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1 CENTRE FOR POLICY DIALOGUE (CPD) B A N G L A D E S H a c i v i l s o c i e t y t h i n k – t a n k Presented by Khondaker Golam Moazzem Research Fellow,

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Presentation on theme: "1 CENTRE FOR POLICY DIALOGUE (CPD) B A N G L A D E S H a c i v i l s o c i e t y t h i n k – t a n k Presented by Khondaker Golam Moazzem Research Fellow,"— Presentation transcript:

1 1 CENTRE FOR POLICY DIALOGUE (CPD) B A N G L A D E S H a c i v i l s o c i e t y t h i n k – t a n k Presented by Khondaker Golam Moazzem Research Fellow, CPD Katmandu; August , 2006 SAFTA (Trade Liberalisation Programme - Non Tariff Barriers) Final Meeting on Regional Economic Cooperation in South Asia

2 2 Contents I.Smooth Functioning of SAFTA: Major Challenges II.NTBs: A Major Concern Worldwide IV. NTBs Applied by South Asian Countries V.NTBs Facing by South Asian Countries within the Region VI.Removing NTBs: Lessons from AFTA III.NTBs: Experience of Developing Countries VII.Conclusion

3 3 I. Smooth Functioning of SAFTA: Major Challenges I. Smooth Functioning of SAFTA: Major Challenges In the backdrop of very limited intra-regional trade in South Asia, SAFTA has started to operate since 1 July, The pace of tariff liberalization finalised under the SAFTA Agreement is much slower than the one proposed in the GEP Report, perhaps reflecting the current state of affairs in terms of economic cooperation in the region. It needs to be recognized that the establishment of an FTA is not likely to automatically lead to economic gains. Much depends on how the Agreement is crafted, how it is able to cater to and reconcile the often conflicting interests and concerns of member countries, and most important of all, how other parallel complementary activities, often outside the ambit of the narrow limits of trade cooperation, are put in place with a view to translating the potential opportunities into actual gains.

4 4 SAFTA Framework Agreement refers to such measures as Harmonisation of standards, reciprocal recognition of tests and accreditation; Harmonisation of customs clearance and customs cooperation; Transit facilities, particularly for land-locked contracting states; Removal of barriers to intra-SAARC investments; Development of communication system and transport infrastructure; Rules of fair competition and promotion of venture capital, simplification of procedure for business visas. I. Smooth Functioning of SAFTA: Major Challenges (contd…) I. Smooth Functioning of SAFTA: Major Challenges (contd…) These measures indicate elimination of non-tariff barriers (NTBs) will be a major trade task in order to enhance intra-regional trade in South Asia.

5 5  It is found that market access barriers faced by developing country exporters are not decreasing under the liberalised trade regime for some of their most important export sectors.  LDCs are especially at risk.  Recent research by ITC based on Market Access Map shows that three hardles are blocking the track to better market access.  First, specific tariffs are widespread. They are less transparent than ordinary (ad valorem) tariffs and they tend to discriminate against the developing countries.  Second, commodity prices have plummeted. If tariffs were ad valorem, the duties actually paid would have declined with the prices. Since specific tariffs are so important–especially for commodities in practice, developing countries and LDCs are witnessing an effective rise in protection.  Third, non-tariff barriers (food safety standards, environmental certification etc.) are growing in case of LDCs, they are particularly dramatic. II. NTBs: A Major Concern Worldwide  A staggering 40% of LDC exports are subject to non-tariff barriers. For developing and transition economies and developed countries, the figure is only 15%.

6 6  Even with preferential agreements that grant LDCs duty-free access to markets, non-tariff barriers may prevent these countries from entering those markets.  In fact, between 1996 and 2001, the share of duty-free LDC exports in their total exports-excluding oil and arms-fell sharply from 81% to 69%. This has hardly been in line with the spirit of the Uruguay Round. II. NTBs: A Major Concern Worldwide (contd…)  According to UNCTAD’s TCMCS/TRAINS, technical measures as well as quantitative measures increased considerably during the period  The nature of most NTBs as actually applied, however, changed.  “Core measures”—meant to protect local producers—declined.  “Non-core measures”—largely intended to protect local consumers— increased.  Among non-core measures, the use of technical measures increased, which suggests that behind-the- border measures will likely become the dominant means for restraining trade in the future.

7 7  By the end of November 2005, about 40 WTO member States had submitted around 250 notifications/proposals on NTBs—78% of which were notifications by developing countries.  Of the notifications or proposals, major concerns are:  Customs and administrative entry procedures (32.5%)  Technical barriers to trade (21.9%)  Specific limitations, such as requirements for marking, labelling & packaging, quantitative restrictions, and export restrains (25%) II. NTBs: A Major Concern Worldwide (contd…)  On a sectoral basis, the top five sectors affected by NTBs are:  Chemicals (11.5%)  Machinery and equipment (9.2%)  Textiles and clothing (9.2%)  Motor vehicles and parts (7.3%)  Fish/fishery products (6.1%)  The results of OECD surveys with the business communities in several developed and developing countries (in ) suggest that natural resource-based industries are most strongly affected by NTBs.

