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Presentation by
Professor Mustafizur RahmanExecutive Director, CPD
Addressing Non-Tariff Barriers to Trade in
South Asia: The Next Challenge
Kathmandu, 17-19 December 2010
Regional Economic Integration, Climate Change and Food Security Agenda for the Decade 2011-2020
Organised by
South Asia Watch on Trade, Economics & Environment (SAWTEE) and South Asia Centre for Policy Studies (SACEPS)
PMR: Addressing NTBs to Trade in South Asia: The Next Challenge 2
Contents
Introductory Comments
Section I: Non-Tariff Barriers: Conceptual Issues and Definition
Section II: Non-Tariff Barriers in SAARC
Section III: NTBs as reported by SAARC Member Countries and Related Responses
Section IV: Dispute Settlement Mechanism to Deal with NTBs in Various RTAs
Section V: Policy Recommendations to Deal with NTBs in SAARC
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PMR: Addressing NTBs to Trade in South Asia: The Next Challenge
Globally, the experience has been that it is the non-tariff issues which are
emerging as major barriers to trade in goods and services across borders
With MFN tariffs coming down, NTBs are becoming increasingly important
from the perspective of advancing trade cooperation among SAARC countries
Whilst SAFTA has made some headway in moving towards duty-free access for
tradable goods, NTB issues have tended to remain relatively less-addressed
within the context of the SAARC
If regional cooperation is to be deepened through vertical integration and
promoting cross border supply-chains, NTBs in SA will need to be addressed
adequately with due importance
NTBs pose the next major challenges from the perspective of strengthened
regional economic and trade cooperation in South Asia
3
Introductory Comments: Growing importance of the need to address NTBs in South Asia
PMR: Addressing NTBs to Trade in South Asia: The Next Challenge 4
• Non-tariff barriers and measures (NTBs) include measures other than border
tariffs that affect trade in goods, services, and factors of production
• Taxonomies of NTBs include both narrow and broad categories
Section I: Non-Tariff Barriers: Conceptual Issues and Definition
Definition
According to the UNCTAD, classification of NTBs falls into six broad categories:
• Price control measures: Para-tariffs, surcharges etc.
• Finance measures: Regulate access to and the cost of foreign exchange for imports, define the
terms of payment.
• Automatic licensing measure: Restrain the quantity of imports of any particular good
• Monopolistic measure
• Technical measure: Measures referring to product characteristics such as quality, safety or
dimensions, including the applicable administrative provisions, terminology, symbols, testing
and test methods, packaging, marking and labeling requirements as they apply to a specific
product
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PMR: Addressing NTBs to Trade in South Asia: The Next Challenge 555
Imp
ort
measu
res
Sanitary and phytosanitary measures (SPS)
Technical barriers to trade (TBT)
Pre-shipment inspection and other formalities
Price control measures
Licenses, quotas, prohibition & other quantity control measures
Charges, taxes and other para-tariff measures
Finance measures
Anti-competitive measures
Trade-related investment measures
Distribution restrictions
Restrictions on post-sales services
Subsidies (excluding export subsidies)
Government procurement restrictions
Intellectual property (IP)
Rules of origin (RoO)
Technical
measures
Non-
technical
measures
Export
measures Export-related measures (including export subsidies)
Classification of Non-Tariff Measures
Source: ITC: Non-Tariff Measures Programme, Colombo, Sri Lanka
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• SAARC countries have in place several ad hoc restrictions and NTBs on imports.
The general consensus is that the SAFTA Agreement has not been able to address
the NTB issues with due diligence
Non-Tariff Measures Share
SPS, TBT, and Other Related Measures 86.3
Tariff Quota 9.8
Anti-Dumping Measures 7.4
License Requirement 5.3
Countervailing Measures 1.2
Percentage Share of Specific NTBs to all NTBs in SAARC
Source: Quantification of South Asian Trade Benefits (ADB,2008)
Types of NTBs in South Asia
Section II: Non-Tariff Barriers in SAARC
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Trade Facilitation as NTB: An Emerging Concern
In view of the recent developments in promoting connectivity-added
importance
•Lack of Border Infrastructure and Traffic Planning: Traffic congestion and
delays in handling the shipments
•Land Ports at the Border: The storage dwell times has been increasing and
the port storage is grossly inadequate. For example, at the Petrapole-
Benapole border, it takes longer time to unload vehicles into the land
port than the physical clearance time
•Lack of Cross-Border Transport Agreements: Due to lack of through-
transport movement, formidable transport inefficiencies exist at the
interface
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PMR: Addressing NTBs to Trade in South Asia: The Next Challenge
Results of CGE modelling exercises support the hypothesis that long
delays to cross the borders restrict LDCs’ potential for diversifying
exports and more importantly, it limits their potential to participate in
some of the most dynamic sectors of the economy.
