1. 1 UNCTAD MEETING OF EXPERTS ON NON-TARIFF MEASURES Geneva, 5-7 September 2005 Concerns of developing Countries Concerns of developing Countries Subash C. Sharma Subash C. Sharma Economic, Trade and Energy Division Economic, Trade and Energy Division Secretariat of the South Asian Association for Regional Cooperation (SAARC) Kathmandu, Nepal scsharma@saarc-sec.org www.saarc-sec.org

2. 2 Greetings ! Thanks for organising this meeting Thanks for organising this meeting Greetings and best wishes from SAARC Secretary-General H.E. Mr. Chenkyab Dorji for successful conclusion of this very crucial meeting. Greetings and best wishes from SAARC Secretary-General H.E. Mr. Chenkyab Dorji for successful conclusion of this very crucial meeting. I thank all the eminent experts, panelists and all the delegates for their fruitful interventions. I thank all the eminent experts, panelists and all the delegates for their fruitful interventions. Great learning experience for me. Great learning experience for me.

3. 3 SAARC-UNCTAD COOPERATION UNCTAD-SAARC MOU for collaboration in TRAINS was signed by UNCTAD Secretary-General and SAARC Secretary- General in February 1993. UNCTAD-SAARC MOU for collaboration in TRAINS was signed by UNCTAD Secretary-General and SAARC Secretary- General in February 1993. It was the first MOU signed by SAARC. It was the first MOU signed by SAARC. 17 more agreements signed since then which include ESCAP, UNDP, EC, PTB, World Bank and ADB. 17 more agreements signed since then which include ESCAP, UNDP, EC, PTB, World Bank and ADB.

4. 4 Economic Cooperation under SAARC Economic Cooperation under SAARC SAPTA, SAFTA and NTBs SAPTA, SAFTA and NTBs Some concerns of SAARC Countries - recent examples Some concerns of SAARC Countries - recent examples SAARC Common Position on NTBs SAARC Common Position on NTBs The role of Private Sector in SAARC The role of Private Sector in SAARC Task ahead Task ahead

5. 5 SAARC and Economic Cooperation I SAARC Charter signed on 7 December 1985 SAARC Charter signed on 7 December 1985 Members : Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka Members : Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka Headquarter in Kathmandu, Nepal Headquarter in Kathmandu, Nepal Committee on Economic Cooperation (CEC) – 12 Meetings held Committee on Economic Cooperation (CEC) – 12 Meetings held Commerce Ministers – 4 regular and special meetings on WTO Issues Commerce Ministers – 4 regular and special meetings on WTO Issues Common Position on WTO Issues Common Position on WTO Issues SAPTA signed on 11 April 1993 SAPTA signed on 11 April 1993 Signed on 11 April 1993 by FMs Signed on 11 April 1993 by FMs Entered into force on 7 December 1995 Entered into force on 7 December 1995 Four Rounds concluded Four Rounds concluded 5-100 % tariff concessions on products covered 5-100 % tariff concessions on products covered Number of products covered and tariff concessions extended thereon differs from country to country and product to product Number of products covered and tariff concessions extended thereon differs from country to country and product to product Additional Measures in favour of Least Developed Countries include: Additional Measures in favour of Least Developed Countries include: deeper tariff concessions deeper tariff concessions Concessions on more products Concessions on more products More relaxed rules of origin More relaxed rules of origin

6. 6 SEVENTH SAARC SUMMIT

7. 7 NTMs Definition of Non-Tariff Measures in SAPTA Agreement: Definition of Non-Tariff Measures in SAPTA Agreement: Non-tariffs means any measure, regulation or practice other than “tariffs” and “para- tariffs”, the effect of which is to restrict imports, or to significantly distort trade. Non-tariffs means any measure, regulation or practice other than “tariffs” and “para- tariffs”, the effect of which is to restrict imports, or to significantly distort trade.

