(a) Non Tariff Barriers (NTBs)

Transcription

1 Market Access, Market Entry and Competitiveness (Item 4) Presentation by Mrs. Lakshmi Puri, Director, Division of International Trade in Goods and Services, and Commodities 21 March 2006 I will address several priority issues regarding market access, market entry and competitiveness including (a) our very interesting project on NTBs (non-tariff barriers) and the progress in the work of UNCTAD Secretary-General s Eminent Persons Group on Non- Tariff Barriers; (b) some insight on the work done in the new and dynamic sectors of world trade, in particular the status of the UNCTAD-Phillips partnership in Southern Africa, as an initiative to help build supply capacity in the new and dynamic sectors for African Countries; (c) show some broad current trends in world trade flows, especially those referring to developing countries; and finally (d), some key trends in tariffs and market access issues, including in the Doha Round negotiations, as well as in regional trade agreements (RTAs). (a) Non Tariff Barriers (NTBs) Background: The continual decline of tariff rates as a result of multilateral trade negotiations, as well as regional, bilateral and unilateral liberalization, has increased the relative importance of NTBs both as protection and regulatory trade policy instruments. Nevertheless, current knowledge of such barriers, both empirical and conceptual, is rather limited and is hampered by the lack of common definition and methodologies, inadequate quantity and quality of data, and ways and means of quantification of impacts on trade. NTBs have been now fully recognized as a growing challenge by trade negotiators and governments. For example, in the recent 2007 Economic Report of the United States President, it is emphasized that unjustified nontariff barriers can distort the prices and quantities of goods and services traded internationally, restrict international investment, and reduce economic welfare in exporting and importing countries. This is clearly a problem and it has an impact particularly on competitiveness and market entry. For developing countries it has a particular impact on their ability to supply markets, it impacts on their competitiveness and on their ability to actually enter markets. Technical measures, such as technical regulations, voluntary standards (including private sector standards, the so-called business-to-business standards ), and conformity assessment systems, are on the rise along with the technological advances. There has been a significant increase in government mandated testing and certification requirements in latest years, as well as a giant surge of various voluntary private sector standards, which under legitimate cover may be used to gain competitive lead. Although it is still difficult to give a precise estimate of trade impact due to the need to comply with different foreign technical regulations and standards, it certainly involves significant additional costs for producers and exporters. NTBs-related access and entry to developed countries markets, especially technical measures, are the most typical concerns for developing countries exporters. NTBs are also increasing costs in the trade among developing countries. Measures such as customs and administrative entry procedures, import surcharges, and other regulatory measures affecting infrastructure, protection of intellectual property rights and regulatory frameworks are among the non-trade obstacles. NTBs also adversely affect regional integration processes. Among major regional integration arrangements, the European Union made arguably the greatest progress in harmonizing technical, sanitary and environmental standards. Under NAFTA, a phased approach was undertaken to deal with NTBs, although detailed rules of origin were applied in 1

2 the case of textiles and automobiles. South-South RTAs also need to deepen their trade integration processes by addressing NTBs more actively. Progress in the work of the UNCTAD Secretary General s Eminent Persons Group on NTBs: The Secretary-General of UNCTAD established the Group of Eminent Persons on Non-Tariff Barriers (GNTB). The first meeting of the GNTB was held in Geneva on 12 July It considered the nature and scope of the work of the GNTB, as well as organizational issues. On substantive matters, following issues were highlighted during the GNTB meeting: (a) It was recognized that the most comprehensive collection of publicly accessible information on NTBs is the database contained in the UNCTAD Trade Analysis and Information System (TRAINS), which is accessible through the World Integrated Trade Solution (WITS) software, jointly developed by UNCTAD and the World Bank. However, TRAINS is far from being complete, as it is constrained seriously by the lack of availability of updated non-tariff data. Therefore, substantial improvement in NTB data collection was considered as a matter of priority. (b) Therefore, it was suggested to use the TRAINS database as the basis on which a more comprehensive database on NTBs would be created. In doing so, it would be necessary to keep the level of ambition reasonable and therefore focus on realms that can be more easily dealt with. The initial focus would be on SPS and TBT measures. (c) The issue of quantification of NTBs was also raised. Reference to numbers in the database appeared desirable from the standpoint of indicating an order of magnitude. However, getting the numbers could be difficult and perhaps judgmental, which could undermine the credibility of the database. Quantification could be rather seen as a function of a subsequent analysis rather than part of the database itself. (d) The database should allow potential users to apply it for different purposes. The data should be used for multilateral surveillance; research; policy advice; assisting exporters; and identifying issues for policymaking, norm setting or future trade negotiations. (e) Three groups of end-uses were identified: (a) trade negotiations; (b) research and analysis; and (c) capacity-building in developing countries. The GNTB also agreed to establish a Multi-Agency Support Team (MAST) to provide technical material in support of substantive work of the GNTB. The team would be composed of experts drawn from key international organizations dealing with NTB issues. At the invitation of the Secretary-General of UNCTAD, the following agencies accepted to be on the MAST: the Food and Agriculture Organization (FAO); International Monetary Fund (IMF); International Trade Centre UNCTAD/WTO (ITC); Organization for Economic Cooperation and Development (OECD); United Nations Industrial Development Organization (UNIDO); The World Bank; and the World Trade Organization (WTO). The first meeting of MAST was held at the World Bank headquarters in Washington, D.C. on 18 October In addition to the MAST members, International Trade Commission of USA (USITC), which maintains a comprehensive database on NTBs facing American exporters, as well as the Economic Research Service (SRS) of the US Department of Agriculture were invited to present their experience and concerns. Two academic trade experts, Mr. Robert Feenstra and Mr. Joseph Francois, also participated. At the first meeting of MAST, among the points emerging from discussions were that the definition of NTBs should be broad, taking all trade policy measures that might affect trade, without a priori consideration of whether the measure has been imposed with specific purpose of restricting imports or protecting the well-being of consumers. There was agreement to use the UNCTAD Coding System as a basis for building a new classification of NTBs, adding other measures and dropping redundant ones as necessary. UNCTAD offered to take the lead in preparing a paper on classification of NTBs. This paper would draw on a 2