Some studies found (Minor P. & M. Tsigas 2008) a 50% reduction in
time of export can generate benefits equivalent to 4% GDP of SA-LDCs
and SSA-LDCs.
50% reduction in time to import: SA 0.4% of GDP; SSA 3.8% of
GDP
8
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Indicators Duration (days) Cost (US$)
Nature of export procedures Bangladesh Thailand Bangladesh Thailand
Documents preparation 14 8 290 270
Customs clearance and technical control 3 1 120 50
Ports and terminal handling 5 3 420 58
Inland transportation and handling 3 2 140 220
Total for all 25 14 970 625
Nature of import procedures
Documents preparation 20 8 455 300
Customs clearance and technical control 3 2 135 75
Ports and terminal handling 4 2 585 200
Inland transportation and handling 2 1 200 220
Total for all 32 13 1375 795
Trade facilitation and trade related infrastructure remains weak
Bangladesh’s performance in trading across border vis-à-vis Thailand
Source: World Bank (2010)
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PMR: Addressing NTBs to Trade in South Asia: The Next Challenge
BPA of Exports of RMG to India (By sea)
Source: Hossain (2010)
Note: For an export order equivalent to USD 50 thousand and exporting by a 20 ft.
container.
10
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The SAFTA Agreement stipulates formation of CoE to deal with NTB issues. The
work of the CoE is carried out in the following manner:
• The Contracting States notifies the SAARC Secretariat of all non-tariff and
para-tariff measures imposed on their exports on an annual basis
• The measures are then reviewed by the CoE, established under Article 10, in
its regular meetings, to examine their compatibility with relevant WTO
provisions
• The CoE then recommends the elimination or implementation of the measure
in the least trade restrictive manner in order to facilitate intra-SAARC trade
• As of now, four sub-group meetings on non-tariff barriers have taken place;
member countries have submitted their complains; responding countries have
given their responses; a majority of notifications and complaints are being dealt
through bilateral negotiations
• Last meeting of the CoE was held in October, 2009. Next meeting was
scheduled to be held in six months. Not held as yet.11
NTBs Reported at the Committee of Experts’ (CoE ) Meetings
Section III: NTBs as Reported by SAARC Member Countries and
Related Responses
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4th SAFTA Sub-Group Meeting of the CoE held in Kathmandu
Notification and Responses with regards to Non-Tariff and Para-Tariff Measures
12
Type of NTB Response from Bangladesh
Ban on import (poultry related products) To protect human and animal/health. In view of recent partial spread of
Avian Influenza, Bangladesh needs to continue such measures.
Same name registration of drug in a developed
country (drugs)
Registration and Free Sale Certificate (FSC) duly signed in original by
the Health Authority of the country of origin and at least one FSC from
a developed country.
15% VAT (all goods) 15% VAT is also imposed on domestic products. Therefore, imposition of
VAT should not be treated as para-tariff.
Non-issue of khamarbari Certificate (Potatoes) Potatoes are not importable into by any means from any country; where
three serious pests, namely Black wart, Golden nematode and potato
beetle, unless they are accompanied by Phytosanitary Certificate from
the country of origin.
Allowed through land route only (Yarn) This measure is not applicable for a specific country. The provision has
been relaxed for yarn imported under back-to-back LC through land
customs.
GSP certificates (Fabric) At present, the EU is considering the revision of Rules of Origin of GSP.
Therefore, the EU GSP scheme should be considered at large.