8. 8 SAARC and Economic Cooperation II Agreement on South Asian Free Trade Area (SAFTA) Agreement on South Asian Free Trade Area (SAFTA) Signed on 6 January 2004 by Foreign Ministers during 12 th Summit Signed on 6 January 2004 by Foreign Ministers during 12 th Summit SAFTA Agreement will enter into force on 1 January 2006 SAFTA Agreement will enter into force on 1 January 2006 10 th Meeting of the COE on SAFTA concluded in Kathmandu on 3 September 2005 10 th Meeting of the COE on SAFTA concluded in Kathmandu on 3 September 2005 Finalization of four outstanding issues which are : Finalization of four outstanding issues which are : Sensitive Lists Sensitive Lists SAFTA Rules of Origin SAFTA Rules of Origin Establishment of Mechanism for Compensation of Revenue Loss for LDCs Establishment of Mechanism for Compensation of Revenue Loss for LDCs Technical Assistance to LDCs Technical Assistance to LDCs 11 th Meeting of COE on 18-19 October 2005 in Islamabad, Pakistan 11 th Meeting of COE on 18-19 October 2005 in Islamabad, Pakistan Followed by Meetings of Commerce Secretaries (Islamabad, 20-21 October 2005) and Commerce Ministers (Islamabad, 22 October 2005) to review the progress Followed by Meetings of Commerce Secretaries (Islamabad, 20-21 October 2005) and Commerce Ministers (Islamabad, 22 October 2005) to review the progress Trade Liberalisation Programme – gradual reduction in Tariffs Trade Liberalisation Programme – gradual reduction in Tariffs India, Pakistan and Sri Lanka to reduce their tariff to 0-5% for LDCs (Bangladesh, Bhutan, Maldives and Nepal) by 1.1.2009 India, Pakistan and Sri Lanka to reduce their tariff to 0-5% for LDCs (Bangladesh, Bhutan, Maldives and Nepal) by 1.1.2009 LDCs to reduce their tariff to 0.5 % by 1.1.2016. LDCs to reduce their tariff to 0.5 % by 1.1.2016.

9. 9 TWELFTH SAARC SUMMIT

10. 10 Trade Facilitation: Draft SAARC Agreements to be signed shortly SAARC Agreement on Mutual Administrative Assistance in Customs Matters (Draft finalised) SAARC Agreement on Mutual Administrative Assistance in Customs Matters (Draft finalised) Agreement on Establishment of SAARC Arbitration Council (Draft finalised) Agreement on Establishment of SAARC Arbitration Council (Draft finalised) SAARC Limited Multilateral Agreement on Avoidance of Double Taxation and Mutual Administrative Assistance in Tax Matters (Draft Finalised) SAARC Limited Multilateral Agreement on Avoidance of Double Taxation and Mutual Administrative Assistance in Tax Matters (Draft Finalised) SAARC Agreement on Promotion and Protection of Investments SAARC Agreement on Promotion and Protection of Investments (Fifth Meeting of the Sub-Group on Investment and Arbitration is scheduled to be held at the SAARC Secretariat, Kathmandu on 5-6 October 2005) (Fifth Meeting of the Sub-Group on Investment and Arbitration is scheduled to be held at the SAARC Secretariat, Kathmandu on 5-6 October 2005) All above SAARC Agreements are expected to enter into force on 2006. All above SAARC Agreements are expected to enter into force on 2006.

11. 11 NTMs Definition of Non-Tariff Measures in SAFTA Agreement: Definition of Non-Tariff Measures in SAFTA Agreement: Non-tariffs measures include any measure, regulation or practice other than “tariffs” and “para-tariffs”. Non-tariffs measures include any measure, regulation or practice other than “tariffs” and “para-tariffs”.

