III

South Asia: Addressing Non-Tariff Measures for Sustainable Trade

7th South Asia Economic Summit

5-7 November 2014

New Delhi, India

V

VI

Rajan Sudesh Ratna

Economic Affairs Officer Trade Policy and Analysis Section Trade and Investment Division UNESCAP, Bangkok ratna@un.org rsratnaun@gmail.com

Presentation Focus

• Non –tariff measures – types

• Focus on:

– Sanitary and Phytosanitary measures

– Technical Barriers to Trade

– Rules of Origin

• South Asian Integration

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Classification: UNCTAD

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Source: UNCTAD

Classification: WTO I. Government participation in trade and restrictive practices tolerated by governments

a) Government aids

b) Countervailing duties

c) Government procurement

d) Restrictive practices tolerated by governments

e) State trading, government monopoly practices, etc.

II. Customs and administrative entry procedures

a) Anti-dumping duties

b) Valuation

c) Customs classification

d) Consular formalities and documentation

e) Samples

f) Rules of origin

g) Customs formalities

III. Technical barriers to trade

a) General

b) Technical regulations and standards

c) Testing and certification arrangements

IV. Specific limitations

a) Quantitative restrictions and import licensing

b) Embargoes and other restrictions of similar effect

c) Screen-time quotas and other mixing regulations

d) Exchange control

e) Discrimination resulting from bilateral agreements

f) Discriminatory sourcing

g) Export restraints

h) Measures to regulate domestic prices

i) Tariff quotas

j) Export taxes

k) Requirements concerning marking, labelling and packaging

l) Other specific limitations

V. Charges on import

a) Prior import deposits

b) Surcharges, port taxes, statistical taxes, etc.

c) Discriminatory film taxes, use taxes, etc.

d) Discriminatory credit restrictions

e) Border tax adjustments

f) Emergency action

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Source: WTO

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Technical Regulations Facts…..

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Overall, import weighted tariff on industrial products

≈ 40%

> 4%

Source: WTO available at www.wto.org/english/tratop_e/tbt_e/program_fiji06_e/s3_conc_def_princ_e.ppt

SPS notifications to WTO (1995 – 2013)

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Source: Author’s calculation on the basis of WTO I-TiP database accessed on 7 April 2014

SPS: Top items notified 1995-2013

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HS Code Description Number Share of

Total

02 Meat and edible meat offal 2,698 17%

08 Edible fruit and nuts, peel of citrus fr

uit or melons 1,645 10%

07 Edible vegetables and certain roots a

nd tubers 1,382 9%

10 Cereals 1,245 8%

01 Live animals 1,233 8%

TBT notifications to WTO (1995 – 2010)

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Source: Author’s calculation on the basis of WTO I-TiP database accessed on 7 April 2014

TBT: Top items notified 2011-2013

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HS code Description No. of SPS Noti

fications

84 Nuclear reactors, boilers, machinery and mech

anical appliances; parts thereof 449

85

Electrical machinery and equipment and parts

thereof; sound recorders and reproducers, tele

vision image and sound recorders and reprodu

cers, and parts and accessories of such article

s

325

11 Products of the milling industry; malt; starches

; inulin; wheat gluten 254

21 Miscellaneous edible preparations 239

19 Preparations of cereals, flour, starch or milk; p

astrycooks' products 237

SAARC Members: SPS, TBT and WTO

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Member SPS Measures TBT Measures Afghanistan 0 0 Bhutan 0 0 Nepal 9 0 India 18 1 Maldives 0 0 Pakistan 0 17 Sri Lanka 17 1

Source: WTO I-TIP database accessed on 29 October 2014

Some Regional

Experiences

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Working Groups

• Working Group on Standards and Mutual Recognition Agreements

• Working Group on Accreditation and Conformity Assessment

• Working Group on Legal Metrology

• …… the desired outcome is “one standard, one test, one certificate accepted everywhere”

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ASEAN Arrangements (MRAs)

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• Memorandum of Understanding on Standstill and Rollback on Non-Tariff Barriers among ASEAN countries (1987)

• The Memorandum of Understanding on Standards and Quality (1996)

• ASEAN Framework Agreement on Mutual Recognition Arrangements (1998)

• ASEAN Telecommunication Regulators’ Council Sectoral MRA (1998)

• ASEAN Sectoral Mutual Recognition Arrangement for Electrical and Electronic Equipment (2002)

• Agreement on the ASEAN Harmonized Cosmetic Regulatory Scheme (2003)

• Agreement on the ASEAN Harmonized Electrical and Electronic Equipment (EEE) Regulatory Regime (2005)

• Pharmaceutical Good Manufacturing Practice (GMP) MRA (2009)

Harmonization in ASEAN agriculture products

• Codex:

– General Standards for Labelling of prepackaged foods, Food additives.