3 review of policies documented in national reports on perceived NTBs in export markets (such reports are published by the US, EU and Japan, among other countries). UNCTAD made a presentation of a potential web-based portal that might be established as a mechanism to collect both existing and new data on NTBs and provide open access to users. The basic concept is to collect data from both exporter and importer sides through the use of Internet. Information from the exporters side (exporter complaints) would need to be matched with the official information from the countries imposing the measure(s) (importer side), if possible at the product level. In respect of commitments by partner agencies, the OECD indicated it was prepared to contribute a paper summarizing its experiences in collecting information on product standards, with a view to providing guidance on how data on such measures could best be collected. The OECD would also release the report on the business survey they have conducted. The World Bank s independent project to collect data on antidumping and safeguards would be integrated into TRAINS/WITS. This is already in process and it is expect to be completed by spring The IMF noted that its long-established report on Exchange Arrangements and Exchange Restrictions contains a variety of potentially useful information on non-tariff policies affecting trade, thus offering a source of time series data. In addition, the IMF collects data on "other duties and charges" for countries that impose such taxes, which could potentially be incorporated into TRAINS/WITS. The US International Trade Commission (USITC) agreed to release all information contained in its NTB database. UNCTAD presented to MAST members a concept for collecting data from both exporter and importer sides through the use of Internet, as well as the updated classification of NTBs for TRAINS. As this approach involves significant resources, in terms of human resources, computer software development and hardware maintenance, it was suggested that a pilot project involving a few countries be initially proposed and donor funding requested. UNCTAD s proposals will be discussed at the forthcoming MAST meeting on 5 April 2007 at FAO headquarters in Rome. To conclude, work on NTBs is gradually progressing, although one should not expect early comprehensive results, bearing in mind the extreme complexity of this subject. It is expected that by the end of this year (2007), the Group of Eminent Persons would present its findings and recommendations. (b) New and dynamic sectors of world trade Since 2005, an important area of work by UNCTAD has been on conducting annual sectoral reviews on strengthening the participation of developing countries in several dynamic and new sectors of world trade. Last year, a review of the energy sector was held. Developing countries are playing an increasingly important role in new and dynamic sectors of world trade. Minerals and metals, chemicals and pharmaceuticals, machinery and transport and parts, electrical items, and textiles and clothing continue to dominate the list. Developing countries have increased their participation significantly in many of these sectors. Not all developing countries, however, have been able to adequately participate in world trade in these dynamic sectors. This lacuna is being addressed by UNCTAD in several activities. For example, at the second sectoral review, it was identified that African countries have negligible participation, as compared with other developing regions, in production and trade in one of the most dynamic trade sectors, which is electronics and electrical products. Following this review, UNCTAD and Royal Philips Electronics Corp., a leading global 3