8 8 III. NTBs: Experience of Developing Countries  Developing countries confront different types of NTBs when accessing different markets.  In markets of developed countries, developing countries often face NTBs, such as conditions regarding technical specification of products, price controls and other NTB measures.  In South-South trade, developing countries confront NTBs such as customs and administrative entry procedures, para-tariff measures (for example, import surcharges and other additional charges), as well as other obstacles, such as poor infrastructure, measures taken to protect intellectual property rights and inadequate governance.  In this sense, the scope of NTBs becomes even wider in trade among developing countries. In general, export products of interest to developing countries, such as fisheries products, electrical equipment, pharmaceutical and textiles are more affected by NTBs than other products.

9 9  In many developed countries, regulatory policy focuses on protection of the environment, public health and safety and often includes higher standards for the domestic market than existing international standards.  It has been estimated that African banana exports could grow by $410 million a year if the EU used international standards for traceability requirements and regulations on pesticide residues for agricultural imports, instead of its own standards.  Overall, it is estimated that at least 10 per cent of export losses of all developing countries arise from SPS/TBT related measures. III. NTBs: Experience of Developing Countries (contd…)  Technical barriers have become a key concern regarding market access. Annual notifications of new technical barriers to GATT/WTO increased steadily from a dozen or two in the early 1980s to over 400 in  Low- and middle-income countries reported that over the period from 1996–99 more than 50 percent of their potential exports of fresh and processed fish, meat, fruit and vegetables into the EU were “prevented” by their inability to comply with SPS requirements (OECD, 2001b).

10 10  Many developing countries are concerned that they are ill- prepared to meet increasingly complex and burdensome standards and regulations. There is often a risk that such regulations may be captured by special interests, particularly when regulatory processes are not transparent. III. NTBs: Experience of Developing Countries (contd…)  From the above, one important challenge for the current WTO multilateral negotiations is to allow Governments to achieve their genuine regulatory objectives while preventing protectionist abuses.  Another challenge for the multilateral negotiations is to ensure that NTB rules in RTAs (both North-South and South- South) are coherent and compatible with the relevant WTO multilateral rules and disciplines.

11 11  It cannot be denied that developing countries need to take steps to improve their legal and regulatory environment to support the participation of their national firms in international markets and enhance their competitiveness. Product standards and domestic sector regulations are areas that require attention.  The modernization of standards systems, including institutions and infrastructure for certification, is essential for operating in the current global trade environment.  Meeting international standards for quality, safety, health, environment and consumer protection is increasingly becoming a precondition for competing in international markets. It has also become a major factor constraining many exporters, particularly in the LDCs, from benefiting fully from preferential access initiatives.  Technical assistance for raising capacity to comply with regulations and standards should also be strengthened.  The participation of developing countries in international standard setting activities should be facilitated.  Finally, the promotion of mutual recognition agreements (MRAs) between developed and developing countries, as well as among developing countries, will also help substantively in reconciling frictions and disputes caused by different regulations between trading partners and lead to large cost savings for exporting firms worldwide. III. NTBs: Experience of Developing Countries (contd…)

12 12 IV. NTBs Applied by South Asian Countries IndiaImport Licensing  India has eliminated its import licensing requirements for most consumer goods. Importers of vehicles of any type face restrictive and trade-distorting import practices.  India continues to maintain a negative import list. The negative list is currently divided into three categories: (1) banned or prohibited items; (2) restricted items which require a non- automatic import license and (3) "canalized" items importable only by government trading monopolies subject to cabinet approval regarding timing and quantity.  India has liberalized many restrictions on the importation of capital goods. The government allows imports of all second- hand capital goods by the end-users without requiring an import license, provided the goods have a residual life of five years. Country IssuesDescription

13 13 IndiaCustoms Procedures  Indian Customs requires extensive documentation, which inhibits the free flow of trade and leads to frequent processing delays. In large part these delays are a consequence of India’s complex tariff structure and multiple exemptions, which may vary according to product, user, or specific Indian export promotion program.  India introduced a reference price system for soybean oil in September 2002 to address alleged under-invoicing.  Certain customs procedures impede importation of automotive products. Motor vehicles may be imported through only three specific ports and only from the country of manufacture. Declared transaction values of automotive products may be rejected, insofar as legitimate reductions in the wholesale price of such products are ignored. IV. NTBs Applied by South Asian Countries (contd…) Country IssuesDescription

