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BUSINESS PERSPECTIVES ON NON-TARIFF MEASURES

BUSINESS PERSPECTIVES ON NON-TARIFF MEASURES. FINDINGS AND IMPLICATIONS FOR ARAB STATES. Mathieu Loridan, ITC UN-ESCWA EGM on Trade and Transport Facilitation, Dubai 10 April 2013. Removing trade obstacles among LAS countries can lead to substantially increased trade and job creation.

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BUSINESS PERSPECTIVES ON NON-TARIFF MEASURES

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  1. BUSINESS PERSPECTIVES ON NON-TARIFF MEASURES FINDINGS AND IMPLICATIONS FOR ARAB STATES Mathieu Loridan, ITC UN-ESCWA EGM on Trade and Transport Facilitation, Dubai 10 April 2013

  2. Removing trade obstacles among LAS countries can lead to substantially increased trade and job creation Increased total exports from Arab states by 10% and more than double intra Arab tradeby 2025. More than 2 million new jobs created in the LAS’ export sectors by 2025 (growth highest in Somalia/Sudan and Oman). Main beneficiary sectors are food, metals and machinery and electronics sectors: 2 million new jobs represents an increase of 10% of the workforce in exporting sectors… …and covers 5-10 % of the new jobs needed to absorb the increase of the workforce (as estimated by World Bank and FEMISE) Source: ITC technical document on LAS tradeintegration, 2012

  3. Short introduction to non-tariff measures (NTMs) The ITC programme on NTMs Survey findings in the region Conclusions and way forward

  4. NTMs – What are they? • Official policy measures on exports and imports, other than ordinary customs tariffs, than can potentially have an effect on international trade in goods, changing traded quantities, prices or both; • Mandatory requirements, rules or regulations legally set by the government of the exporting, importing or transit country (in contrast to private standards which are not legally set); • Can affect negatively both exports and imports and become non-tariff barriers to trade

  5. TechnicalMeasures Non-Technical Measures Import relatedmeasures Export relatedmeasures NTM classification on goods

  6. Short introduction to non-tariff measures (NTMs) The ITC programme on NTMs Survey findings in the region Conclusions and way forward

  7. The ITC programme on NTMs Global objective: Key stakeholders in beneficiary countries are aware of non-tariff obstacles to trade that affect their products and are enabled to formulate options to address these obstacles. Key activities (Mar 2010 - Mar 2013): Collection, classification and dissemination of NTM regulations; in collaboration with UNCTAD and World Bank ( integration of data into MAcMap) Comprehensive business surveys on NTMs in 23 countries Mainly funded by UK DFID

  8. Why do we need the business perspective? NTMs and other trade barriers Excessively strict NTMs E.g.: pesticides levels set by the EU on imported tomatoes are hard to comply with for Moroccan exporting companies NTMs Regulations on trade and products, other than tariffs, which may negatively affect the international trade of goods. Procedural obstacles (POs) E.g.: the analysis required by the EU to test the level of pesticides of imported tomatoes from Morocco is delayed because the laboratory in charge of the analysis (in Morocco or in partner country) is overstrained. Trade barriers Business environment: obstacles that are not related to NTMs but hinder international trade. E.g.: lack of port infrastructure.

  9. ITC business surveys on NTMs Global methodology …based on large-scale company level surveys …representative by sector and company size …adjusted to country-specific requirements • Identify trade impediments faced by companies on product and partner country level. • Enable companies to voice their concerns and needs regarding the identified problems and create dialogue among national stakeholders. • Reinforce country capacity: survey and analysisimplemented in collaboration with local specialists, after intensive training.

  10. The survey process consists of two steps: NTM Surveys follow a two-step approach: Step 1. Phone-screen interviews (5-10 min) Step 1 is aimed to identify the companies which are affected by burdensome NTMs or other obstacles to trade. Results of the phone screen interviews show the share of companies affected by NTM-related barriers to trade. Step 2. In-depth face-to-face interviews (~60 min) Step 2 face-to-face interviews cover only companies that reported on the phone that their export is affected by barriers to trade. Face-to-face interviews capture detailed information on the types of burdensome NTMs and other obstacles to trade at the product level and by partner country.