12. 12 NTMs in SAFTA Agreement Article 7 The Contracting States shall notify the SAARC Secretariat all non- tariff and para-tariff measures to their trade on an annual basis. The notified measures shall be reviewed by the Committee of Experts, established under Article 10, in its regular meetings to examine their compatibility with relevant WTO provisions. The Committee of Experts shall recommend the elimination or implementation of the measure in the least trade restrictive manner in order to facilitate intra-SAARC trade. The Contracting States shall notify the SAARC Secretariat all non- tariff and para-tariff measures to their trade on an annual basis. The notified measures shall be reviewed by the Committee of Experts, established under Article 10, in its regular meetings to examine their compatibility with relevant WTO provisions. The Committee of Experts shall recommend the elimination or implementation of the measure in the least trade restrictive manner in order to facilitate intra-SAARC trade. The initial notification shall be made within three months from the date of coming into force of the Agreement and the COE shall review the notifications in its first meeting and take appropriate decisions. The initial notification shall be made within three months from the date of coming into force of the Agreement and the COE shall review the notifications in its first meeting and take appropriate decisions. Contracting Parties shall eliminate all quantitative restrictions, except otherwise permitted under GATT 1994, in respect of products included in the Trade Liberalisation Programme. Contracting Parties shall eliminate all quantitative restrictions, except otherwise permitted under GATT 1994, in respect of products included in the Trade Liberalisation Programme.

13. 13 Garment Importers shy away from Nepal Garment Importers shy away from Nepal Three leading importers in USA have not placed any order for importing garments from Nepal for the last six months saying that Nepal is no more a reliable source of supply. Three leading importers in USA have not placed any order for importing garments from Nepal for the last six months saying that Nepal is no more a reliable source of supply. 80% of Nepal’s export of garments is absorbed by USA. 80% of Nepal’s export of garments is absorbed by USA. For the last two years when US pledged duty and quota free market access to African suppliers, Nepal has been losing competitiveness in the US Market. For the last two years when US pledged duty and quota free market access to African suppliers, Nepal has been losing competitiveness in the US Market. Since the expiry of quota regime in January 2005, the rate of export decline has further climbed to an average of 40 per cent. Since the expiry of quota regime in January 2005, the rate of export decline has further climbed to an average of 40 per cent. This has threatened the Nepali industry greatly. Garment sector is the largest foreign exchange earner and employs over 50,000 people in Nepal. This has threatened the Nepali industry greatly. Garment sector is the largest foreign exchange earner and employs over 50,000 people in Nepal. NTBs facing SAARC exports An example - Unofficial Embargo

14. 14 Protection Policies Nepal’s export trade depends upon few countries. USA and Germany are main export markets for readymade garments and carpets. Over 80% of Nepalese carpet export flows to Germany. If these countries adopt the protection policy for the upliftment or protection of ‘their own’ industries, the export trade of Nepal will degrade or reduce – leading to hardships to the Nepalese exporters in particular and to Nepal in general. Nepal’s export trade depends upon few countries. USA and Germany are main export markets for readymade garments and carpets. Over 80% of Nepalese carpet export flows to Germany. If these countries adopt the protection policy for the upliftment or protection of ‘their own’ industries, the export trade of Nepal will degrade or reduce – leading to hardships to the Nepalese exporters in particular and to Nepal in general. Therefore special and additional favourable measures need to be taken by the developed countries to encourage exports from Least Developed Countries like Nepal. Therefore special and additional favourable measures need to be taken by the developed countries to encourage exports from Least Developed Countries like Nepal.

15. 15 Customs Procedures Customs procedures in certain countries require use of only electronic methods for document submission and processing, appropriateness of the units of measurement for certain products like yarn, classification issues and very strict implementation of customs laws – minor transgression of which results in confiscation of the export from the SAARC region. Customs procedures in certain countries require use of only electronic methods for document submission and processing, appropriateness of the units of measurement for certain products like yarn, classification issues and very strict implementation of customs laws – minor transgression of which results in confiscation of the export from the SAARC region.

16. 16 Packaging requirement Jute and Jute products exported by Bangladesh to Canada Jute and Jute products exported by Bangladesh to Canada Fumigation of packaging using certain chemical Fumigation of packaging using certain chemical the chemical in question is banned due to social reasons the chemical in question is banned due to social reasons