Exporting Country: India
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Notification and Responses with regards to Non-Tariff and Para-Tariff Measures
13
Type of NTB Response from Bangladesh
Non acceptance of cargo by road/rail/rover
routes (all goods)
Currently, necessary equipments and physical infrastructure are not available
to handle containerized cargoes. Thus, containerized cargoes via land, river
and rail routes are not permitted.
L/C requirement (all products) Bangladesh Bank feels that this instruction is necessary to ensure entry of
imported materials/goods into the country against paid money and this has
not been applied as a non-tariff barrier.
Radioactivity test (directly consumable
stuff)
All imports of food items require radioactivity test report. However,
radioactivity test requirement has been relaxed for SAARC countries.
PSI certificate Any exporter from any part of North East India can get the service of the
PSI office in Shilong within 24 hours. Moreover, it must be noted that most of
the products exported to Bangladesh from North East India are non-PSI
items
Non-payment of irrevocable L/Cs by
various banks in (all exports)
The issue is being addressed by a joint group on Banking sector.
Reluctance to open new trade routes and
certain notified Land Customs Stations
Teghamukh and Ramgarh are situated in remote areas where traveling and
communication is very difficult. Besides, there are 4/5 land customs stations
close to these places, which can cover the trade with Mizoram.
Exporting Country: India (Contd)
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Notification and Responses with regards to Non-Tariff and Para-Tariff Measures
14
Type of NTB Response from Pakistan
All products in positive list The bilateral trade between both the countries is to be viewed in the
political relations since independence. The positive list has increased from 42
to over 1800 tariff lines. 302 new tariff lines were added to the list.
Certain items allowed to be imported only
for limited periods from India (Corrugated
galvanized iron sheets, blankets)
These items were allowed from for the specific purpose of providing relief
and rehabilitation to earthquake victims in the northern areas of Pakistan.
Indian films are not allowed to be screened
in theatres.
It is a bilateral issue, which may be addressed in the relevant forums, e.g. in
Ministry of Culture.
No transit facilities offered for exports
from India to Afghanistan through land
border.
Transit of goods to Afghanistan is an issue relating to Pakistan-Afghanistan
bilateral Transit Trade Agreement. India has no bilateral Transit Trade
Agreement with Pakistan and cannot claim benefits from the Pakistan-
Afghanistan agreement.
Restrictions on items to be imported from
India through the Attari LSC (Wagah
Border) by road only.
Wagah Border has remained closed for all trade by road for over 40 years.
Hardly, any restrictions on imports from India by train has been placed. The
opening of the land route has been relaxed now for the first time since 1965.
Cotton is allowed to be imported only
through port and not by rail/road.
The quarantine arrangement in other ports is inadequate.
Exporting Country: India
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Notification and Responses with regards to Non-Tariff and Para-Tariff Measures
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Type of NTB Response from Pakistan
Inadequate handling capacity at Lahore
Land Customs Station (Lahore LCS).
Lahore LCS is in the process of upgradation its infrastructure facilities to handle
increasing volumes of trade
Commercial invoice and packing list
must be accompanied with the
consignment.
This measure is necessary to safeguard government revenue and streamline the
clearance of goods
Anti-dumping duty has been levied on
import of phthalic anhydride from India.
The measure is in line with WTO Agreement on Anti-dumping to protect local
industry
In many cases Pakistani banks do not
accept L/Cs issued by Indian banks.
This issue is under consideration in the bilateral dialogue. Understanding has
been reached to open bank branches across borders with India
Clearing through Asian Clearing Union is
mandatory for all members of Asian
Clearing Union.
State Bank of Pakistan has been requested to clarify this point
Pakistan Standards and Quality
Authority (PSQCA) is currently
maintaining 15 thousand standards.
PSPQA developed/adopted 4900 standards in accordance with ISO guide 21 and
are also in line with CODEX Alimentarius Guidelines.
Exporting Country: India (Contd)
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Notification and Responses with regards to Non-Tariff and Para-Tariff Measures
16
Type of NTB Response from Pakistan
Under PSPQA Act-VI of 1996,
compulsory standards and licenses are
required for 46 items for local
manufacturing.
PSPQA provides one window services for standards and conformity assessment.
All mandatory standards are in line with CODEX Alimentarius Guidelines.
In case of non-compliance with
specifications given by the importer,
consignments are not returned or
returned only after several months
(pharmaceuticals).