14 14 IndiaStandards, Testing, Labeling and Certification  The GOI has identified 109 specific commodities that the BIS must certify before the products are allowed to enter the country. A system now exists by which foreign companies can receive automatic certification for products made outside India provided BIS has first inspected the production facility.  In 2004, Indian Customs began to require registration or an exemption certificate for imported boric acid. The Ministry of Agriculture's Central Insecticides Board and Registration Committee has not yet published criteria and procedures for obtaining this documentation.  India's procedures for establishing emissions standards are non-transparent. Even the latest low-emission technology used by developed country-manufacturers fails to meet India's requirements.  In 2001, India banned textile and apparel imports that contain certain dyes. In January 2004, the GOI relaxed its textile- testing requirement by announcing that it would accept, as proof of the absence of azo-dye, certification that the exporting country had banned azo-dyes in textiles. IV. NTBs Applied by South Asian Countries (contd…)

15 15 IndiaSanitary and Phytosanitary (SPS) Measures  In 2003, the Ministry of Health implemented amendments under its PFA Act which could potentially restrict Indian imports of several agricultural products. In addition, at the end of 2003, the MOA issued a set of new phytosanitary regulations and quarantine requirements for imports of agricultural products. GOI implementation of these measures prior to notifying them to the WTO SPS Committee restricted Indian imports of almonds, pulses, fresh fruits and vegetables. Furthermore, new requirements affecting solid Wood Packaging Material (SWPM), affected adversely to exports of other countries nonagricultural products.  The Indian government has implemented several sanitary restrictions, which do not appear to coincide with the Office of International Epizootics (OIE) and CODEX recommendations. Such restrictions have affected Indian imports of poultry and poultry products, and pet food and dairy products.  The GOI reports that it is currently reviewing its policy for evaluating the safety of biologically engineered foods. In 2002, the Genetic Engineering Approval Committee (GEAC), conditionally approved the import of refined soy oil and crude de-gummed soy oil. It declined to consider importation of a corn- soy blend (CSB) without a special certification. IV. NTBs Applied by South Asian Countries (contd…)

16 16 IndiaOther barriers  In case of pharmaceutical markets, while the scope of the rigid government-controlled pricing system has been reduced, final steps to eliminate it have stalled.  Indian states fail to apply consistently certain national laws and regulations. This creates uncertainty for foreign companies exporting to, and investing in India. Foreign companies affected by such inconsistency that include: pesticide manufacturers whose products have been approved at the national level and banned at the state level, and distilled spirits producers who face nonuniform state-level taxes despite the national government’s directive to harmonize such taxes. In addition, taxes on inter-state trade and conflicting regulations continue to hamper the free flow of goods within India.  India’s implementation of its antidumping regime has raised concerns in key areas such as transparency and due process. India continued aggressively to apply its antidumping law over the past year. From the second half of 2003 through the first half of 2004, which is the most recent 12-month period for which WTO statistics are available, India imposed 38 final antidumping measures, more than any other WTO Member, and ranked second in the number of initiations. IV. NTBs Applied by South Asian Countries (contd…)

17 17 PakistanImport policies  Pakistan’s trade policy in 2005 continued to ban the import of 30 items, mostly on religious, environmental, security, and health grounds. Effective July 1, 2005, Pakistan further reduced duties on imported automobiles to between 50% and 75% from the previous range of 75% to 150%. The government exempted all domestically produced pharmaceutical related inputs from its General Sales Tax (GST). Imported pharmaceutical inputs subject to a 10% customs duty are also exempt from payment of GST.  In January 2000, the Pakistani government began implementing a transactional valuation system, pursuant to which 99% of import valuation is based on invoice value, in accordance with the WTO's Customs Valuation Agreement. A number of traders in food and nonfood consumer products, however, report experiencing irregularities and deviations in the application of that system.  A U.S. freight forwarding company reported in 2005 that Pakistan imposed a new SRO requiring that the commercial invoice and the packing list must be included within a container. This practice is difficult in situations when shipments originate from a location that is different from where the invoice and packing list are created; when, for security, invoices are created after the shipment departs; or when several companies are involved. IV. NTBs Applied by South Asian Countries (contd…)

18 18 IV. NTBs Applied by South Asian Countries (contd…) PakistanStandards, Testing, Labeling, and Certification  As of June 30, 2005, Pakistan Standards and Quality Control Authority (PSQCA) had established over 21,000 standards (including 15,500 ISO standards) for agriculture, food, chemicals, civil and mechanical engineering, electronics, weights and measures, and textile products. However, no new standards were approved in  Testing facilities for agricultural goods are inadequate and standards are inconsistently applied. Generally, however, foreign exporters have not reported problems due to the restrictive application of SPS or environmental standards.  Pakistan approved biosafety guidelines and rules in April 2005, but the action plan to implement these guidelines is still pending. At present Pakistan has permitted the import of biotech soybeans. The delay in the implementation of biosafety guidelines, however, has impeded the introduction of other biotechnology products.

