NTMs Classification Workshop

1. NTMs Classification Workshop Bangkok, 14-15 March 2013

2. Background • UNCTAD work on NTMs goes back to early 1980s when a taxonomy of different possible types of NTMs was developed. • Effort led to the establishment of the UNCTAD Coding System of Trade Control Measures (TCMCS) in late 1980s, following several revisions • Collecting data using TCMCS began in 1988 • Data in the Trade Analysis and information System (TRAINS) database in 1992

3. Outline • Backgound • UNCTAD’s new initiative on NTMs • Overview of UNCTAD’s old NTM classification • New NTM classification

4. Background • Since the 1990’s UNCTAD has maintained a database on tariff and NTMs • Very good success with tariff, good coverage with more than 167 countries and updated on a regular basis • Not so good success with NTMs, very few countries with partial data and we never managed to update data on regular basis. • Why? • Much easier to collect data on tariff as countries publish tariff schedules and update these every fiscal year. • NTMs are not listed in one publication as it is for tariff information and countries don’t publish them

5. Background Some Facts • Past 20 years, trade liberalization has been used as an effective development tool • During this period, we have seen a continual decline of tariff rates by virtue of MTAs under WTO and PTAs at regional and bilateral level • Reduction in tariffs has not been reflected by a reduction in Non-Tariff Measures (NTMs)

6. Background Some reasons why a focus on NTMs is needed today NTMs are increasingly becoming important as countries are recurring to NTMs as alternative trade policy instruments for protectionist or regulatory purposes Proliferation of NTMs: Trade is today regulated by an increasing number of NTMs both in terms of countries adopting these measures as well as in their variety.

7. Background More Reasons • NTMs can add to the cost of trading • NTMs can be discriminatory, and thus can have important trade diverting effect. Even when NTMs are indiscriminately applied to all imported goods, many NTMs discriminate among a country's trading partners because costs of compliance are often different across exporters • Sometimes protectionist intents could be hidden behind NTMs due to their complexity • As NTMs are integral part of the trade negotiation agendas, both at the multilateral and at the bilateral level, policymakers should be aware of the use of NTMs and their effect on international trade, especially in terms of market access

8. UNCTAD: New Initiative on NTMs Data Collection September 2005, UNCTAD organized an Expert Meeting on NTBs with the following main objectives: Identify ways to improve NTBs data in TRAINS database Clarify methodologies for definition and classification Look at experiences of other organizations in dealing with NTBs Identify methodological approaches for quantification of NTMs and assess their impacts 8

9. Recommendations of NTBs Expert Meeting (2005) The main conclusion of the meeting was: a clearer understanding of NTBs definition and classification as well as the availability of reliable and detailed data were prerequisites for reliable quantification, improved analysis and negotiation of better market access. 9

10. Following the meeting, UNCTAD Secretary General established the Group of Eminent Persons on NTBs (GNTB). Main purpose of GNTB is to discuss definition, classification, collection and quantification of NTBs so as to identify data requirements, and consequently to facilitate the understanding of the implications of NTMs. Group of Eminent Persons on NTBs 10

11. Members of the Group of Eminent Persons on NTBs 11

12. To carry out the technical work of the GNTB, a Multi-Agency Support Team(MAST) was also set up. Main objectives of MAST: Produce an updated classification of various NTBs Advise on the feasibility of data collection of NTBs Members: Food and Agriculture Organization (FAO) , International Monetary Fund (IMF), International Trade Centre (ITC), Organization for Economic Cooperation and Development (OECD), United Nations Conference on Trade and Development (UNCTAD), United Nations Industrial Development Organization (UNIDO), World Bank (WB) and World Trade Organization (WTO) Observers: European Commission, and US International Trade Commission and Department of Agriculture Multi-Agency Support Team (MAST) 12

13. UNCTAD Secretary General’s Group of Eminent Persons on NTBs (GNTB): 6 July 2006 and 5 November 2009, Geneva Multi-Agency Support Team for GNTB (MAST): Conducted 5 meetings from Oct. 06 to Jan. 09 (Washington DC, Rome, Vienna, Paris and Geneva) GNTB and MAST Technical Meetings 13