The exporter/importer should comply with the specific issue prescribed by the
Ministry of Health. The delay can occur in such cases where litigation is involved.
Pakistan is prepared to examine the relevant issues on case to case basis.
In addition to customs duty, customs
imposes a sale tax of up to 15% and a
withholding tax of up to 6% (on selected
products).
Sales tax @ 15% is levied on imported as well as local supply of goods at a
uniform rate. It is a value added, multi-stage levy on value addition at each stage.
In addition to a sales tax, a federal excise
duty is imposed on selected products.
All imported goods are not subject to with-holding tax @ 6%. The rates vary
from 1 to 6% and adjustable as final tax liability as per national rules.
Customs has levied an upfront stage
sales tax on 30% value addition on
import of pesticides.
The notification quoted has been superseded. VAT is being collected in lieu of
the levy at wholesale and retail stages.
Exporting Country: India (Contd)
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Notification and Responses with regards to Non-Tariff and Para-Tariff Measures
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Type of NTB Response from Bangladesh
Pre-shipment Inspection (all products) Appropriate authority in Bangladesh has already advised the PSI Company to open
facilities in Pakistan.
One Free Sales Certificate (FSC) from
two developed countries
(pharmaceuticals) as eligibility to
import from Pakistan
Registration and Free Sale Certificate (FSC) duly signed in original by the Health
Authority of the country of origin and at least one FSC from one developed
country.
Radiation free certificate
(food products)
All imports of food items require radioactivity test report. However, radioactivity
test requirement is more relaxed for SAARC countries.
High incidence of para-tariff makes
applicable taxes above 100% (fruits,
consumables, garments, shoes etc.)
At present, supplementary duties (SD) are imposed on a number of products.
However, Bangladesh is gradually reducing the SD.
Rules against establishment of Central
Bonded –warehouses (all products)
The relevant rules do not prohibit establishment of central bonded warehouse. In
order to ensure rapid delivery of raw materials the relevant authority has
undertaken the following measures: private Container Depot in Chittagong; items
have been allowed for delivery in private premises and delivery farm hook point;
and import allowed without BBLC
Imports only against L/C. Imports can be made against L/C as well as without opening of L/C in certain
cases.
Exporting Country: Pakistan
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Notification and Responses with regards to Non-Tariff and Para-Tariff Measures
Exporting Country: PakistanType of NTB Response from India
No single official publication covering all information on
trade regulations (all products)
Department of Commerce will prepare compendium on
import policy and procedure to facilitate the procedure.
Separate tariffs and Federal excise duty (all products) The proposed compendium on import policy and procedure
will simplify the current tariffs and taxes on imports
Each Indian state has its own rules on inter-state movement.
Goods are subject further inspection and even taxes/fees
(all products).
Each state has prescribed rules of interstate movement of
goods which applicable to both domestic and imported
goods.
Indian banks often do not accept LCs issued by Pakistani
banks (all products)
This is an operational matter. GoI has not issued any
guidelines to the banks regarding non acceptance of LSs
issued by Pakistani banks.
License from Bureau of Indian Standards cement, gelatin,
condensed milk, electrical appliances, mineral water, steel
products, leather products, x-ray equipments, dry cell
battery, thermometers,, helmets and gas cylinders)
The following steps have been taken: 1) number of items for
which certification is needed has been reduced from 109 to
68, 2) marking fees for BIS license has been reduced for
SAARC countries, and 3) processing charge for SAARC
countries has been abolished.
Anti-dumping measures (all products) India has not initiated any ant-dumping measures against
Pakistan.
Bio-security and sanitary requirement (agricultural
products)
Requirement has been set as per Articles 2 of the
Agreement on Sanitary and Phytosanitary Measures (SPS)
under WTO.
Exporting Country: Pakistan
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Notification and Responses with regards to Non-Tariff and Para-Tariff Measures
Exporting Country: Pakistan
Response yet to be Received from India (Contd.)
Type of NTB Response from India
Testing requirement by the Port Health Officer. At places
where PHOs are not available, valuable time is lost (food
products)
As per Section 5&6 of the Prevention of Food
Adulteration Act 1954. No food item can be imported
into India without license. Total number of laboratories for
testing has been increased from 4 to 32.