19 19 Sri Lanka Import Policies  Import tariffs and other import charges: Currently, there are 5 tariff bands of 0 percent, 2.5 percent, 6 percent, 15 percent, and 28 percent. Textiles, pharmaceuticals, and medical equipment are free of duty. Basic raw materials are generally assessed a 2.5 percent duty. Semi- processed raw material tariffs are 6 percent, while intermediate product tariffs are 15 percent. Most finished products are at 28 percent. There are also a number of deviations from the five-band tariff policy (Tobacco and cigarette). In addition, there are specific duties on certain items, including footwear, ceramic products, and agricultural products. Imports for export industries enter duty free.  Export Development Board (EDB) Levy: In November 2004, the Sri Lankan government introduced a new additional tax on a range of imports identified as “non-essential.” The EDB levy is applied on C.I.F value, and ranges from 10 percent to 20 percent.  Import prices are increased by 7 percent (by adding an imputed profit margin) when calculating the VAT and excise duty.  According to U.S. trade data, the total value of imports affected by the EDB will be about $5 million out of a total of about $143 million annual U.S. exports to Sri Lanka. The total effect on U.S. exports could be much higher, while calculating U.S.-sourced products sent via other trading hubs. IV. NTBs Applied by South Asian Countries (contd…)

20 20 Sri Lanka Import Licensing  Sri Lanka requires import licenses for over 300 items at the 6-digit level of the Harmonized System (HS) code, mostly for health, environment, and national security reasons. Importers must pay a fee equal to 0.1 percent fee of the import price to receive an import license. Customs Barriers  The Government of Sri Lanka implemented the WTO Customs Valuation Agreement in January 2003 and follows the transaction value method to determine the C.I.F. value. Customs is also in the process of installing an Electronic Data Interchange (EDI) system to support an automated cargo clearing facility. When implemented, this system should improve customs administration and facilitate trade. Standards, Testing, Labeling, and Certification  There are 85 items that come under the Sri Lanka Standards Institution (SLSI) mandatory import inspection scheme. These importers have to obtain a clearance certificate from the SLSI to sell their goods. SLSI accepts letters of conformity from foreign laboratories, but retains the discretion to take samples and perform tests.  The Ministry of Health has drawn up a draft law to regulate the import of GM food. Some large foreign food exporters have expressed concern about this proposed regulation, which is thought to be excessive and could hinder exports of US brands to Sri Lanka.  A new labeling and advertising regulation came into effect from April 01, New features of the latest regulations include the date of manufacture, the name or INS number of the food additives, claims that are allowed and disallowed, etc.  Poultry and meat: There is a temporary ban on all poultry imports due to fears of HPAI. Imports of beef from the United States are banned due to fears of Bovine Spongiform Encephalopathy (BSE). IV. NTBs Applied by South Asian Countries (contd…)

21 21 Bangla desh Import Licensing  Import licenses are not required for any imports into Bangladesh. However, in addition to the standard LCA import procedure, a permit, clearance, prior permission or approval may be required for a number of imported products. Many of the clearance requirements for items on the restricted list are based on health or safety grounds and therefore seem to be "automatic" in nature.  Some categories of the restricted items can be imported only by the registered industrial consumers, including export-oriented ready-made garments; hosiery and specified textile industries operating under the bonded warehouse system; the pharmaceutical (allopathic) industries; and foreign exchange hotels.  Second-hand clothing is importable only by 3,000 commercial importers who are selected by an open lottery of quotas, which are distributed among different districts on the basis of population. The ceiling of Tk 50,000 is set for each importer, who may purchase, on the basis of prior permission from the CCIE. All consignments of second-hand clothing must also be accompanied by a certificate from a chamber of commerce of the exporting country certifying that the consignment does not contain any banned items.  An import permit or clearance permit is required from the CCIE in the following cases: (i) imports of books, magazines, journals, periodicals, and scientific and laboratory equipment; (ii) imports of free samples, advertising materials, and gift items above the prescribed ceiling; (iii) imports of drugs and medicines; and (iv) imports of capital machinery for joint-venture industrial units. IV. NTBs Applied by South Asian Countries (contd…)

22 22 Bangla desh Standards, Testing, Labeling, and Certification Standards, testing, and certification  There are 1,612 standards in Bangladesh of which about 8% are compulsory. Testing and certification procedures for compulsory standards are the same for domestic and imported products. Bangladesh has notified the WTO of its acceptance of the Code of Good Practice of the WTO Agreement on Technical Barriers to Trade.  At present, some 36 Bangladeshi standards are identical to ISO standards, and another 15 are identical to IEC standards. Bangladesh has been a member of the ISO since 1974, but is not yet a member of the International Electrotechnical Commission (IEC). The internationally equivalent standards in Bangladesh are mostly voluntary.  The adoption of ISO 9000 and ISO certification is regarded as an essential instrument for the Bangladeshi exporters to market their products in foreign markets. So far, 25 companies have obtained ISO 9000 certificates and two companies have obtained ISO certificates. Some 12 companies have been awarded HACCP certificates.  At present, there is no laboratory accreditation scheme in Bangladesh. While there are no accredited Bangladeshi laboratories, there are some multinational companies operating in Bangladesh whose certificates are accepted in the country.  Bangladesh does not as yet participate any bilateral or mutual recognition agreements with its trading partners in the areas of standards, testing, and certification. However, the Government is currently promoting such initiatives with the SAARC countries; a MOU in the area of quality, standardization, and testing is to be signed between the Bureau of India Standards and the BSTI. IV. NTBs Applied by South Asian Countries (contd…)