– Guidelines on Claims and Nutrition labelling

• IPPC:

– International Standards for Phytosanitary Measures (ISPMs)

• World Organization for Animal Health:

– Guidelines for disease reporting; import- export risk analysis; and surveillance section.

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Intra ASEAN exports

2002 2005 2008 2012

Benefits of MRAs • MRAs set the groundwork for regulatory

coherence in ASEAN for them to harmonise their national standards with the international standards.

• Prepares them for regional collaboration in meeting international standards which ultimately helps in looking for the international markets.

• Supports the regional integration for free flow of goods.

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ASEAN: Lessons Learnt • Strong political commitment and top level support is

essential to meet the goals on standards and technical regulations.

• Collaboration and commitment by regulators and CABs are essential.

• Members at various stages of development – brings challenges in consensus building.

• Technical assistance become important.

• ASEAN initiated dialogues with its dialogue partners – Japan, EU, USA etc.

• The basis for harmonisation – international standards.

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SAARC: SAFTA • Article 3(d) - free movement of goods,

between countries through, inter alia, the elimination of tariffs, para-tariffs and non- tariff restrictions on the movement of goods and any other equivalent measures.

• 6(c) Arrangements relating to non-tariff measures.

• 8(a) Harmonisation of standards, reciprocal recognition of tests and accreditation of listing laboratories of contracting states and certification of procedures.

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SAARC

• Agreement on the Establishment of South Asian Regional Standards Organisation (SARSO) (August 2008).

• SAARC Agreement on Multilateral Arrangement on Recognition of Conformity Assessment (November 2011).

• SAARC Agreement on Implementation of Regional Standards (November 2011).

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SAARC • The Agreement on the Establishment of

South Asian Regional Standards Organisation(SARSO) entered into force with effect from 25 August 2011 after ratification by all member States of SAARC.

• SARSO Sectoral Technical Committees (STCs) discussing harmonisation of standards on Refined sugar, biscuits, instant noodles, black tea, vanaspati, skimmed milk powder on food and agricultural products.

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0%

5%

10%

15%

20%

25%

30%

35%

40%

01 - Live animals 02 - Meat and edible meat offal

03 - Fish, crustacean, mollusc etc.

07 - Edible vegetables and

certain roots

08 - Edible fruit and nuts; peel of

citr

09 - Coffee, tea, matï and spices.

10 - Cereals Total

Intra regional exports share SAARC

2002 2005 2008 2012 Average export to SAARC

Existing works

• Lot of literature available

• Focus on non-tariff measures

• Listing of items of interest

• Problems at ground identified

• Analysis on existing gaps in regulations to be done.

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SAARC: Lessons Learnt • Focus is on exporting to India and how to reduce the

transaction cost (Trade facilitating effect) and not real regional integration.

• However, the solution lies on trade policy and not mainly on trade facilitation (CAP, Equivalence, Regionalisation, Harmonisation).

• Prioritization of items of regional export interest, especially in the context of SPS and TBT measures is lacking.

• Institution building:

– Laboratory and testing equipments

– National Accredited Bodies for these items/sectors

– Conformity Assessment Bodies

• Capacity building and technical assistance

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SAARC • No effort for setting up own regional

standards and then taking them up for setting international standards.

• No effort taken for equivalence or regionalisation.

• Lack preparedness for driving the agenda for setting international standards.

• Not using very actively the STCs in WTO – perhaps a collective effort in Geneva is needed.

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Cumulation

• Provision of cumulation:

– 50% value added with 20% in final exporting country.

– Full cumulation not allowed.

• Deprives the concept of “Made in SAARC”.

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Declaration of the Fourteenth SAARC Summit

3 - 4 April 2007, New Delhi:

18. The Heads of State or Government emphasized the need to develop, at an early date, a roadmap for a South Asian Customs Union and a South Asian Economic Union in a planned and phased manner.

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Is CU possible?

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WTO Bound Rate MFN Agriculture

Country Agriculture Non-Agriculture Agriculture Non-Agriculture

Afghanistan (2013) - - 7.1 5.7

Bangladesh (2013) 192 37.3 16.8 13.4

Bhutan - -

India (2013) 113.5 34.6 33.5 10.2

Maldives 48.1 35.1 - -

Nepal (2013) 41.5 23.6 13.8 12

Pakistan (2013) 95.5 54.8 15.4 13.2

Sri Lanka (2012) 50 19.7 25.7 7.5

Source: WTO Tariff Profiles

Economic Integration of SAARC

• Step 1: Duties in SAFTA to be ZERO.

• Step 2: Move towards Customs Union Harmonise the duties

Solve the issues of Rules of Origin

Harmonise the SPS and TBT

• Step 3: Form an Economic Union

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