4 corporation, decided to collaborate to explore possibilities and prerequisites for establishing energy saving light-bulb industry in the Southern African Development Community (SADC) Region. On July 2006, UNCTAD and Philips in collaboration with UNDP organized a regional conference in Pretoria to consider ways to start investment and production of energy saving lamps to trade within SADC. UNCTAD and Philips also undertook advisory missions to explore possible factory sites to Lesotho, Mozambique and South Africa. Subsequently, Philips formulated its views with emphasis on the necessary prerequisites to make this project economically viable. Concluding consultations are going on with several SADC countries on key policy considerations relating to the project. The objectives of this project are: (i) to strengthen cooperation among SADC member States by creating competitive supply capacities of energy saving light-bulb products; (ii) promote energy saving in the SADC region to meet the challenge of rising energy costs and achieve reliable energy security; and (iii) improve environmental sustainability by reducing greenhouse gas emissions. Major benefits for SADC countries from this initiative are expected to be (i) promotion of energy saving and sustainable development to support implementation of national/regional energy strategies; (ii) revival of the electrical and electronics industry in the region, with possible export prospects to other regions in (and outside Africa), and developed countries; (iii) additional employment creation; and (iv) transfer of modern technologies. (c) Overview of trends in trade flows International trade flows during 2006 expanded rapidly. Growth of world exports more than doubled the growth of world output, indicating further deepening of global economic integration. The dynamism of developing countries trade over the last years is evident. Its growth is roughly double to that of world trade growth as a whole. An important aspect of the rapid expansion of world merchandise trade during 2006 is a continued large increase in trade flows of oil and non-oil commodities in value terms, mainly due to the higher prices of these commodities. Demand for primary commodities has also remained strong by historical standard, owing in particular to the continued rapid pace of industrialization in China, India, and other emerging developing countries that consume these products to fuel their industrialization process. In terms of overview of trends in trade flows for regions, Asia continues to lead developing country export growth, where China exceeded 20% in export growth. The growth of exports in South Asia has been strong, particularly in textiles and ready-made garments. In India, exports growth reached around 20% in The main driver remained the engineering goods, with machinery and instruments, and electronic goods the strongest performers. In Latin America and the Caribbean, both prices and volumes rose in Volume of exports has increased at about 8%. Chile and Peru benefited the most from increases in the value of basic metals and minerals exports. Similarly, Bolivia and Venezuela were favoured respectively by higher prices of natural gas and oil. The volume of African exports continues to expand in 2006, but at a lower pace than in This deceleration reflects the decline or slow growth of oil production in Chad, Equatorial Guinea, Gabon, and Nigeria, and a weak manufacturing export growth in South Africa. Export growth is expected to remain robust in 2007, with an increase in hydrocarbon production in Algeria, Angola, and Mauritania, the start of operations at new mines in Ghana, Mali, and Namibia, and the resumption of timber and rubber exports in Liberia. 4

5 Import demand in volume in most countries with economies in transition accelerated during 2006, owing to sustained economic growth in these economies as well as a continued improvement in the terms of trade for a large number of these countries. As for developed countries, the United States remains the major locomotive for world trade. During 2006, total value of imports of goods and services of the US increased by about 12%, reaching an estimated level of $2.2 trillion. Import demand in the European Union has grown to near 10%, following a continued boom in the new EU member states. Imports in Japan have also been rising gradually along with the expansion in domestic demand, but the growth has slowed somewhat in the second half of Imports of capital goods in Japan have been on a solid upward trend reflecting stronger business investment demand. (d) Some key trends in tariffs and market access issues, Tariff trends for developing countries exports. Tariffs have decreased over the past years worldwide, although developed countries still charge higher tariffs to developing countries and LDCs as compared with tariffs applied to trade among themselves, thus adversely affecting market access of their developing country and LDC trading partners. There is still a tariff bias against developing countries, although this has been reduced in recent years. Some of the most important developed countries imports from LDCs were still facing relatively high tariffs at double-digit levels. In some cases, the maximum tariff was as high as 90%. Textiles and clothing are the product categories subjected to the highest tariffs. Tariff escalation remains an important concern for developing countries, particularly in the case of imports from LDCs. For example, in the case of cotton and textiles, data clearly indicate that tariffs in developed countries are increasing with the level of processing of imports from developing countries. Market access issues: In terms market access issues in the Doha Round, hopes for tariff reductions for products of export interest to developing countries under the Doha Round remain uncertain for the moment, while intensive consultations and plurilateral negotiations are under way. While recognizing the need to achieve a commercially meaningful level of ambition in market access for agriculture and NAMA (non-agricultural market access), there is an important challenge facing negotiators, namely to match this ambition in a balanced and proportionate manner consistent with the principles of special and differential treatment and less than full reciprocity for developing countries. In parallel, the last decade has witnessed a proliferation of RTAs (regional trade agreements). They can be seen as a route to trade liberalization and economic integration. Currently, trade between RTA partners account for nearly 45% of global trade. Many of these RTAs are among developing countries, and some of these South-South RTAs have achieved important level of liberalization. The High-Level Policy Dialogue with the representatives of South-South RTAs (on 19 th March 2007) is expected to address in detail these issues. South-South trade liberalization and removal of tariffs and NTBs is being attempted in the context of the third round of GSTP negotiations among developing countries on an interregional basis. These negotiations, supported by UNCTAD, have reached a critical point and are expected to conclude by the end of this year. 5