14. Recommendations of GNTB First GNTB meeting of July 2006: NTM Definition should be as broad as possible Collection from both importer (government) and exporters (complaints by traders)

15. UNCTAD: Definition of NTMs (1) • UNCTAD (GNTB-MAST): • Non-tariff measures (NTMs) are policy measures, other than ordinary customs tariffs, that can potentially have an economic effect on international trade in goods, changing quantities traded, or prices or both. • NTMs are measures that have the potential to substantially distort international trade, whether their trade effects are protectionist or not 15

16. UNCTAD: Definition of NTMs (2) • The protectionist or discriminatory intent is the factor differentiating non-tariff barriers (NTBs) from NTMs • MAST agrees that NTBs are a subset of NTMs recognizing that the a priori distinction of NTBs from NTMs should be avoided. 16

17. GNTB of 2009 • Adoption of revised definition and classification • Green light for global data collection effort and start using the new classification

18. MAST new NTM Classification Drawing upon the existing, outdated classification of NTMs [UNCTAD Coding System of Trade Control Measures (TCMCS) in late 1980s], modifications and new measures to reflect the current situation of NTMs in international trade were introduced. Proposed new classification includes a substantial number of new sub-categories on SPS and TBT. Introduction of new measures (Government Procurement, Export measures, Intellectual Property rights, etc). Classification suited to collect detailed information. More than 250 measures at the most detailed level 18

19. MAST new NTM Classification The new classification was officially launched in 2009. It was then revised in 2012 to include modifications suggested by WTO. 19

20. Procedural Obstacles Classification • The new classification introduces the concept of “procedural obstacles” • Procedural obstacles refer to issues related to the process of application of an NTM, rather than the measure itself • “Testing requirement” a TBT measure as opposed to “Excessive documentation requirement”, a procedural obstacle • These can only be collected through firm-level surveys

21. Procedural Obstacles • Administrative burdens related to regulations • Information/transparency issues • Discriminating behavior of officials • Time constraints • Informal or unusually high payment • Lack of sector-specific facilities • Lack of recognition/ accreditations

23. ^ Transparency in Trade UNCTAD GNTB-MAST would like the New NTMs Classification to be the standard classification for the collection, analysis and dissemination of NTMs information by all international, as well as regional organizations and national agencies. UNCTAD in collaboration with the World Bank, AfDB, and WTO and ITC propose to launch a multi-year programme to build, update and disseminate free of charge a NTMs database using the new NTMs classification and covering as many countries as possible. New Funding requests for all market access data related work including NTMs (as well as trade and tariff) UNCTAD’s Global Initiative 23

24. Why Transparency? Improved transparency on NTMs would contribute to discouraging their use as hidden protectionist instruments. Better information on NTMs would contribute better target trade-facilitation and aid-for-trade programs. This would contribute to a coordinated effort on NTMs data collection, capacity building and dissemination, which would help policy makers and researchers to better understand the implications of NTMs for international trade and to identify the best policy option to help developing countries to take advantage of the global market. Objectives 24

25. Capacity Building Program will set up a network of international, regional and national agencies, which will collaborate in the collection and dissemination of NTM data. To increase transparency and monitoring of NTMs applied at the country and product level. To foster ownership for the creation of a sustainable data collection framework at the regional and national levels. To encourage economic analysis of NTMs and their impact on international trade. Objectives 25

26. Transparency in Trade (TNT) initiative Joint fund raising initiative of the World Bank with UNCTAD, UNSD, ITC and WTO for Global trade data requirement including: Trade statistics Tariff data Non-Tariff Measures Services data

27. Current status of TNT Concrete fund commitment from African Development Bank (AfDB): For countries in Africa as well as their major export markets (such as EU, USA, Japan and China) Other donors are being sought by the World Bank Small trust funds of WB and UNCATD are used to finance specific projects within TNT

28. Strategy for NTB official data collection • Through regional organization such as ASEAN and ALADI • Through academic institutions: China, some African and Asian countries with the World Bank • National Consultants: USA, Canada • Directly by UNCTAD: EU, Japan

29. Future • Quantification of NTMs • Identification of NTBs and move towards their reduction/elimination • Harmonization of NTMs • Capacity Building

30. OLD NTMs Classification UNCTAD Coding System of Trade Control Measures 1994 Six Chapters: 3-8 (1 and 2 are for tariffs and para-tariffs) 3. Price Control Measures 4. Finance Measures 5. Automatic Licensing 6. Quantity Control Measures 7. Monopolistic Measures 8. Technical Measures

31. Old Classification overview • The old classification identifies over 100 different types of NTMs at its most detailed level grouped in six broad categories. • NTMs divided into Core and non-Core measures • Core Measures: Measures intended to protect local producers. • Non-Core Measures: Measures intended to protect local consumers.