“Sensitive items” can only be imported from specified
ports and land customs stations (products considered
„sensitive by India‟
To ensure consumer safety this restrictions have been
imposed on 4 products; areca nuts, metal scrap,
automobiles and second-hand defective steel.
A 100% check is done on all food products (food
products)
The list of items where 100% testing is required has been
reduced to 14. Samples will be taken for high risk and
perishable items like fruits, meat and vegetables.
Import Permit from Dept. of Animal Husbandry a& Dairy
(poultry, dairy and meat)
Requirement is WTO compliant and as per the SPS
Agreement.
Compliance of Food Adulteration Act regarding shelf life
of goods (processed food products)
Compliance of shelf life is mandatory for all processed
food item but determination is not arbitrary. It is based on
PFA Rules 1955.
Laboratory testing (leather and melamine goods) The following steps have been taken; 1) mandatory license
is required only for safety boots and shoes for minors, 2)
license for safety boots and shoes for minors can be
obtained from BIS, and 3) every consignment is not
required to be checked by BIS.
Exporting Country: Pakistan (Contd.)
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Notification and Responses with regards to Non-Tariff and Para-Tariff MeasuresExporting Country: Pakistan (Contd.)
Type of NTB Response from India
No Certificate of Testing from country of origin is
accepted and test results cannot be challenged (pre-
packaged products)
These are statutory requirement under the Consumer
Protection Act.
Pre-shipment inspection certificate and extensive testing
requirement (textile products)
The provisions are also in effect for domestic industries.
Certificate from brand owners than the product is
genuine (woolen textiles)
Certificate is required to guarantee the use of 100% pure
wool content and international quality standard.
Requirement of registration of drugs with the Central
Drug Standard Control Organization (pharmaceutical
products)
No import license is required for import of
pharmaceuticals. All import of bulk drugs are set as per
the EXIM policy 2004-2009.
New vehicles can only be imported through three ports.
Second hand vehicles must have 5 years‟ road worthiness.
Importer must have a certificate from a testing agency
(automotive vehicles)
The regulations are aimed at ensuring road safety and
prescribed emission standards.
DGTF notification on labeling (consumer goods in retail
packaging)
The DGFT notification on labeling and marking rules are
applicable to all exporters to India on MFN basis and they
are in accordance with national treatment.
Special labeling of country of origin (jute bags/sacks) The rationale is that if there is any irregularity in the
quality of the imported item, the source could be tracked.
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Notification and Responses with regards to Non-Tariff and Para-Tariff Measures
Exporting Country: Pakistan (Contd.)
Type of NTB Response from India
Control of procurement by State Trading Enterprise
(agricultural and fertilizers)
The role of State Trading Enterprise is confined to only
essential food items which have sensitivities for
production and distribution.
TRQ to protect its producers (powdered milk, maize,
crude sunflower, sunflower seeds, colza and mustered oil)
India has TRQ for only 4 items,; milk, corn, sunflower and
mustard oil.
Countervailing duty (CVD) of 4% (all products) CVD is charged on imports of like goods if manufactured
in India, so as to accord National Treatment to imported
goods as per Article III of GATT.
National Calamity Duty (tobacco products, motor sprits,
polyester, motor vehicles)
The duty is also charged on domestically produced
products.
Additional duty of excise and specific duty per meter or
kg (textile products)
All textile and textile products are exempted from levy of
additional excise duty.
Education cess @ 2% of the aggregate duty (all products) Education cess on imported goods is in the nature of tariff.
The sum total of education cess and basic customs duty is
within the WTO bound rate.
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Notification and Responses with regards to Non-Tariff and Para-Tariff Measures
Exporting Country: Bangladesh
Type of NTB Response from India
License from Bureau of Indian Standards cement, gelatin,
condensed milk, electrical appliances, mineral water, steel
products, leather products, x-ray equipments, dry cell
battery, thermometers,, helmets and gas cylinders)
The following steps have been taken: 1) number of items
for which certification is needed has been reduced from
109 to 68, 2) marking fees for BIS license has been
reduced for SAARC countries, and 3) processing charge
for SAARC countries has been abolished.
Requirement of laboratory testing (all products) 100% checks are done on only 14 high risk food items.
