NTBs Under NAMA Negotiations A South Asian Perspective

1. NTBs Under NAMA NegotiationsA South Asian Perspective By CUTS-CITEE Research Team Pranav Kumar Simi T B Chandan Mukherjee

2. Presentation Coverage • Theory • Definition, Classification & Measurement Problems • NTBs in Multilateral Trade Negotiations • Tokyo, Uruguay and Doha Round • Progress on NTBs Negotiations in Doha Round • Approach, Notification • Notification by South Asian Countries • India, Pakistan and Bangladesh • Composition of Mfg. Exports from South Asia

3. Definition of NTBs • Baldwin (1970), Walter (1972), Mayer & Gevel (1973), and Deardorff & Stern (1997) have provided their definitions to NTBs. • UNCTAD, OECD, PECC too contributed in formulation of the term NTBs • No legal definition of NTBs in WTO Agreements NTB are measures, other than tariffs, that are connected with state (administrative) activity and influence prices, quantity, structure and/or direction of international flows of goods and services as well as resources used to produce these goods and services.

4. Non-tariff Measures (NTMs) Vs. Non-tariff Barriers (NTBs) • For several countries both NTB and NTMs are mere synonymous terms, for others these two are quite different. • As per OECD, NTMs are defined as policy measures that have the effect of limiting trade, with no implied judgment on the legitimacy. Whereas, NTBs are defined as instruments that are in violation of WTO law. • The raison d'être for using the term ‘measure’ instead of ‘barrier’ is primarily due to the reality of few cases where policies that stimulate the volume of trade rather than retard trade, such as exports subsidies, cannot be held as a barrier. A barrier means prevention of something, now here it is the trade.

5. Classification of NTBs • UNCTAD’s Coding System of Trade Control Measures is the most comprehensive classification system • At its most detailed level, the classification identified over 100 different types of NTBs at its most detailed level though it does not incorporate any measures applied to production or to exports. • This classification comprises of six categories/chapters of NTBs, including price control measures, finance measures, automatic licensing, quantity control measures, monopolistic measures and technical measures. • These chapters on NTBs begin from chapter 3 to chapter 8, while chapter 1 and 2 are on tariff and Para-tariff measures.

6. Measurement of NTBs • Frequency-type measures • QRs and similar specific limitations • Non-tariff charges and related policies • Govt supports and other restrictive practices • Customs and administrative procedures • Technical barriers to trade • Price-comparison measures • Quantity-impact measures

7. NTBs in Multilateral Trade Negotiations • In Tokyo Round, there was a comprehensive effort to reduce trade obstacles stemming from tariffs and NTMs • New or reinforced agreements called “codes,” were reached on the following NTMs: • subsidies and countervailing duties; • government procurement; • technical standards; • import licensing procedures; • customs valuation; and • antidumping.

8. NTBs Negotiations Under Uruguay Round • WTO (URA) does not ban the use of all NTMs • In many ways URA on NTMs are an ext. of Tokyo Round • Binding multilateral agreements signed on AD, subsidies, SPS, TBT, safeguards, MFA etc. • The objective was to discipline and allow only legitimate NTMs • UR results see a reduction in the use of some important NTMs – ERAs, QRs, export subsidies etc.

9. Doha Mandate on NTBs • Seeks reduction or elimination of NTBs in particular on products of export interest to developing countries • Elaborated further in July Package and Hong Kong Declaration: • Notification • Identification • Examination • Categorisation • To begin negotiations

10. Progress on NTBs Negotiations • Tariff reduction has been the main thrust area, discussion on NTBs has received less attention • At the WTO General Council meeting in July 2004, Members reiterated the importance of NTBs to the NAMA negotiations in the Annex B The agreement reads as follows: "We recognise that NTBs are an integral and equally important part of these negotiations and instruct participants to intensify their work on NTBs. In particular, we encourage all participants to make notifications on NTBs by 31 October 2004 and to proceed with identification, examination, categorization and ultimately negotiations on NTBs. We take note that the modalities for addressing NTBs in these negotiations could include request/offer, horizontal, or vertical approaches; and should fully take into account the principle of special and differential treatment for developing and least-developed country participants." • 32 WTO Members submitted notifications, 19 of which are developing countries. So far only three African countries (Egypt, Kenya, and Senegal), and one LDC (Bangladesh) have submitted notifications. • Following this, the WTO Secretariat provided compilations of the proposals submitted regarding NTBs. The compilation, dated 29 October 2004, consolidated 26 submissions and distilled three central issues for discussion: whether to address the broad range of NTMs identified or whether to limit the focus; the appropriate WTO Committee or negotiating group in which to address the NTBs; and the appropriate modalities (in other words, methodology) for negotiation of NTBs.