  11. ITC business surveys on NTMs - countries • In the region • Egypt • Morocco • Occ. Palestinian T. • Tunisia As of 1 January 2013 9,339 phone interviews 3,290 face-to-face interviews (plus 7 pilot countries)

  12. Short introduction to non-tariff measures (NTMs) The ITC programme on NTMs Survey findings in the region Conclusions and way forward

  13. Context: low intra-regional trade ITC calculationsbasedCepii’s BACI database, 2010

  14. Context (cont’d): Multiplication of tradeAgreementsinvolving LAS members

  15. Business perspectives on NTMs across surveyed regions ITC calculationsbased on Survey findings in 21 countries

  16. Business perspectives on NTMs across surveyed countries ITC calculations based on Survey findings in 21 countries

  17. What are the most affected export sector and destination for Arab states? ITC calculations based on Survey findings for Egypt, Morocco, Occupied Palestinian Territory and Tunisia.

  18. Who applies the burdensome NTMs? ITC calculations based on Survey findings for Egypt, Morocco, Occupied Palestinian Territory and Tunisia.

  19. What type of NTMs apply partner countries? ITC calculations based on Survey findings for Egypt, Morocco, Occupied Palestinian Territory and Tunisia.

  20. What are the NTMs affecting agricultural exports? TechnicalNTMs Agriculture Non-technicalNTMs ITC calculations based on Survey findings for Egypt, Morocco, Occupied Palestinian Territory and Tunisia.

  21. What are the technical measures affecting agricultural exports? Agriculture ITC calculations based on Survey findings for Egypt, Morocco, Occupied Palestinian Territory and Tunisia.

  22. What are the NTMs affecting manufacturing exports? Manufacturing TechnicalNTMs Non-technicalNTMs ITC calculations based on Survey findings for Egypt, Morocco, Occupied Palestinian Territory and Tunisia.

  23. What are the technical measuresaffecting manufacturing exports? Manufacturing ITC calculations based on Survey findings for Egypt, Morocco, Occupied Palestinian Territory and Tunisia.

  24. Why partner’s NTMs are burdensome? ITC calculations based on Survey findings for Egypt, Morocco, Occupied Palestinian Territory and Tunisia.

  25. Where do procedural obstacles take place? ITC calculations based on Survey findings for Egypt, Morocco, Occupied Palestinian Territory and Tunisia.

  26. What are the main procedural obstacles? ITC calculations based on Survey findings for Egypt, Morocco, Occupied Palestinian Territory and Tunisia.

  27. Short introduction to non-tariff measures (NTMs) The ITC programme on NTMs Survey findings in the region Conclusions and way forward

  28. Conclusions Regionalintegrationrequires efforts beyond the removal of ‘conventional’ tariffs: • Non-tariff obstacles significantly hamper intra-LAS trade: • especially in manufacturing • especially due to technicalrequirements (SPS and TBT) • Good and bad news: many issues, in particularprocedural obstacles, can and need to beaddressedat home, e.g. w.r.t. implementation of existingrules, efficiency of institutions, lack of information, etc. • The simple existence of an FTA does not remove NTM-related problems  necessity to fully implement provisions related to elimination of non-tariff obstacles within agreements • Foster public-private dialogue with the goal of removing burdensome obstacles to trade, thereby assisting companies become more competitive

  29. Selected ex. from OPT: Trade facilitation – home-made problems …but soisgetting to the border in the first place. Crossing the border iscomplicated… Source: ITC Survey on NTMs in Malawi, 2010-2011.

  30. Selected ex. from Morocco: survey recommendations:

  31. NTM surveys – nextsteps Increase country coverage: 20+ surveys to be conducted in 2013-2016 among which new LAS countries (Aid for Trade in Arab states program) Follow-up activities in Arab countries (Egypt, Morocco, Occ. Palestinian T., Tunisia) Publications: Country reports and other publications (e.g. LAS regional integration) NTM in services (2013-2016): development of a methodology and pilot surveys

  32. More information on www.intracen.org/NTM

  33. Thank you! Comments or questions? You can contact me alsoat loridan@intracen.org International Trade Centre (ITC) Palais des Nations CH-1211 Geneva 10, Switzerland

  34. BACK UP

  35. UNCTAD: United Nations Conference on Trade and Development (formulation of tradepolicies for economicdevelopmentthroughtrade and investment) World Trade Organisation: Forum of multilateral trade negotiations, implementation of agreements and managing trade conflicts ITC enables small business export success in developing countries by providing trade development solutions to the private sector, trade support institutions and policy makers What is ITC? Mission ITC’s overarching goal is to help developing countries achieve sustainable development through exports. In particular it helps SMEs better integrate in the global trading system and reap the benefits of trade - to increase sales, export performance and hence revenues and to contribute to creating jobs and reducing poverty.