Requirement of chemical testing (leather and melamine) The following steps have been taken; 1) mandatory license
is required only for safety boots and shoes for minors, 2)
license for safety boots and shoes for minors can be
obtained from BIS, and 3) every consignment is not
required to be checked by BIS.
Detailed product information (all prepackaged goods) These are statutory requirement under the Consumer
Protection Act.
Bio-security and sanitary permit (Primary agricultural
products)
Requirement has been set as per Articles 2 of the
Agreement on Sanitary and Phyto Sanitary Measures (SPS)
under WTO.
Compliance of Food Adulteration Act regarding shelf life
of goods (processed food products)
Compliance of shelf life is mandatory for all processed
food item but determination is not arbitrary. It is based on
PFA Rules 1955.
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Notification and Responses with regards to Non-Tariff and Para-Tariff Measures
Exporting Country: Bangladesh (Contd.)
Type of NTB Response from India
Special labeling of country of origin (jute bags/sacks) The rationale is that the country of origin on product is
to be mentioned because if there is any irregularity in the
quality of the imported item, the source could be tracked.
Certificate of non-halogenated hydrocarbon (jute
products)
Domestic producers face the same stipulation.
Pre-shipment certificate about presence of no hazardous
dyes ( textile and textile products)
The provisions are also in effect for domestic industries.
Registration of the drug with the Central Drug Standard
Control Organization (pharmaceutical products)
No import license is required for import of
pharmaceuticals. All import of bulk drugs are set as per
the EXIM policy 2004-2009.
Requirement of import license (mostly consumer goods) Requirement of import licenses are under exception
clauses of Article XX and Article XXI of GATT.
PMR: Addressing NTBs to Trade in South Asia: The Next Challenge 2424
Notification and Responses with regards to Non-Tariff and Para-Tariff Measures
Type of NTB Response from Pakistan
Registration of drugs with the Central
Drug Standard Control Organization
(pharmaceutical products)
Pakistan is also facing similar problems in Bangladesh. Both
countries are looking at the issue bilaterally.
Exporting Country: Bangladesh
Recent Developments Concerning Bangladesh Export• Export of soap to W. Bengal from Bangladesh discontinued as of May 2010: NOC
required from Kolkata Drug Administration office (dual authority!)
• For food items:At least 60% remaining life required from the date of manufacturing
• Shillong Customs: Items to be kept at customs bonded warehouse and clearance by
post (previously importers‟ warehouse; clearance by hand) delays cost
escalation
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Notification and Responses of Non-Tariff and Para-Tariff Measures
• Sri Lank did not provide any notification or replies during the fourth Sub-Group Meeting.
However, according to a study conducted by RIS, following NTBs were identified in bilateral
trade between Sri Lanka and India:
Delay in customs clearance.
Port restrictions for some products.
Referring the country of origin to check the fulfillment of rules of origin.
Carrying out various tests despite goods possessing authorized certificates.
Food control systems in operations.
• ILBFTA Agreement stipulates that any dispute that may arise between commercial
entities of the Contracting Parties shall be referred for amicable settlement to the nodal
apex chambers. Such references shall, as far as possible, be settled through mutual
consultations by the Chambers. In the event of an amicable solution not being found, the
matter shall be referred to an Arbitral Tribunal for a binding decision.The Tribunal shall be
constituted by the Joint Committee in consultation with the relevant Arbitration Bodies
in the two countries.