17. 17 Anti-dumping actions have been reported for textiles, engineering and electronic hardware as non-tariff barriers adversely affecting exports, in the EC. These NTBs are also reported in respect of steel items in the US market. Solutions suggested include (a) defining the basis for computation of domestic prices; (b) decreasing the frequency of initiating anti-dumping investigations; and (c) preferential treatment to developing and least developed countries. It is however noted that anti-dumping and countervailing actions taken in accordance with the provisions of the WTO agreements are generally not regarded as NTBs but as admissible trade defense measures. Anti-dumping and subsidy matters are also subjects of ongoing negotiations in the WTO and submissions have been made in the relevant negotiating groups by the concerned SAARC Member States. ANTI-DUMPING & COUNTERVAILING ACTIONS

18. 18 Standards i.e. SPS and TBT Measures have been reported as the most prevalent NTB. Issues include stringency; non-harmonization of standards, frequent changes; complicated and expensive testing procedures; testing and certification only in the country of import; destruction of contaminated cargo; etc. etc. Technical Regulations

19. 19 Some NTBs affecting exports of SAARC Countries Anti-Dumping/ CVD Action Implementation of the Agreement on Textiles and Clothing Charges on Imported Goods Customs Procedures Bilateral Discriminatory Import Restriction Minimum Import Price Market Labeling Practice Non-Governmental Restrictions Price Control Port Restriction Quantitative/ Marketing Restrictions Rules of Origin Preferential access Technical Regulations Packaging Requirements etc

20. 20 Basic Principles Transparency Transparency Simplification Simplification Non-discrimination Non-discrimination Due Process Due Process Cooperation Cooperation Consistency and Predictability Consistency and Predictability Communications & consultation Communications & consultation Protection and Compliance Protection and Compliance Standardization Standardization

21. 21 Constraints Restrictive Trade Policies Restrictive Trade Policies Strict rules of origin criteria Strict rules of origin criteria Lack of information Lack of information Resource constraints Resource constraints Non-availability of exportable surpluses of desired specifications Non-availability of exportable surpluses of desired specifications High cost of production High cost of production Imbalances in trade Imbalances in trade Lack of standardization of documentation and complexity of procedures etc Lack of standardization of documentation and complexity of procedures etc Lack of transparency Lack of transparency

22. 22 Tariff Measures vs NTMs Tariff is imposed on MFN basis while NTMs are imposed on a case-by-case-basis. Tariff is imposed on MFN basis while NTMs are imposed on a case-by-case-basis. This possibility of discrimination in application of NTMs raises the possibility of trade diversion This possibility of discrimination in application of NTMs raises the possibility of trade diversion Tariff is a transparent instrument while the NTMs are mostly not only opaque and volatile but also operate through a maze of administrative measurements. Tariff is a transparent instrument while the NTMs are mostly not only opaque and volatile but also operate through a maze of administrative measurements. It seems that NTMs are more than just ‘sand in the wheels’. It seems that NTMs are more than just ‘sand in the wheels’.

23. 23 Standing Group on Standards, Quality Control and Measurements Three Meetings held so far. Three Meetings held so far. Third Meeting was held in New Delhi on 18-19 May 2004. Importance of adopting uniform standards was underlined. Third Meeting was held in New Delhi on 18-19 May 2004. Importance of adopting uniform standards was underlined. The Fourth Meeting is scheduled to be held in Islamabad shortly. The Fourth Meeting is scheduled to be held in Islamabad shortly.

24. 24 Measurements, Accreditation, Standards MOU signed with PTB - German Metrology Institute MOU signed with PTB - German Metrology Institute inter-comparisons in the SAARC Region for the standards of Mass, Length and Temperature. inter-comparisons in the SAARC Region for the standards of Mass, Length and Temperature. Pilot Laboratory for Mass Standard would be National Physical and Standards Laboratory (NPSL), Pakistan, whereas for Length and Temperature, it would be National Physical Laboratory (NPL), India. Pilot Laboratory for Mass Standard would be National Physical and Standards Laboratory (NPSL), Pakistan, whereas for Length and Temperature, it would be National Physical Laboratory (NPL), India. Sharing of facilities in Metrology & Testing among SAARC Countries – to be uploaded on the website of NPSL, Pakistan based on data provided by Standards Bodies in Members in a common questionnaire prepared and circulated by India. Sharing of facilities in Metrology & Testing among SAARC Countries – to be uploaded on the website of NPSL, Pakistan based on data provided by Standards Bodies in Members in a common questionnaire prepared and circulated by India. PTB (Measurement) PTB (Measurement) European Commission European Commission (Regional Standards Body) (Regional Standards Body) UNIDO (Capacity Building) (MOU in the process) UNIDO (Capacity Building) (MOU in the process)