23 23 IV. NTBs Applied by South Asian Countries (contd…) Bangla desh Standards, Testing, Labeling, and Certification Labeling and packaging  All imports are required to carry a label indicating the country of origin. The label must also indicate quantity, weight, measure, trade description, component materials, and date of manufacture/expiry. Bangla or English is permissible for labeling.  For imports of food and beverages, the dates of manufacture and of expiry must be clearly printed. Marking of the ingredients and composition of milk food is required in Bangla. In addition, imports of milk food with fat content, and baby food must be in a tin container, and import of non-fat dried milk must be in a bag or tin.  For imports of pesticides and insecticides, labels must contain information on the manufacture and ingredients, as well as warning, antidote, and direction for use, in Bangla. Sanitary and phytosanitary standards  Sanitary certificates and radioactivity test certificates are required for imports of food and edible products. A sanitary certificate issued by the competent authority of the exporting country must indicate that the specific product is free of injurious insects, pests, and diseases. The Bangladesh Atomic Energy Commission conducts radioactivity tests on samples upon the arrival of food items, and issues a clearance certificate for release of the items by the customs authority. Foreign certifications of radioactivity test are also accepted in Bangladesh. All expenses incurred for the tests are borne by importers.

24 24 Bangla desh Other barriers Anti-dumping, countervailing, and safeguard measures An application for an investigation, whether for an anti-dumping or countervailing measure, must be made in writing to the BTC by or on behalf of a domestic industry. Provisional anti-dumping or countervailing duties, not greater than the margin of dumping or of the subsidy rates, may be imposed within 60 days of initiation and applied for a period of six months, extendable by three months.  Final measures may be taken for a period of five years from the date of imposition; however, the Government may renew the duty for a further period of five years, upon review, if it is believed that there would be continued injury.  Hitherto, there has been no investigation initiated on anti-dumping or countervailing measures in Bangladesh. A number of local producers have complained that trade liberalization in recent years has helped foreign suppliers to sell their products in Bangladesh. However, lack of technical expertise and financial resources both by the administration and industries, as well as lack of authenticated data essential for submission of application, have made difficult to initiate investigations.  A provision on safeguards was introduced in 1997 by amendments to Section 18 of the Customs Act, However, rules regarding imposition of safeguard measures have not yet been made. IV. NTBs Applied by South Asian Countries (contd…)

25 25 MaldivesRegistration, documentation, and customs clearance  Any entity or person, including non-nationals, may import goods commercially for a registered business activity or outlet to sell imports, provided that it has a general import license from the Ministry of Trade and Industries.  Since 25 May 2000, Customs has authorized registered users to access the customs declaration processing software system for processing forms online. This has enabled import (and export) documents to be submitted through electronic data interchange (EDI) or direct trader input (DTI). Some 85% of declarations from substantial importers are submitted electronically, either using EDI or floppy disc.  The Maldives Customs Service inspects imports for clearance after payment of duty. All single-item consignment goods and direct- delivery cargo, such as river sand and cement, are released on a risk-assessed basis. About 25% to 30% of consignments of reliable parties judged on past importing history are physically inspected.  There are no preshipment inspection (PSI) requirements. The Maldives has commenced computerizing customs operations, and UNCTAD's ASYCUDA++ implemented during 2002,  The Maldives has post-entry audit arrangements and import declarations are checked after release. Importers must pay the duties in full on shipments subject to valuation disputes while seeking court relief. No system of security guarantees exists. IV. NTBs Applied by South Asian Countries (contd…)

26 26 IV. NTBs Applied by South Asian Countries (contd…) MaldivesRegistration, documentati on, and customs clearance  The Maldives became a member of the World Customs Organization in September While it is not a member of the ATA Carnet System, similar procedures and privileges are followed. The Maldives is considering joining this system.  The Maldives and other SAARC members have approved the Customs Action Plan to harmonize the application and simplification of customs procedures and practices. This is to be achieved through the progressive implementation of the Kyoto Convention on Customs Procedures and developing a coordinated and cooperative approach to customs, including adoption of standardized forms and simplified procedures.  According to the authorities, the new customs legislation due to be passed in 2003 will be consistent with the Kyoto Convention.

