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

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1 1 NTMs Classification Workshop Bangkok, March 2013

2 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 4 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 Background

5 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 8 UNCTAD: New Initiative on NTMs Data Collection 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

9 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.

10 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

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

12 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)

13 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

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 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

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

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 A. Administrative burdens related to regulations B. Information/transparency issues C. Discriminating behavior of officials D. Time constraints E. Informal or unusually high payment F. Lack of sector-specific facilities G. Lack of recognition/ accreditations

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23 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

24 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

25 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

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 1.Through regional organization such as ASEAN and ALADI 2.Through academic institutions: China, some African and Asian countries with the World Bank 3.National Consultants: USA, Canada 4.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 31 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. Old Classification overview

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

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

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

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

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

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

38 38 Old Classification overview Technical Measures Technical Regulations

39 OLD CLASSIFICATION 3. PRICE-CONTROL MEASURES 4. FINANCE MEASURES 5. AUTOMATIC LICENSING 6. QUANTITY CONTROL MEASURES 7. MONOPOLISTIC MEASURES 8. TECHNICAL MEASURES NEW NEW CLASSIFICATION F. PRICE-CONTROL MEASURES, INCLUDING ADDITIONAL TAXES AND CHARGES D. CONTINGENT TRADE-PROTECTIVE MEASURES G. FINANCE MEASURES E. NON-AUTOMATIC LICENSING, QUOTAS, PROHIBITIONS AND QUANTITY-CONTROL MEASURES OTHER THAN FOR SPS OR TBT REASON H. MEASURES AFFECTING COMPETITION A. SANITARY AND PHYTOSANITARY MEASURES B. TECHNICAL BARRIERS TO TRADE C. PRE-SHIPMENT INSPECTION AND OTHER FORMALITIES D. CONTINGENT TRADE-PROTECTIVE MEASURES I. TRADE-RELATED INVESTMENT MEASURES P. EXPORT-RELATED MEASURES 39

40 Comparing old and new classification OLD NTM classificationNew NTM Classification Product characteristics requirementsB6. Product identity requirement B7. Product quality or performance requirement Marking requirementsB32. Marking requirements for TBT reasons or A32. Marking requirements for SPS reasons Labelling requirementsB32. Labelling requirements for TBT reasons or A32. Labelling requirements for SPS reasons Packaging requirementsB33. Packaging requirements for TBT reasons or A33. Packaging requirements for SPS reasons 40

41 Comparing old and new classification OLD NTM classificationNew NTM Classification Testing, inspection and quarantine requirements A8 or B8Conformity Assessment Information requirementsNo match Requirement relative to transitC2. Direct consignment requirement Pre-shipment inspectionC1. Pre-shipment inspection 8300.Special customs formalitiesNo match Obligation to return used product No match 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 A. Sanitary and Phytosanitary Measures (SPS) B. Technical Barriers to Trade (TBT) Technical Measures C. Pre-shipment inspection and other formalities D. Contigent trade protective measures E. Non-automatic licensing, quotas, prohib. and QCM F. Price control measures including add. taxes and ch. 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 Non- Technical Measures Export Measures P. Export-related measures (including export subsidies) Import measures NTMs Classification

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 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. 46 Chapter A

47 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 47 Chapter B

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

49 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. 49 Chapter D

50 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). 50 Chapters E & F

51 Chapter G lists the finance measures. It refers to measures restricting the payments of imports, for example when the access and cost of foreign exchange is regulated. It also includes measures imposing restrictions on the terms of payment. 51 Chapters G

52 Chapter H includes those measures affecting competition – those that grant exclusive or special preferences or privileges to one or more limited group of economic operators. They refer mainly to monopolistic measures, such as State trading, sole importing agencies or compulsory national insurance or transport. 52 Chapter H

53 Chapter I deals with trade-related investment measures, and groups the measures that restrict investment by requiring local content or requesting that investment be related to export in order to balance imports. 53 Chapters I

54 Chapters J & K Chapters J and K relate to the way products, or services connected to the products, are marketed after imports. They are considered non-tariff measures because they could affect the decision of being imported. Chapter J, on distribution restrictions, refers to restrictive measures related to the internal distribution of imported products. Chapter K deals with restrictions on post-sales services, for example, restrictions on the provision of accessory services. 54 Chapters J & K

55 These chapters relate to behind-the-border policies. Chapter L contains measures that relate to the subsidies that affect trade. Chapter M, on government procurement restriction measures, refers to the restrictions bidders may find when trying to sell their products to a foreign government. Chapter N gathers restrictions related to intellectual property measures and intellectual property rights. Chapter O, on rules of origin, groups the measures that restrict the origin of products or its inputs. 55 Chapters L, M, N and O

56 The last chapter, chapter P, is on export measures. It groups the measures a country applies to its exports. It includes export taxes, export quotas and export prohibitions. 56 Chapters P

57 Using the classification to collect NTMs The classification greatly simplifies data collection. Challenge is how classify laws and regulations into the appropriate NTM category. There is not a single national repository of NTM information as laws and regulations affecting trade are enacted by different government agencies.