11. Notifications from South Asia • Till February 2006, countries like Japan, Korea, US, Argentina, Croatia, US, Cuba, Egypt, India, Mexico Singapore, Taiwan, Bulgaria, Norway, Venezuela, Hong Kong and some others have made notifications to the WTO on NTBs. • The notifications are mostly in the areas/sectors like automobiles, chemicals, electrical, energy, environmental goods, fish and fish products, LAB foods, forest products, LAB Generic, Health and safety, REG Leather, Minerals, Petroleum, Pharmaceuticals, Phyto sanitary and textiles. The notifications are submitted to technical Barriers to Trade (Agreement/Committee), NGMA, Sanitary and Phytosanitary (Agreement / Committee), Negotiating group on Rules and others. • From South Asia – India, Bangladesh and Pak have notified

12. Notification from India India has submitted notifications on NTBs along with other countries to the NGMA. India in its submission has stated that restrictive standards, burdensome regulations and procedures in several countries have been acting as barriers that significantly affect exports as also the capacity to trade. Several issues are involved with the NTBs; some of the measures clubbed together affect individual consignments, while some like those involving costs put additional burden on exports.

13. Notification from Bangladesh Regarding the inventory of non-tariff barriers, the authorities of Bangladesh gathered information from Chambers, associations and individual exporters. The NTBs faced by exporters are of different nature, and are categorised in the following broad areas: (a) NTBs similar to SPS measures; (b) NTBs related to TBT measures; (c) Quantitative restrictions including ban; (d) Labeling requirement; (e) Rules of Origin; (f) Visa requirement

14. Notification from Pakistan Notifications put forward by Pakistan to the Negotiating group on market access for the NTBs faced by its exporters includes: • Due to the pre-shipment inspection required by certain countries for certain goods, shipments get delayed and importers avoid sourcing from Pakistan. • Non-transparent procedure for registration of drugs provides undue protection to domestic pharmaceutical firms in many countries and the foreign pharmaceutical companies and drug suppliers are denied market access. • The registration procedures as laid down by the Agreement on Trade-related intellectual property rights needs to be made transparent. • Quarantine certification; food labeling and packaging regulations [description of food ingredients; indication of nutritional claims-substantiated and specified], high rate of inspection etc raises the cost of export and delays the shipment of consignments for the countries not having preferred status through bilateral MOU; • The food sanitation law requirements are also too stringent and need to be brought at par with internationally accepted standards. • This trade restrictive requirements needs to be eliminated for products like Art silk fabrics and art silk garments. The Azo Dyes certification test results differ from laboratory to laboratory and this leads to denial of market access and also increases costs to exporters.

15. Categorising NTBs In its compilation of proposals submitted by Members on NTBs, the Secretariat identified four categories of NTBs – • Category 1 are those that are covered by an existing WTO Agreements and do not have a specific separate negotiating mandate. • Category 2 are those that are covered by a specific WTO Agreement and are also subject of a specific separate negotiating mandate. • Category 3 are defined as barriers that are not specifically covered in an existing WTO Agreement, but that are related to aspects of the Doha Work Programme. • NTBs in Category 4 are classified as barriers that are not covered in a specific WTO Agreement, and are not the subject of a separate negotiating mandate.

16. Categorising NTBs Category 1: SPS, TBT, RoO, Import Licensing etc. Category 2: Anti-dumping and Subsidies & Countervailing Measures (SCMs) Category 3: Trade Facilitation measures Category 4: Outside the existing WTO agreements and Doha Agenda

17. Composition of Mfg. Exports from South Asia Bangladesh: RMG (Woven and Knitware), Jute products, Frozen foods and Leather & leather products India: textiles and RMG, gems and jewelry, engineering goods, transport equipments, machinery, chemical products, leather products, handicrafts etc. Nepal: RMG, Woollen carpets, Pashmina products, Handicrafts, Silver jewelleries Pakistan: Textiles & garments, Leather & leather products, sports goods, Carpets, surgical instruments Sri Lanka: Processed food, textiles & apparel, gems etc.