordable medicines, medical products and lower cost healthcare for their populations.

• LDCs may choose to reduce tariffs on these products to 4 percent in three equal rate reductions and retain them at that level. They are encouraged to consider further reductions, including tariff elimination, where possible.

Sectoral Approach• Cutting or eliminating tariffs on certain sectors

independent of the tariff cutting formula that is followed for other sectors (paragraph 16 of DDA) – mostly favoured by developed countries.

• NGMA (2003) proposed seven sectors with considerable export interest of developing countries for this purpose (Electronics and electrical goods; fish and fish products; footwear; leather goods; motor vehicles – parts and components; stones, gems and precious metals; textile and clothing).

• Recent suggestion on other sectors.• Considered a good option given the then state of

negotiations on modalities.• US keen on discussion on manufacturing industries, EU

focus on textile and clothing.

Sectoral Approach (Contd ..)• Developing countries argue that the sectoral

approach should be voluntary in nature and should be taken up only after the issue of tariff reduction formula is settled.

• Believes Zero-to-Zero approach to be a violation of the LTFR principle.

• The Hong Kong Declaration stated that participation in sectorals will not be mandatory for countries.

• December 2008 draft supports it, but requests members to participate in this initiative.

• Within 5 months of joining the discussions, members needs to furnish their comprehensive commitments on an unconditional basis

• Will developing countries and LDCs gain from the Sectoral approach?

NAMA: December 2008 Draft

• A 25 percent Mark up to be used – 2001 will be considered as the base year.

• Developing countries with tariff binding below 15 percent shall bind 75 percent of non-agricultural tariff lines.

• Developing countries with tariff binding above 15 percent shall bind 80 percent of non-agricultural tariff lines.

• All duties shall be bound on an ad valorem basis. Existing bindings on a non ad valorem basis shall be converted to ad valorem equivalents.

Preference Erosion• Erosion in preferential treatment for LDCs due to general

tariff liberalization (e.g. - “Everything But Arms (EBA) Initiative” under GSP, granting duty free and quota free access in EC, except to arms and ammunitions.)

• Decision at Hong Kong (2005) to intensify work on assessment of scope of the problem of ‘preference erosion’.

• Suggestions from LDCs: (1) The African group has asked for suitable treatment of their products currently enjoying non-reciprocal preferential access and introduction of a correction coefficient to improve the preference margins of the products that are enjoying preferential access (2) Mauritius has suggested formation of a ‘Competitiveness Fund’ for the countries whose preferences are being eroded, for allowing them to undertake competitive adjustment.

• December 2008 Draft noted that arriving at a consensus would be difficult.

Several developing countries think that some LDCs should now graduate to the developing country league.

Case Study: Cashew Nuts in Shell import by India (080131)

Exporting Country Unit Price (US $ / KG) Market Share (%)

Cote Divoire 0.90 30.82

GuineaBissau 1.20 15.96

Benin 0.92 12.11

Indonesia 1.12 10.69

Tanzania 1.02 10.29

Ghana 0.86 5.74

Mozambique 0.91 4.93

Gambia 1.11 4.15

Nigeria 0.84 1.83

Guinea 0.90 1.65

Kenya 0.91 0.81

Senegal 1.10 0.74

Togo 0.89 0.07

Singapore 0.75 0.07

Madagascar 0.66 0.06

El Salvador 1.17 0.04

Areas nes 1.02 0.02

Panama 0.76 0.02

Asia Othr.ns 1.06 0.01

Tonga 0.61 0.01

Burkina Faso 1.13 0.01

Though bound duty is 100 percent, the applied duty is currently zero. So no special access for Tanzania. What about the RTAs?

Case Study: Cashew Nuts Shelled import by India (080132)

Exporting Country Unit Price (US $ / KG)

Market Share (%)

Viet Nam 4.81 41.63

Brazil 4.81 27.47

Tanzania 4.81 24.92

Panama 4.81 4.74


Though bound duty is 100 percent, the applied duty is currently 10 percent. The new bound tariff might be 53.8 percent. So no special threat for Tanzania. But Viet Nam and Brazil as a part of ASEAN and MERCOSUR respectively would receive extra access. Hence threat perception for Tanzanian export might go up.

Case Study: Other vegetables import by India (071390)


Market Share (%)

Myanmar 0.59 75.85

Tanzania 0.68 16.30

Malawi 0.53 4.96


Kenya 0.68 0.18

USA,PR,USVI 0.53 0.06

Areas nes 0.57 0.03

Malaysia 0.55 0.02

Though bound duty is 100 percent, the applied duty is currently 10 percent. The new bound tariff might be 53.8 percent. So no special threat for Tanzania. But Myanmar and Malaysia as a part of ASEAN would receive extra access. Hence threat perception for Tanzanian export might go up.