58 GUIDELINES TO COLLECT NTMs GENERAL CONSIDERATIONS What do we want to achieve and what kind of information is recorded? Build a database containing all official NTMs affecting products to be imported or exported. Database will have the following structure:

59 Official NTMs Database Structure Necessary Information Reporting country ('who applies the measure') HS Product code Product description (National Tariff line or HS6 digits) Measure code from the NTM classification Measure description the NTM classification Start Year (and Start Month) of the measure (Date of entry into force) Product Coverage indication (Full or Partial) Countries affected by the measure (products originating from specific countries) Source of the measure (link if available online), language, # legislation Objective of the measure (reasons behind the existence of the measure) Other notes, if necessary

60 Example of NTM dataset See Access table Data extracted from TRAINS database via WITS software at

61 GUIDELINES TO COLLECT NTMs GENERAL CONSIDERATIONS Measure (NTM) versus Regulation A measure is a trade control requirement enacted within a legal text or regulation issued officially by a country. One regulation could bear several NTMs. A regulation is a legal document issued officially by a government, such as a law, decree, directive, order, etc..

62 Steps to collect NTMs Identify sources of Information Identify Documents from each Source Identify Regulations from each document Identify and classify measures within each regulation Identify affected products GUIDELINES TO COLLECT NTMS

63 Identifying Sources of Information One or several sources depending on the country Source is the institution In ALADI countries, information is published in the official journal by the office of the President The US publishes the information on line. The EU also on line (Export Help Desk )

64 Example of Government agencies dealing with trade regulations ASanitary and Phytosanitary Measures (SPS) Ministry of agriculture; Standardization Agency BTechnical Barriers to Trade (TBT) Standardization Agency; Ministry of Healthcare; Ministry of Ecology; Ministry of Industry CPre-shipment Inspection and other formalities Customs Agency DContingent Trade Protective MeasuresMinistry of Finance; Ministry of Economy or Trade ENon-Automatic Licensing, Quotas, Prohibitions and Other Quantity Control Measures Ministry of Economy (or Trade, Foreign Relations) FPrice Control Measures Including Additional Taxes and Charges Ministry of Economy (or Trade, Foreign Relations); Customs Agency GFinance measuresMinistry of Finance; National Bank HMeasures Affecting CompetitionMinistry of Economy (or Trade, Foreign Relations) ITrade-related investment measures Ministry of Economy (or Trade, Foreign Relations) PExport-related measuresMinistry of Economy (or Trade, Foreign Relations); Customs Agency

65 GUIDELINES TO COLLECT NTMs Identifying documents from each source An inventory of documents on trade regulations is needed from each source. Trade regulations are published in documents and/or websites Trade regulations may be published in one or several documents Example Bangladesh: Import Policy Order, Bangladesh Bank Foreign Exchange Department Circular

66 GUIDELINES TO COLLECT NTMs Examples of document titles Bangladesh: Import Policy Order, Bangladesh Bank Foreign Exchange Department Circular Sri Lanka: Food Act Consumer Affairs Authority Act Import and Export (Control) Act Animal Deseases Act Plant Protection Act The Fauna and Flora Protection Ordinance

67 GUIDELINES TO COLLECT NTMs Examples of document titles Nepal: Nepal Standards Plant Protection Act Foreign Exchange Regulation Circular Customs Tariff Value Added Tax Act 1996 Pakistan Import Policy Order 2009 Export Policy Order Pakistan Animal Quarantine (Import and Export of Animal and Animal Products) ordinance, 1979

68 GUIDELINES TO COLLECT NTMs Identifying Regulations from each Document A document may contain one or several regulations. All regulations within each document need to be identified and recorded A regulation may be called a law, an act, an ordinance, a directive, an order, a notification or a decree

69 GUIDELINES TO COLLECT NTMS Identifying and classify Measures within each Regulation Once all regulations have been identified, all measures within each Regulation have to be classified according to the NTMs classification. A regulation has to be clearly read to be able to find the corresponding NTM code

70 GUIDELINES TO COLLECT NTMS Identifying products affected by the measure The National HS classification will be provided by UNCTAD. If the National HS classification is not available, the HS 6-digit will be used.