PMR: Addressing NTBs to Trade in South Asia: The Next Challenge
NTBs in ASEAN
26
Non-tariff Barrier Number of Tariff Line Affected Percentage
Customs surcharges 2,683 69.42
Additional Charges 126 3.26
Single Channel for Imports 65 1.68
State-trading Administration 10 0.26
Technical Measures 568 14.70
Product Characteristic Requirement 407 10.53
Marketing Requirements 3 0.08
Technical Regulations 3 0.08
Total 3865 100.00
Source: ASEAN Secretariat
Most Prevalent NTBs in ASEAN
It is of interest to note that NTBs continue to remain a major issue of concern for the
ASEAN member countries inspite of the long history of trade cooperation and
integration
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NTBs in ASEAN
27
Country Number of Reported NTBs Typology of NTBs
Cambodia99 Import licensing, Permits, Technical Measures (SPS), Non-Automatic
licensing, Prohibitions
Thailand134 Technical measures (SPS), Tariff-rate quotas (TRQ), Non-Automatic
licensing TRQ, Import licensing, Prohibitions
Vietnam464 Prohibitions, Import licensing, Internal taxes and charges, Labelling
requirement, Technical regulations
Malaysia1017 Import licensing, Approved permit, registration certificates,
Certificate of approval, Technical measures (SPS)
Source: ASEAN Non-Tariff Database
ASEAN’s NTBs REPORTED (as of 2007)
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Possible Non-Tariff Barriers in Trade in Services
• Thresholds on the total value of service transactions
• Restrictions on the number of service operations
• Limits on the number of natural persons to be employed in case of supply
for a particular service
• Measures which force a service supplier to supply a service through a
particular set of legal means
• Limits on the percentage share of foreign investment, which may be
accounted for by foreign shareholders
28
In view of the SAFAS, there is a possibility that NTBs will also emerge with
regard to services trade in future
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Section IV: Dispute Settlement Mechanism to Deal with NTBs in Various RTAs
29
ASEAN EU NAFTA
Any differences, as far as possible, should be settled
amicably through Consultation between the Member
States
If the consultations fail to settle the dispute within 60
days, the matter can be raised at the Senior Economic
Officials Meeting (SEOM), which may establish a panel
The panel should be established no later than 30 days
after the date on which the receipt of the dispute
The panel must submit findings to the SEOM within
60 days of its formation
The SEOM should consider the report and make a
ruling on the dispute within 30 days
An appeal on the ruling by the SEOM may be
submitted to the ASEAN Economic Ministers (AEM)
within 30 days of the SEOM‟s ruling
Member States who are parties to a dispute are
expected to comply with the ruling or decision
within a reasonable period of time
Request for
consultations; 10 – 30
days
Consultations; 60 days
Appointment of panel;
45 days
Panel deliberations and
ruling; 6 months
If there are no appeals,
ruling must be adopted
within 60 days
An appeal to the
appellate body can be
made within 60 days of
the ruling
Appellate Body ruling
must be adopted
Request for Panel Review filed
Complaints to be filed within 30 days of
Panel Review request
Panel Selection to be completed by the
Parties by Day 55
Final Determination, Reasons, Index and
Administrative Record to be filed within 15
days after filing of Notice of Appearance
Briefs by Complainants to be filed within
60 days after filing of Administrative Record
Briefs by Investigating Authority or
Participants in support to be filed within 60
days after receipt of Authority's Briefs
Reply Briefs to be filed within 15 days
Oral Argument to begin within 30 days
after Reply Briefs
Panel Decision Due 315 days after request
for Panel Review
Dispute Settlement Mechanisms in various RTAs
Whilst the SAFTA stipulates that CoE would act as the DSB for the purpose of settling NTB related disputes,
other RTAs have their own modalities to address the attendant issues. In majority of the cases RTAs such as EU
and NAFTA tend to follow the WTO DSM mechanism whilst ASEAN's DSM is somewhat different.
PMR: Addressing NTBs to Trade in South Asia: The Next Challenge 30
Section V: Policy Recommendations to Deal with NTBs in SAARC
Standards and Certification
A majority of NTBs and perceived NTBs relate to SPS-TBT, and health-hygiene related
standards. Many of these concern national standards. The best way to go forward would
be to : (a) ensure that these are not country-specific but of general/common nature; (b)
ascertain that whether the requirements are beyond internationally recognised standards
e.g. Codex plus; (c) strengthen national standard setting institutions to meet compliance
requirement; (d) strengthening of technical laboratories, standardisation, testing, quality
management, certification authorities and inspection bodies, which ought to be perceived
as an investment priority by the SAARC members; (e) signing of mutual recognition
framework agreements; (f) strengthening of regional institutions such as SARSO; (g) raising
the technical capacity and strengthening the ability of CoE in SAARC to deal with NTBs;
and, (h) designing a programme of technical support in order to strengthen capacity of low
income SAARC members, with support from both SAARC developing members and
multilateral institutions.