Case Study: Chickpeas (garbanzos) import by India (071320)


Australia 0.56 49.24

Myanmar 0.59 30.51

Tanzania 0.52 10.78

Canada 0.73 5.20

Russian Fed 0.58 2.66


Turkey 1.01 0.40

Ethiopia 0.61 0.38

Untd Arab Em 0.52 0.15

Kenya 0.54 0.14

Argentina 0.83 0.03

Malaysia 0.78 0.01

Ukraine 0.54 0.01

Though bound duty is 100 percent, the applied duty is currently 10 percent. The new bound tariff might be 53.8 percent. So no special threat for Tanzania. But Myanmar and Malaysia as a part of ASEAN and UAE as a part of GCC would receive extra access. Hence threat perception for Tanzanian export might go up.

Case Study: Cloves (whole fruit, cloves and stems) import by India (090700)


Sri Lanka 4.30 69.37

Tanzania 3.92 15.85

Indonesia 2.22 7.87


Brazil 4.05 1.47

Comoros 3.58 1.37

Kenya 3.88 0.74

Singapore 4.94 0.53

Guatemala 3.53 0.16

Netherlands 22.35 0.01

Malaysia 1.16 0.00

Though bound duty is 100 percent, the applied duty is currently 35 percent. The new bound tariff might be 53.8 percent. So no special threat for Tanzania. But Indonesia, Singapore and Malaysia as a part of ASEAN , Sri Lanka as a part of ILFTA and Brazil as a part of MERCOSUR would receive extra access. Hence threat perception for Tanzanian export might go up.

Case Study: Of tropical wood specified in Subheading Note 1 to this Chapter :-- Other import by India (440729)

Exporting Country Unit Price (US $ / m3) Market Share (%)

Tanzania 437.67 21.74

Myanmar 612.33 17.20


Malaysia 402.40 10.95

Germany 424.46 10.33

Brazil 471.71 5.19

Cameroon 641.80 4.33

Ghana 360.27 3.20

Benin 352.74 2.69

Singapore 362.93 1.43

Nigeria 332.66 1.20

Congo 690.60 1.09

Canada 257.08 1.06

Ecuador 594.87 0.85

China 548.47 0.77

Italy 540.53 0.62

Viet Nam 700.41 0.52

Though bound duty is 37.5 percent, the applied duty is currently 10 percent. The new bound tariff might be 13 - 15 percent. So no special threat for Tanzania. But how are the RTAs functioning?

Case Study: Essential oils other than those of citrus fruit :-- Other import by India (330129)



China 8.51 12.50



Tanzania 143.91 6.25

France+Monac 57.64 5.19

Switz.Liecht 28.43 2.41

Germany 53.11 2.06

Spain 26.16 1.82


Paraguay 9.86 0.98

Hungary 37.89 0.83

Sri Lanka 12.21 0.82

Untd.Kingdom 33.07 0.75


Thailand 47.73 0.62

Though bound duty is 150 percent, the applied duty is currently 20 percent. The new bound tariff might be 17.64 – 21.42 percent. So reduction in tariff may happen and a threat for Tanzanian export may occur. But how are the RTAs functioning?

Case Study: Other black tea (fermented) and other partly fermented tea import by South Africa (090240)


Malawi 1.28 62.35

Tanzania 1.97 15.41

Sri Lanka 3.41 7.57

Zimbabwe 0.91 7.39

Kenya 2.51 5.20

Indonesia 2.62 1.48

India 3.29 0.21



Argentina 1.71 0.05

China 2.11 0.03

Germany 10.15 0.02

Areas nes 0.78 0.01


Though bound duty is 170 percent, the applied duty is currently 400 c / KG. The new bound tariff might be 91.46 percent. So reduction in tariff may not be a threat for Tanzanian export. But how are the RTAs functioning?

Case Study: Of cotton seeds import by South Africa (230610)


Market Share (%)

Zimbabwe 0.18 44.42

Benin 0.23 25.94

Tanzania 0.15 11.18

Zambia 0.16 9.01

Malawi 0.10 3.67


Brazil 0.19 1.76

Togo 0.24 0.75

Untd Arab Em 0.23 0.61

Areas nes 0.08 0.06

Though bound duty is 33 percent, the applied duty is currently 6.6 percent. The new bound tariff might be 22.11 percent. So reduction in tariff may not be a threat for Tanzanian export. But how are the RTAs functioning?