71 GUIDELINES TO COLLECT NTMS Identifying affected countries List the countries affected by the measure (usually all countries)

72 GUIDELINES TO COLLECT NTMS Work flow for each regulation Regulation 1 Measure 1 Countries Affected Products Affected Objectives mentioned Measure 2 Countries Affected Products Affected Objectives mentioned Measure 3 Countries Affected Products Affected Objectives mentioned

73 GUIDELINES TO COLLECT NTMs Principles for classifying measures Regulation, Measure name and Measure code ->A regulation may contain one or several measures. Each measure to be classified into no more than one NTM code. Selecting a code within a branch -> A measure should be classified using the most detailed code (4 digits)

74 GUIDELINES TO COLLECT NTMs Principles for classifying measures Different regulations imposing the same measure ->If 2 distinct regulations impose measures that would be classified into the same code, the measure is to be registered twice, each with its corresponding official source. Leading and supporting measures -> Only the leading measure needs to be recorded

75 GUIDELINES TO COLLECT NTMs Principles for classifying measures Likelihood but not certainty of controls ->when the legislation states that inspection or conformity assessment could or may be applied or hypothetical situations (authorities might suspend imports if..). Such measures are not registered in the database. However, a random check should be recorded. Misleading words -> For example marking may be used in a regulation text to mean a proof of compliance rather than a Marking requirement. See EU with its EC marking. Two other terms, ‘certification’ and ‘prohibition’ can sometimes be misleading->see example in the guidelines

76 EC marking A PLUS-POINT FOR SAFETY AND RELIABILITY According to EC Directive 89/106/CE only products which meet specific essential requirements of safety and reliability may enter and circulate in the European Economic Area; these requisites are mechanical strength and stability, fire, hygiene, health and environmental safety, safe use, protection against noise, energy saving and heat retention. EC marking is the pass for products which meet these specific requirements and which are guaranteed by their full compliance with European Technical Specifications.

77 77

78 GUIDELINES TO COLLECT NTMs Principles for classifying measures When to use conformity assessment measures? ->The conformity assessment (A8 or B8) is a verification process that normally goes with a requirement and is intended to prove its compliance by a certification. In this case we have two types of measures that have to be recorded in the database. Pay attention to the difference between: 1. Tolerance limit (A21 or B21) and Restricted use (A22 or B22) 2. Labeling (A31 or B31) and Marking (A33 or B33) 3. Testing (A82 or B82) and Inspection (A84 or B84) 4. Identity requirement (B6) and Quality or performance requirement (B7)

79 GUIDELINES TO COLLECT NTMs Principles for classifying measures Is Labeling for food SPS or TBT? ->Labeling requirements for foods products can be applied to both categories A31 and B31

80 GUIDELINES TO COLLECT NTMs Principles for classifying measures Some notes on specific NTM codes 1) Product Quality or performance requirement (B7) should only be used when the measure imposes specific quality or performance requirements such as durability or energy consumption. There is a need to read the regulation text thoroughly as not to miss its mean objective (see example in the guidelines). 2) System approach. The code (A13) should be used only when either “Systems approach” or “HACCP” words are found in the text of the regulation.

81 GUIDELINES TO COLLECT NTMs Principles for classifying measures Can’t find the code for a measure At the end of each chapter there is always a code for n.e.s (no where else). Those are codes ending in 9. In case of doubt send an to

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83 83 Phone: Fax: Thank you!

84 Distinct NTM measures per country NTM Chapter Name Afghani stan (30) China (62) India (76) Nepal (47) Pakistan (46) Sri Lanka (38) A.SPS B.TBT C.PRE-SHIPMENT INSPECTION D.CONTINGENT TRADE- PROTECTIVE MEASURES E.NON-AUTOMATIC LICENSING, QUOTAS, PROHIBITIONS F.PRICE-CONTROL MEASURES G.FINANCE MEASURES H.MEASURES AFFECTING COMPETITION I.TRADE-RELATED INVESTMENT MEASURES J.DISTRIBUTION RESTRICTIONS P.EXPORT-RELATED MEASURES


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