27 27 Maldives Standards and other technical requirements Standards, testing, and certification  There are no known Maldivian standards, and no formal mechanism exists on standards. Australian, United Kingdom, and United States standards are sometimes required.  The Maldives, along with other SAARC members, has agreed to a Regional Action Plan on Standards, Quality Control and Measurement aimed at identifying trade in products adversely affected by variations in national standards, and their harmonization, including the prospects of developing regional standards.  Efforts also include the promotion of mutual acceptability and recognition of certification schemes and accredited testing. Initial focus is on agricultural and food products, building materials and household electrical appliances. Sanitary and phytosanitary (SPS) requirements  Imports of live animals, birds and plants require a phytosanitary or sanitary certificate. The Maldives is not a member of the FAO's Codex Alimentarius, OIE, or IPPC. Marking, labelling, and packaging  The Maldives has no special marking, labelling, or packaging requirements. IV. NTBs Applied by South Asian Countries (contd…)

28 28 IndiaCommunication Problems  Whenever there are disturbances at the Indo-Pak border, the mobile connections are not operational. Trade LogisticsWhile road routes for trade between India and Pakistan are non-existent, rail and air connectivity between the two countries has been erratic. Different products  Indian entrepreneurs facing NTBs of their products like electronic items, jute goods, machinery, plastic goods, textile and chemical items in Bangladesh. Rice  There are about 600 varieties of rice are grown in India. These include both basmati and non- basmati rice. Sri Lanka, accepts up to 100% broken rice (non-basmati). Transformers  In Sri Lanka, exporters require the KEMA4 certificate (ISO standards) even though the product certified by several reputed third-party inspection agencies like Crown Agents, ISO 9001:2000, Lloyds, Bureau Veritas, S.G.S. Robert, W. Hunt Company, BSI Inspectorate, Griffith UK, OMIC Japan, Tubescope Vecto GmbH Germany etc. Even though obtaining this certificate is not very complex or expensive, it demands lot of time and effort, which is an irritant to exporters. Cosmetics  Sri Lanka specifies registration in their country even if the Indian exporter has registration in India. This registration is specific to Sri Lanka and is not a mandatory procedure for exports to other countries. Hence, this aggravates the agony of the exporter especially while exporting to Sri Lanka Mango pulp  In case of mango pulp export to Sri Lanka, Indian exporters are required to obtain a Health certificate from the Ministry of Health of Sri Lanka. This test is conducted in order to specify the exact contents of the product. This test is conducted over a period of 2 days and costs about Rs Rs.7000 per consignment. V. NTBs Facing by South Asian Countries within Region

29 29 IndiaTextile products  Although most importing countries accept the quality certification from ISO and Bureau Veritas, Sri Lanka asks for certification from its own agencies like Sri Lanka Standards Institution. This is a problem for Indian exporters as they have to get this certificate and incur the cost and the time even though they have an ISO certificate from a recognised agency in India. Sanitary ware  Sri Lanka does not accept products packed in straws. They demand that such products be packed in 5-ply corrugated boxes. India does not manufacture enough 5-ply corrugated boxes to meet the existing demand. The prices are too high compared to the other countries. This actually increases the costs of the packaging and affects the product pricing in the international market. Others  Regarding the first category of barriers in Sri Lanka majority of the firms faced barriers related to product standards. In the second category of barriers majority of the firms felt there were barriers related to banks and to competition.  Majority of the firms exporting to Sri Lanka disagreed that there was any kind of discrimination against them vis-à-vis other competitors.  Majority of the firms exporting to Sri Lanka stated that they incurred expenses between 0 and 5% of total sales revenue to meet standards. Other barriers  Many buyers in Sri Lanka demand under invoicing in order to save themselves from import duties. This causes exporters undue harassment. Also Indian banks like the State Bank of India do not confirm the LC issued by Banks of Thailand and most banks of Vietnam. Due to non-confirmation of the LCs the exporters are not able to take orders. On the other hand, some of the private banks like Citibank, HSBC do confirm the Letter of Credit. V. NTBs Facing by South Asian Countries within Region

30 30 PakistanLack of Adequate Banking Relations  Lack of banking facilities of each other’s bank is mentioned as a barrier to trade with India  Some Indian banks do not recognize L/Cs from all Pakistani banks. Moreover payments through Asian currency union are delayed. Communication Problems Whenever there are disturbances at the Indo-Pak border, the mobile connections are not operational. Trade LogisticsWhile road routes for trade between India and Pakistan are non-existent, rail and air connectivity between the two countries has been erratic. Stringent checking Pakistani consignment are subject to more stringent checking and detailed security checks in India (e.g. Pakistani Molasses is allowed in 1 ton packs only because of security reasons) Closure of land routes Closure of land routes (Wagha, Khokrapar, and Ganda Singh Wala (near Kasur) is also seriously hampering trade with India Port congestions There is higher port congestions, higher port and demurrage charges, more paper work, and generally more issues of trade and transport facilitation in Pakistan V. NTBs Facing by South Asian Countries within Region