25. 25 SAARC Common position on NTBs at WTO Ministerial Conferences “Reject the new forces of protectionism that are disguised as concerns about the environment, social conditions, labour standards, and all other forms of non-tariff barriers’” These are not trade related issues and should be kept out of the multi-lateral trading system. “Reject the new forces of protectionism that are disguised as concerns about the environment, social conditions, labour standards, and all other forms of non-tariff barriers’” These are not trade related issues and should be kept out of the multi-lateral trading system. “The Uruguay Round negotiations did not result in greater market access for the exports of developing and least developed countries as was expected, due to the existence of ‘tariff peaks’, the phenomenon of tariff escalation, and the use of non-tariff barriers in respect of products of export interest to the developing and least developed countries. Action should be taken to ensure effective market access for the exports of these countries.” “The Uruguay Round negotiations did not result in greater market access for the exports of developing and least developed countries as was expected, due to the existence of ‘tariff peaks’, the phenomenon of tariff escalation, and the use of non-tariff barriers in respect of products of export interest to the developing and least developed countries. Action should be taken to ensure effective market access for the exports of these countries.” Least developed countries should be granted duty-free and quota-free access on an autonomous basis for their exports by the developed countries. These should be exempt from antidumping duties, safeguard action and non-tariff barriers. Least developed countries should be granted duty-free and quota-free access on an autonomous basis for their exports by the developed countries. These should be exempt from antidumping duties, safeguard action and non-tariff barriers. SAARC Commerce Ministers (Islamabad, October 2005) would also be adopting SAARC Common position on all issues, including NTBs, for submission to the forthcoming Sixth WTO Ministerial Conference to be held in Hong Kong in December 2005. SAARC Commerce Ministers (Islamabad, October 2005) would also be adopting SAARC Common position on all issues, including NTBs, for submission to the forthcoming Sixth WTO Ministerial Conference to be held in Hong Kong in December 2005.

26. 26 Private Sector in SAARC SAARC Chamber of Commerce and Industry (SCCI) is also actively involved in forming a collective strategy to face NTMs and disseminating awareness among the SAARC business community in this regard SAARC Chamber of Commerce and Industry (SCCI) is also actively involved in forming a collective strategy to face NTMs and disseminating awareness among the SAARC business community in this regard www.saarcchamber.com www.saarcchamber.com www.saarcchamber.com

27. 27 Task ahead for seeking reduction/elimination of NTBs for encouraging and facilitating export products of Developing and Least Developed Countries Identification Identification Collection Collection Compilation Compilation Classification Classification Codification Codification Quantification Quantification Tariffication Tariffication NTBs Vs NTMs NTBs Vs NTMs Reduction and Elimination Reduction and Elimination

28. 28 UNCTAD Announcement by the UNCTAD Secretary-General of his intention to establish an informal Group of Eminent Persons to examine the whole issue of NTBs is a timely step in this regard. We all welcome it. Announcement by the UNCTAD Secretary-General of his intention to establish an informal Group of Eminent Persons to examine the whole issue of NTBs is a timely step in this regard. We all welcome it. SAARC Secretariat will be happy to cooperate and collaborate with UNCTAD and endeavour to provide all required information and data in respect of SAARC Member States as per MOU signed between SAARC and UNCTAD. SAARC Secretariat will be happy to cooperate and collaborate with UNCTAD and endeavour to provide all required information and data in respect of SAARC Member States as per MOU signed between SAARC and UNCTAD. Thank you !

29. 29 Subash C. Sharma Economic, Trade & Energy Division PO Box 4222 Tridevi Sadak KathmanduNepal Tel : 009771-4221692 & 4221785 Fax : 009771-4227033 & 4223991 E-mail: scsharma@saarc-sec.org scsharma@saarc-sec.org Thank You !