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PMR: Addressing NTBs to Trade in South Asia: The Next Challenge 31
Dealing with NTBs: Mutual Recognition Agreements
One way of dealing with NTBs, many of which originate from SPS-TBT measures,
certification and laboratory testing, health-hygiene requirements, is to set up a mutual
recognition framework
31
• Indeed, India has already submitted such a bilateral framework agreement to
Bangladesh for the latter‟s consideration
• There has been an agreement that developing SAARC members will provide
support in the form of technical assistance and capacity-building to other members
of SAARC
• The SAARC members have decided to set up a SAARC Standardisation
Organisation (SARSO) in Bangladesh, which is an important step in this direction
PMR: Addressing NTBs to Trade in South Asia: The Next Challenge 32
Mutual Recognition Agreements (MRAs)
• Developing MRAs is also critically important for delivery of services particularly
through Mode 4 (Movement of Natural Persons)
• Lack of recognition of qualifications, skills, or experience is one of the most
common barriers affecting Mode 4 (Chanda 2005)
• The mechanisms for assessment of equivalence of qualification, licensing, and
other requirement related regulations with a view to improving market access
have been developed under a number of regional arrangements – the most
prominent examples being the European Union, NAFTA etc.
• Zarrilli (2005) suggests that two basic approaches have been singled out as the
basis for mutual recognition
vertical approach: recognition is provided on a profession-by-profession
basis
horizontal approach: mutual recognition is provided without prior
harmonization of curricula and training requirements, on the basis of a
broad equivalence of qualifications
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PMR: Addressing NTBs to Trade in South Asia: The Next Challenge 33
Border Measures:
(a) A targeted programme needs to be designed to facilitate cross-border trade
through development of border infrastructure, and if required, coordination of
infrastructure development at border points; (b) harmonisation of customs rules and
regulations, valuations and customs procedures; (c) building of capacities to deal with
the most prevalent SPS-TBT related NTBs at particular border points
Strengthening the Financing of Intra-SAARC Trade
To facilitate trade among SAARC countries, financial intermediation is also emerging as
an important constraint. These relate to presence of adequate banking facilities,
honouring of L/Cs, L/C margins, time required for verification of bank documents etc.
The central banks of the SAARC countries will need to coordinate the respective
regulations, particularly with respect to trade with N.E. States by facilitating setting up
of banking facilities in those areas.
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PMR: Addressing NTBs to Trade in South Asia: The Next Challenge 34
Dealing with Para-tariffs and Surcharges
Many of the perceived NTBs relate to state taxes, surcharges, cess, VAT etc.
These are, as a rule, general in nature and not country-specific. Since zero-
tariff preferential access provided under SAFTA relates to only customs duties
at border points, these continue to remain in case of products that enter
under SAFTA Duty Free facilities. However, SAARC member countries may
think about providing preferential treatment that covers such non-border
barriers, on a mutual basis, to address at least some of these concerns.
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PMR: Addressing NTBs to Trade in South Asia: The Next Challenge
Making the CoE More Effective
The CoE is the main focal point for arbitration with regard to discussions and disputes in the
context of NTBs in SAARC. Steps should be taken to strengthen the capacity of CoE in terms
of data generation on NTBs and settlement of disputes. Whilst periodic meetings are the
institutional modalities of work of CoE at present, more needs to be done to invest the CoE
with appropriate capacities to deal with NTBs on a continuing and permanent basis.
35
Using WTO DSB Mechanism
Although the SAARC countries, as a rule, should try to deal with NTB related disputes in the
CoE, as members of the WTO they can also resort to WTO-DSM to settle issues which can not
be appropriately addressed in the CoE. This route should not be seen as something which
undermines SAARC solidarity. It may well be a better strategy, in specific cases, to come to a
resolution through the WTO-DSM than to keep alive a conflict in the CoE for a protracted
period.
• More meaningful participation in global standard setting bodies
• Leverage AfT to address NTBs in South Asia
•The EIF-DTIS being carried out at present in SA-LDCs ought to give due prominence to
identifying measures to address NTBs so that these then can be recommended for support
under the AfT
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PMR: Addressing NTBs to Trade in South Asia: The Next Challenge 363636
Thank You
for
Your Attention