31 31 V. NTBs Facing by South Asian Countries within Region Bangla desh Major products  India has imposed non-tariff restrictions on Bangladesh export items which include biscuits, jam, jelly, fruit juice, soft beverage, vegetables, Jamdani saree, jute, jute goods, and cement. India also imposed anti-dumping duty on dry cell battery exports. Dye  In India, it is being tested for dyes in Lucknow instead of Kolkata. Cement  India recently refused to allow cement export to its north-eastern states taking quality certification as a pretext. India has instructed its Customs officials to bar cement import from Bangladesh to Tripura state citing ground that these exports have no quality certification of Bureau of Indian Standards (BIS). Bangladeshi cement manufacturers have quality certification from appropriate government agencies such as Bangladesh Standard and Testing Institute (BSTI).  It is not practical in any way that each and every Bangladeshi exporters will seek quality certificate from BIS to avail of export facility to Indian market. Potato  India refused export of potatoes to Tripura last year citing health ground. Mizoram's attempts to buy some other merchandise have also failed in like situations. RMG  The Indian government had also raised duty on garment import from Bangladesh, which affected Bangladesh’s export. BIS Certificate  In order to obtain the BIS certificate, Bangladeshi companies in the first should apply, then the BIS inspectors will come to Bangladesh at the company's cost, make inspection, evaluate manufacturing process and quality of products, and take data back to India for further evaluation.  The final issue of quality certificate, if they do it at all, will take several months if not some years.

32 32 V. NTBs Facing by South Asian Countries within Region BangladeshPharmaceutical products Registration from Pakistan is very tough as they restricted import of Bangladeshi pharmaceuticals by law to that country. Jute yarnThe BTC study (2003) noted that packaging requirements, phyto-sanitary measures, special certificate of origin, customs valuation, pre- shipment inspection requirements are restricting the export of jute yarn to India, Canada and other countries. Problems at customs point Exporters face problems while exporting goods also to India. For example, lack of truck parking space, unavailability of customs officials in time etc. Visa Restrictions Visas can be obtained only for specific cities prior to entry into Pakistan.

33 33 V. NTBs Facing by South Asian Countries within Region CountryProductsNTBs NepalTea  There is a 100 per cent incidence of NTMs in exports of all types of green and black tea to India and Pakistan. For Bangladesh and Sri Lanka, the incidence is zero per cent. Honey  There is a 100 per cent incidence of NTMs in exports of natural honey to India and Pakistan. However, in the case of other countries, the incidence is zero per cent. Floriculture  There is a 100 per cent incidence of NTMs in exports of cut flowers, fresh and other to India. However, in the case of other countries, the incidence is zero per cent. Medicinal Plant  There is a 100 per cent incidence of NTMs in exports of Liquorice roots to Pakistan. However, the incidence is zero per cent in the case of other countries.  There is a 100 per cent incidence of NTMs in exports of Ginseng roots to Pakistan followed by China (25 per cent). However, the incidence is zero per cent in the case of other countries. And, for exports of other medicinal plants (121190) to India and Pakistan, there is a 100 per cent incidence of NTMs. However, the incidence is zero per cent in other countries. Vegetable Seed Export  There is a 100 per cent incidence of NTMs in exports of vegetable seeds to Pakistan. However, the incidence is zero per cent in the case of other countries.

34 34 V. NTBs Facing by South Asian Countries within Region Sri Lanka Vanaspati At present, under the Free Trade Agreement (FTA) between Sri Lanka and India, vanaspati can be imported from Sri Lanka at zero import duty, and without any quota restriction. As an offshoot of the FTA, about 2.7 lakh tonnes of vanaspati have entered into the country from Sri Lanka between September 2005 and March Government of India is planning to impose restrictions. One of them may be relating to insertion of a clause under the FTA allowing imposition of a tariff-related quota (TRQ) on its import from Sri Lanka. While the other may be inclusion of vanaspati, originating from that country, under the heading of HS-1516, one of the product specification categories under the Indian Customs law.