32. Old Classification overview Core NTMs Non-Core NTMs Price Control Measures Automatic Licensing Measures NTMs Finance Measures Monopolistic Measures Quantity Control Measures Technical Measures

33. Old Classification overview Price Control Measures Variables Charges Administrative price fixing Voluntary export price restraint Antidumping measures Countervailing measures

34. Old Classification overview Transfer delays, Queuing Finance Measures Advance payments requirements Multiple exchange rates Restrictive official foreign exchange rate Regulations concerning terms of payment for imports

35. Old Classification overview Automatic Licensing Measures Automatic license Surrender requirements Import monitoring

36. Old Classification overview Enterprise specific restrictions Quantity Control Measures Non-Automatic licensing Quotas Prohibitions Export restraint arrangements

37. Old Classification overview Monopolistic Measures Single Channel for Imports Compulsory National Services

38. Old Classification overview Technical Measures Technical Regulations

40. Comparing old and new classification

41. Comparing old and new classification 41

42. NTMs Classification Structure of the NTMs classification • Two Broad Categories: Imports and Export Measures • Imports Measures further subdivided into Technical and Non-Technical Measures • Within Technical Measures->3 chapters A-C • Within Non-Techical Measures->12 chapters D-O • Only one chapter for Export Measures

43. NTMs Classification A. Sanitary and Phytosanitary Measures (SPS) Technical Measures B. Technical Barriers to Trade (TBT) C. Pre-shipment inspection and other formalities Import measures D. Contigent trade protective measures E. Non-automatic licensing, quotas, prohib. and QCM F. Price control measures including add. taxes and ch. Non- Technical Measures G. Finance measures H. Measures affecting competition I. Trade-related investment measures J. Distribution restrictions K. Restrictions on post-sales services L. Subsidies(excluding export subsidies) M. Government procurement restrictions N. Intellectual property O. Rules of Origin Export Measures P. Export-related measures (including export subsidies)

44. NTM classification Tree Structure • The classification develops a tree/branch structure where measures are categorized into chapters, depending on their scope and/or design • Each chapter is further differentiated into several subgroups to allow a finer classification of the regulations affecting trade, using a tree/branch structure up to 3 levels (1,2 and 3 digits)

45. NTM classification Example

46. Chapter A • Chapter A deals with sanitary and phytosanitary measures, which are generally referred to as SPS. It gathers measures such as restriction for substances and ensuring food safety, and those for preventing dissemination of disease or pests. Chapter A also includes all conformity-assessment measures related to food safety, such as certification, testing and inspection, and quarantine.

47. Chapter B • Chapter B collects technical measures, also called TBT. It refers to measures such as labelling, standards on technical specifications and quality requirements, and other measures protecting the environment. As in the case for SPS, chapter B also includes all conformity-assessment measures related to technical requirements, such as certification, testing and inspection. The last chapter in the

48. Chapter C • The last chapter in the technical measures section is chapter C, which classifies the measures related to pre-shipment inspections and other customs formalities.

49. Chapter D • Chapter D groups the contingent measures, i.e. those measures implemented to counteract particular adverse effects of imports in the market of the importing country, including measures aimed at unfair foreign trade practices. They include antidumping, countervailing, and safeguard measures.

50. Chapters E & F • Chapter E includes licensing, quotas and other quantity control measures, including Tariff rate quotas. Chapter F lists price-control measures implemented to control or affect the prices of imported goods. Among the examples are those to support the domestic price of certain products when the import prices of these goods are lower; to establish the domestic price of certain products because of price fluctuation in domestic markets, or price instability in a foreign market; or to increase or preserve tax revenue. This category also includes measures other than tariffs measures that increase the cost of imports in a similar manner (para-tariff measures).