Case Study: Of machinery of heading No. 84.26, 84.29 or 84.30 :-- Parts for boring or sinking machinery import by South Africa

(843143)


Sweden 12.19 23.30

USA,PR,USVI 33.66 22.07

France+Monac 30.87 7.87

Canada 26.17 7.63


Germany 32.59 5.87


Areas nes 11.89 3.67

Angola 14.10 2.76

Tanzania 7.32 2.46

China 7.17 2.24

Finland 22.23 2.15


Italy 20.85 1.07

Though bound duty is 10 percent, the applied duty is currently 0 percent. The new bound tariff might be 6.67-7.14 percent. So reduction in tariff may not be a threat for Tanzanian export. But how are the RTAs functioning?

Case Study: Cashew nuts :-- In shell import by South Africa (080131)


Viet Nam 0.50 48.01

Tanzania 0.54 30.88

India 0.59 9.89


Brazil 0.39 1.59

Nigeria 0.27 1.09

Areas nes 0.13 0.38

China 0.02 0.00


Cameroon 0.08 0.00

Bound duty is 0 percent, the applied duty is also 0 percent.

Case Study: Of cotton import by South Africa (610910)

Exporting Country Unit Price (US $ / Item) Market Share (%)

China 1.19 57.07

Mauritius 2.21 18.28

India 1.02 9.34

Bangladesh 0.80 4.20

Turkey 4.31 1.69

Tanzania 1.85 1.45



Viet Nam 1.60 0.53

Singapore 0.50 0.49

Malawi 1.29 0.49

Hong Kong 2.78 0.49

Thailand 1.65 0.44

Indonesia 1.17 0.39

Though bound duty is 45 percent, the applied duty is currently 40% or 47% with a maximum of 8000c/kg. The new bound tariff might be 13.85-16.07 percent. So reduction in tariff might put a serious threat for Tanzanian export.

Case Study: Sesamum seeds import by Japan (120740)


Paraguay 2.78 23.98Nigeria 1.64 20.65Tanzania 2.10 10.94Burkina Faso 1.75 8.73Sudan 1.82 6.96China 2.04 5.91Myanmar 1.59 5.34Mozambique 2.14 4.05Guatemala 2.00 2.73Uganda 2.14 2.31Bolivia 2.83 1.90Pakistan 1.35 1.37Turkey 3.67 1.29Mexico 3.24 0.98Venezuela 2.40 0.60Egypt 2.65 0.44Nicaragua 2.09 0.40Kenya 1.84 0.40


Case Study: Other import by Japan (261690)


Market Share (%)

Tanzania 6.14 45.50

Papua N.Guin 12.36 25.36


Chile 7.84 9.92

South Africa 27.71 3.49

Ghana 9.14 0.22

Dem.Rp.Congo 9.14 0.01


Case Study: Coffee, not roasted :-- Not decaffeinated import by Japan (090111)


Brazil 2.90 23.75

Colombia 3.32 23.72


Guatemala 3.60 10.66

Viet Nam 2.27 10.63

Ethiopia 3.17 2.26

Tanzania 3.30 2.26

Jamaica 24.70 2.16

Honduras 3.15 2.01

Costa Rica 3.68 1.94

China 3.02 1.60

Papua N.Guin 2.95 1.47

El Salvador 3.24 1.47

Nicaragua 3.23 1.27

Mexico 3.47 1.05

Peru 3.20 0.74

Kenya 4.12 0.36


Case Study: Frozen filletsimport by Japan (030420)


Chile 7.37 19.05

Korea Rep. 9.26 9.97

Norway,Sb,JM 4.84 9.53

Malta 33.94 9.07

China 4.66 6.23

Russian Fed 5.23 5.19

Turkey 35.25 4.69

Spain 28.90 3.92


New Zealand 4.32 3.03

Tunisia 32.44 2.88

Croatia 34.83 2.36

Morocco 32.22 2.34

Indonesia 7.02 2.23

Tanzania 5.18 0.57

Bound duty is 3.5 percent, the applied duty is also 3.5 percent. The new bound tariff might be 1.75 percent.

Case Study: Cloves (whole fruit, cloves and stems) import by Japan (090700)


Market Share (%)


Tanzania 4.76 23.98


Sri Lanka 7.55 2.35

Malaysia 14.14 1.20

India 10.44 0.66

China 4.74 0.44

Bound duty is 1.2 percent, the applied duty is also 1.2 percent. The new bound tariff might be 0.6 percent.

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Market Access: Some Aspects for Tanzania Lecture 9