35 35 Table: Selected Bangladeshi Products Facing NTBs in Indian Market, 1997 HS CodeProduct NameNTMs 30310Salmon, Pacific, frozen, whole Flatfish except halibut, plaice or sole, frozen, whole Eels, frozen, whole Fish nes, frozen, whole Fish fillet or meat, fresh or chilled, not liver, roe Fish fillets, frozen Livers and roes, dried, smoked, salted or in brine Smoked fish & fillets other than herrings or salmon Crabs, frozen Crustaceans nes, frozen Feathers and down used for stuffing Ossein and bones treated with acid Foliage,branches, for bouquets, etc. - except fresh Leeks & other alliaceous vegetables, fresh or chilled Globe artichokes, fresh or chilled Vegetables, fresh or chilled nes Tea, black (fermented or partly) in packages < 3 kg Tea, black (fermented or partly) in packages > 3 kg100 Source: Deb (2006), "Rules of Origin and Non-Tariff Barriers in Agricultural Trade: Perspectives from Bangladesh and Cambodia" V. NTBs Facing by South Asian Countries within Region

36 36 VI. Removal of NTBs: Experience of AFTA AFTA has taken different measures in order to remove NTBs i.e. process of verification and cross-notification; updating the working definition of Non-Tariff Measures (NTMs) and NTBs in ASEAN; the setting-up of a database on all NTMs maintained by Member Countries; and the eventual elimination of unnecessary and unjustifiable NTBs. With the effective realisation of AFTA, ASEAN Member Countries are now placing more emphasis on the elimination of NTBs to trade, particularly with regard to those that are associated with standards, technical regulations, and conformity assessment procedures.

37 37 In 2004, 82 standards on safety and electromagnetic compatibility (EMC) were completed with another 24 standards for electrical and electronic equipment set for harmonisation before Currently, a survey is being conducted to identify more standards for harmonisation to support the integration of the eleven priority sectors. Member Countries have indicated their acceptance of test reports and/or product certifications under the ASEAN Sectoral Mutual Recognition Arrangement for Electrical and Electronic Equipment (ASEAN EE MRA). A regulated product that has been tested by a designated testing laboratory or certified by a designated certification body can enter and be marketed in the importing Member Country without being subject to further testing and certification. Four testing laboratories and one certification body have been designated to provide testing and certification services under the ASEAN EE MRA. Another five testing laboratories are undergoing verification processes for technical competence. VI. Removal of NTBs: Experience of AFTA (contd…)

38 38 ASEAN Member Countries have also agreed to work towards the harmonisation of regulatory regimes in the electrical and electronics sector by ASEAN Member Countries made considerable progress in implementing the Agreement on the ASEAN Harmonised Cosmetic Regulatory Scheme. This agreement includes an MRA and the ASEAN Cosmetic Directive, which lays down the requirements for cosmetic products marketed in ASEAN. Seven Member Countries have indicated their readiness to implement the Directive on or before To support Member Countries to implement the Scheme, a series of technical documents, guidelines and training modules have been developed, especially in the areas of good manufacturing practice and post marketing surveillance. VI. Removal of NTBs: Experience of AFTA (contd…)

39 39 ASEAN continued efforts to harmonise regulations in order to facilitate trade in pharmaceuticals. All Member Countries have indicated their readiness to implement the ASEAN Common Technical Dossiers (ACTD) and the ASEAN Common Technical Requirements (ACTR) on or before 31 December The ACTD is part of the marketing authorisation application dossier that is common to all ASEAN Member Countries while the ACTR is the set of written materials intended to guide applicants to prepare application dossiers in a way that is consistent with the expectations of all ASEAN Drug Regulatory Authorities. In addition, a series of guidelines for the implementation of the ACTR has been developed. ASEAN is also pursuing the harmonisation of labelling requirements for pharmaceuticals and is considering an MRA on Good Manufacturing Practice Inspection. VI. Removal of NTBs: Experience of AFTA (contd…)

40 40 Concerning prepared foodstuffs, four areas were identified for the harmonisation of technical requirements. These are food labelling; the import export certification and registration procedure; food fortification and GMO; and Hazard Analysis and Critical Control Point (HACCP) and Good Manufacturing Practices (GMP) Inspection and Certification. This harmonisation of technical requirements will pave the way for future MRAs. An ASEAN Common Requirements for Prepared-Packaged Products was developed with the objective of eliminating technical barriers to trade associated with legal metrology regulations. A majority of Member Countries have indicated their readiness to implement the harmonised requirements by December Overall, substantive work was taken to facilitate the integration of the eleven priority sectors. This includes the adoption of action plans on standards, technical regulations and conformity assessments for medical devices, automotives, wood-based and rubber-based products, and traditional medicines and health supplements. A number of areas have been identified for the harmonisation of technical requirements and regulations in these sectors. (ASEAN Annual Report, 2005) VI. Removal of NTBs: Experience of AFTA (contd…)

41 41 VII. Concluding Remarks: How to Remove NTBs? The first step to eliminate NTBs is to make documentation of all the NTBs currently applied by South Asian countries against each other. A committee can be set up for documentation and updating the NTBs. Find out the “real’ NTBs practised in intra-regional trade. In order to develop competitiveness, immediately harmonize the regulatory regimes of major export products. Working on signing a Mutual Recognition Agreement for specific categories of products. Under one certification body, accredited testing laboratories of different South Asian countries will work on product certification. In case of development of testing process, standardization system, labeling system etc., sufficient technical and financial support need to be assured for LDCs.

42 42 Thank You For Your Attention

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