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1 Export Challenges and the WTO Implications - Five Sector Studies BY INAAMUL HAQUE.

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Presentation on theme: "1 Export Challenges and the WTO Implications - Five Sector Studies BY INAAMUL HAQUE."— Presentation transcript:

1 1 Export Challenges and the WTO Implications - Five Sector Studies BY INAAMUL HAQUE

2 2 Scope of Presentation A.Implications of the WTO Agreements (General) B.Flow of Information re: the WTO C.Specific Sectors and WTO Agreements

3 3 A:WTO ISSUES Regulatory Framework for International Trade Discipline of multilaterally agreed rules. The World Trade Organization (WTO) oversees the multilateral system. Aim: To help international trade flow smoothly, freely, fairly and predictably. Trade liberalization orientation of the WTOs rules – a rapid expansion of the world trade. WTO dispensation: Both opportunities and challenges for Pakistan.

4 4 Opportunities WTO is about providing opportunities and not guarantees. Converting Opportunities into Outcomes. Action: Government agencies, trade bodies and above all by entrepreneurs themselves. It is for the business community supported by the Government to convert tariff reductions and liberalization commitments into opportunities for trade.

5 5 Challenges Likewise concerted action both by the public and private sectors. Managing negative fallout. Adjustment Policies

6 6 Expansion in Market Access Drastic Reductions in Tariffs Under GATT/WTO System, Eight rounds of Multilateral Trade Negotiations (MTNs) Tariffs, however, on goods of export interest to developing countries still remain relatively high e.g. on clothing and footwear.

7 7 Poor Countries Get Hit the Hardest Bangladesh vs France The U.S. collects more tariff on imports from Bangladesh than on imports from France. U.S. Imports (billion dollars) Tariff paid (million dollars) Per capita GDP (dollars) Bangladesh2.4331370 France30.033024,170 Source: U.S. International Trade Commission.

8 8 Current Status of Efforts to Liberalize Trade Currently, the ninth (and the first under the WTO) MTN called the Doha Development Agenda (DDA) in progress but pace at least glacial. Negotiations under the DDA on the Non-Agriculture Market Access (NAMA) cover these five sectors.

9 9 The WTO Agreements (In a Nutshell) General Agreement on Tariffs and Trade (GATT 94) regulates the international trade in goods and rests on five pillars: Most-Favoured-Nation (MFN) Obligation, National Treatment Obligation, Elimination of Quantitative Restrictions, Transparency of Government Regulations Affecting Trade and Tariff Bindings. Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) seeks to reduce impediments to international trade through promoting adequate protection of intellectual property rights. TRIPS Agreement is specially relevant for pharmaceutical industry. Agreement on Technical Barriers to Trade (TBT) contains a code of good practice for the preparation, adoption and application of standards.

10 10 Agreement on Sanitary and Phytosanitary Measures (SPS) disciplines exercise of discretion when a country wishes to disallow import of any item on the ground that it would be hazardous to life or health of human being or disallowing import to protect human, animals or plants. Customs Valuation under GATT – Implementation of Article VII, This agreement seeks to establish a fair and uniform system for the valuation of goods that provides protection to international traders from fixation of arbitrary values by customs authorities of importing countries.

11 11 Agreement on Rules of Origin seeks to clarify and harmonize rules of origin in member countries and in particular requires members to ensure that such rules do not create distorting or disruptive effects on trade. The rules of origin are of special relevance in cases where a country is to benefit from the lower tariff available through GSP or under a regional trading arrangement. Agreement on Trade-Related Investment Measures (TRIMs) seeks to prohibit investment related measures which are trade distorting e.g. local content requirements and export performance requirements. It is of special relevance for automobile parts sector.

12 12 Agreement on Implementation of Article VI of the GATT 1994 (Antidumping) regulates the practice of dumping i.e. the sale of products of a foreign country at less than the normal value of the products in the exporting country if the price level causes or threatens to cause material injury to an established industry in the importing country. Agreement on Subsidies and Countervailing Measures disciplines use of subsidies and also regulates the actions that can be taken by the countries to counter the effects of subsidies. Agreement on Safeguards disciplines initiation of emergency safeguards measures by laying down requirements for safeguard investigations.