  36. ITC iscontributing to regionalintegration and competitivenessenhancement in the ArabRegion: • ITC assists SME exporters to integrate into regional value chains, for example in Tunisia where a company adapted its products to integrate into the luxury accessories value chain in Morocco to export to a global market • ITC provides support on the supply side to improve product design, quality and packaging of exported products, for example it has helped a Jordanian company export high-end home goods to Arab countries and Europe hence creating jobs for women • ITC has been supporting a variety of Trade Support Institutions such as chambers of commerce in Tunisia, sectoral associations for leather in Morocco and the handicraft association in Jordan to provideimproved business support services

  37. Technical measures – What are they? • Comprise technical requirements and conformity assessment • Technical requirements: • refer to product-specific properties • define product characteristics, technical specifications of a product or the production process and post-production treatment • often has a legitimate purpose (e.g. protect the consumer from health or safety risks) • include sanitary and phytosanitary measures which are generally implemented to protect human, animal and plant life and health from pests and diseases. • Conformity assessments: • determining whether a product or a process complies with a technical requirement • refer to control, inspection and approval procedures - such as testing, inspection, certification and traceability • confirm and control that a product fulfills the technical requirements and mandatory standards

  38. NTMs – Why are they important? • Tariff rates have fallen to historic low levels • National regulations are more important and used more often by governments as trade policy instruments • Products need to comply with wide range of NTMs; NTMs often vary across products and countries and can change quickly • Nature of NTMs has changed over time – they have become less visible and direct, but rather more complex • Impediments companies face in relation to NTMs and their compliance are often linked to lack of capabilities, infrastructure and efficient procedures (“procedural obstacles”) in the country • No transparency on and easy access to relevant information about NTMs that are applied by the destination market • Policy makers often lack a clear understanding about the current obstacles to trade their private sector is facing – making it difficult to define policies and strategies overcoming these challenges

  39. Context 1: Intra-regional trade shares around the world (excl. oil)

  40. Removing trade obstacles among LAS countries can lead to substantially increased trade and job creation Increased total exports from Arab states by 10% and more than double intra Arab tradeby 2025. More than 2 million new jobs created in the LAS’ export sectors by 2025 (growth highest in Somalia/Sudan and Oman). Main beneficiary sectors are food, metals and machinery and electronics sectors: 2 million new jobs represents an increase of 10% of the workforce in exporting sectors… …and covers 5-10 % of the new jobs needed to absorb the increase of the workforce (as estimated by World Bank and FEMISE) Expansion of the current industrial exports will primarily benefit male unskilled and semi-skilled labour.

  41. Whoisaffected? (1/2) Simple cross-country averagebased on 11 countries

  42. Why are NTMsperceived as burdensome? * *Procedural Obstacles Most NTMs are reported as being burdensome due to Procedural Obstacles (POs) like administrative delays or lack of appropriate facilities.

  43. WhichNTMs are perceived as burdensome? (2/2) Simple cross-country averagebased on 11 countries

  44. Does the partner country matter? Burdensome NTMs applied by partner countries: developing vs developed Simple cross-country averagebased on data from 11 reporting countries

  45. Short introduction to non-tariff measures (NTMs) The ITC programme on NTMs Survey results(general) Survey results (Arab States) What to do? Conclusions

  46. Aggregatesurveyresults for Arab countries (1/4) Figure: Share of NTM cases by sector and country applying the NTM – simple average a/ a/ Agriculture: simple average across Egypt, Morocco and Tunisia; Manufacturing: simple average across Egypt and Morocco

  47. Aggregatesurveyresults for Arab countries (2/4) Fig. B: Share of burdensome NTMs and exports across trading partners

  48. Aggregatesurveyresults for Arab countries (3/4) Figure: Agricultural exports: types of burdensome NTMs applied by partner countries

  49. Aggregatesurveyresults for Arabcountries (4/4) Figure: Manufacturing exports: types of burdensome NTMs applied by partner countries

  50. Talking about ROOs….: Trade Agreementsinvolving LAS members

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