13 13 Information re: The WTO WTO WTO Mission of Pakistan, Geneva Ministry of Commerce/TDAP Chambers of Commerce and Trade Associations Entrepreneurs Information flows, both upwards and downwards, on the WTO are depicted below:

14 14 Upward Flows - Government Driven Flows Information transmitted by the GOP to the WTO as an obligation of the membership of the organization. GOPs Information about WTO related problems of business: Obtained through Consultative Meetings and interaction with Entrepreneurs

15 15 Entrepreneurs Driven Flows Information flow (Upwards) Exporters Opinion Semi Voluntary and Sporadic Majority Views: Adequate Information about the concerned government agencies/departments Finding: Information about Reaching Out to the Government uneven.

16 16 Information flow – Downwards, i.e. from the WTO via Government to Entrepreneurs Complaints about the lack of information about the WTO Not readily Available in a User Friendly Way. Inadequate knowledge about Implications of the WTO Agreements Useful Information on Websites of MOC/TDAP (Also on WTO Cell P&D Punjab). Efforts on the part of some entrepreneurs to obtain information. But a small number of few entrepreneurs not even familiar with the term WTO. Findings: Present Flows Unsatisfactory (Content, Sources, Destination, User friendliness, Nature of Information)

17 17 Recommendations More Proactive Role of the Government (Especially MOC & TDAP). Capacity building of Trade Associations/ Chamber of Commerce Setting up of Research & Advocacy Centres in Associations. Effective Dissemination of Information to Members Present system of generalized information on the WTO should be changed to one–disseminating focused information regularly on concrete issues.

18 18 A comprehensive plan for dissemination of sector- specific information may be prepared by TDAP in consultation with stakeholders. A helpline, professionally manned, should be established in TDAP. Sector specific experts should be available to callers. Special meetings/workshops/seminars on regular basis for educating entrepreneurs about the WTO issues should be organized by the TDAP in partnership with concerned trade associations.

19 19 C:Specific Sectors and WTO Agreements I: AUTOMOTIVE PARTS Improved Market Access under WTO Dispensation Better market access through liberalizing orientation of the WTO system. Tariff rates have been drastically reduced in developed countries markets (very low or even zero). Rates still high in Developing Countries e.g. Bangladesh – Our biggest market (Tariff rate: 22.6%)

20 20 Sustained growth in export earnings: Year Value of Exports 2000-01 US$4.25 million 2005-06 US$36.91 million WTO regime made contribution (though it is not the only factor). Counterfactual Question Issue of compliance -TRIMS -Safety Standards/TBT Great potential for increasing exports but we have to tackle supply side problem.

21 21 II: FOOTWEAR Some improvement market access in the industrial countries markets. But rates still high e.g. more than 6% in EU, 28.34% in USA, 29.95% in Japan 1995-2001: Decline in Exports by 17% (Co- incidental) 2001-2005 Increase 224% Counterfactual Question Reduction in prices and improvement in the quality of inputs Great potential for increasing exports but we have to tackle supply side problems.

22 22 III: FURNITURE Impact of Agreements Improved market access in the industrial countries markets. Year Value of Exports 1994-95 US$3.4 million 2004-05 US$13.13 million Caveats.

23 23 IV: PHARMACEUTICAL Improved market access for Pakistani pharmaceutical products in developed countries markets. Tariff rates have been drastically reduced (very low or even zero) in those markets. Requirement of Registration. Sustained growth of export earnings has taken place. 2000-2001: US$ 38 million, 2005-06: US$ 82 million. Compliance with provision of TRIPS. Great potential for increasing exports of generic drugs but we have to tackle supply side problem.

24 24 V: SPORTS GOODS Improved Market Access With coming into force of the WTO agreements, exports have shown mixed trends. (US$ Million) Period Exported value of Sports Goods 1995-96 247.51 2000-01 270.58 2005-2006343.30 2006-2007287.90 Counterfactual question: where would we have been without WTO system?

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