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CENTRE FOR POLICY DIALOGUE (CPD)CENTRE FOR POLICY DIALOGUE (CPD)B A N G L A D E S HB 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 ka c i v i l s o c i e t y t h i n k t a n kt a n k

Presentedby

KhondakerGolam Moazzem

Research Fellow, CPD

Katmandu;August 14 -15, 2006

SAFTA

(TradeLiberalisationProgramme - Non Tariff Barriers)

Final MeetingonFinal MeetingonRegional Economic Cooperation in South AsiaRegional Economic Cooperation in South Asia


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ContentsContents

I.I. Smooth Functioning of SAFTA: Major ChallengesSmooth Functioning of SAFTA: Major Challenges

II.II. NTBs: A Major Concern WorldwideNTBs: A Major Concern Worldwide

IV.IV. NTBs Applied by South Asian CountriesNTBs Applied by South Asian Countries

V.V. NTBs Facing by South Asian Countries within theNTBs Facing by South Asian Countries within theRegionRegion

VI.VI. Removing NTBs: Lessons from AFTARemoving NTBs: Lessons from AFTA

III.III. NTBs: Experience of Developing CountriesNTBs: Experience of Developing Countries

VII.VII. ConclusionConclusion


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I. Smooth Functioning of SAFTA: Major ChallengesI. 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, 2006.

The pace of tariff liberalization finalised under the SAFTA

Agreement is much slowerthan the one proposed in the GEP

Report, perhaps reflecting the current state of affairs in

termsof economic cooperation in the region.

It needs to be recognized that the establishment ofan FTA is not

likelyto automatically lead to economic gains.

Much depends on how the Agreement is crafted, how it is

able to caterto and reconcile the often conflicting interests

and concerns of member countries, and most important ofall, 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

opportunitiesinto actual gains.


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SAFTA Framework Agreementrefers to such measures as

Harmonisation of standards, reciprocal recognition of testsand accreditation;

Harmonisation ofcustoms clearance and customscooperation;

Transitfacilities, particularly for land-locked contractingstates;

Removal ofbarriers to intra-SAARC investments;

Developmentofcommunication system and transportinfrastructure;

Rules of fair competition and promotion of venture capital,simplification of procedure forbusinessvisas.

I. Smooth Functioning of SAFTA: Major ChallengesI. Smooth Functioning of SAFTA: Major Challenges(contd)(contd)

These measures indicate elimination of non-tariffbarriers (NTBs)will be a major trade task in order to enhance intra-regional

trade in South Asia.


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y It is found that market access barriers faced by developing country

exporters are not decreasing underthe liberalised trade regime forsome oftheirmost importantexport sectors.y LDCs are especiallyatrisk.

y Recent research by ITC based on Market Access Map shows thatthree hardles are blocking the track to bettermarket access.y First, specific tariffs are widespread. They are less transparent

than ordinary (ad valorem) tariffs and they tend to discriminateagainst the developing countries.

y Second, commodit y prices have plummeted. If tariffs were advalorem, the duties actually paid would have declined with theprices. Since specific tariffs are so importantespecially forcommodities in practice, developing countries and LDCs arewitnessing an effective rise in protection.

y Third, non-tariff barriers (food safety standards, environmentalcertification etc.) are growing in case of LDCs, they areparticularly dramatic.

II. NTBs: A Major Concern WorldwideII. NTBs: A Major Concern Worldwide

y A staggering 40% of LDC exports are subject to non-tariffbarriers. For developing and transition economies and developed

countries, the figure is only 15%.


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y Even with preferential agreements that grant LDCs duty-free

access to markets, non-tariff barriers ma y prevent thesecountries from entering those markets.

y In fact, between 1996 and 2001, the share of duty-free LDCexports in their total exports-excluding oil and arms-fellsharply from 81% to 69%. This has hardlybeen in line with thespirit ofthe Uruguay Round.

II. NTBs: A Major Concern WorldwideII. NTBs: A Major Concern Worldwide (contd)(contd)

y According to UNCTADs TCMCS/TRAINS, technical measures aswell as quantitative measures increased considerably during theperiod 1994-2004.

y The nature ofmost NTBs as actuallyapplied, however, changed.

y Core measuresmeant to protect local producersdeclined.

y Non-core measureslargely intended to protect localconsumersincreased.

y Among non-core measures, the use of technicalmeasures increased, which suggests that behind-the-border measures will likely become the dominant

means for restraining trade in the future.


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y By the end of November 2005, about 40 WTO member States had

submitted around 250 notifications/proposals on NTBs78% of whichwere notifications by developing countries.

y Ofthe notificationsor proposals, majorconcerns are:

y Customs and administrative entry procedures(32.5%)

y Technical barriers to trade (21.9%)

y Specific limitations, such as requirements formarking, labelling &packaging, quantitative restrictions, and exportrestrains (25%)

II. NTBs: A Major Concern WorldwideII. NTBs: A Major Concern Worldwide (contd)(contd)

y On a sectoral basis, the top five sectors affected by NTBs are:

y Chemicals (11.5%)

y Machineryand equipment(9.2%)

y Textiles and clothing (9.2%)y Motor vehicles and parts(7.3%)

y Fish/fishery products(6.1%)

y The results of OECD surveys with the business communities in several

developed and developing countries (in 1995-2002) suggest that

natural resource-based industries are most stronglyaffected by NTBs.


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III. NTBs: Experience of Developing CountriesIII. NTBs: Experience of Developing Countries

y Developing countries confront different types of NTBs whenaccessing different markets.

y In markets of developed countries, developing countriesoften face NTBs, such as conditions regarding technicalspecification of products, price controls and other NTBmeasures.

y In South-South trade, developing countries confront NTBssuch as customs and administrative entry procedures,para-tariff measures (for example, import surcharges andotheradditional charges), as well as other obstacles, suchas poor infrastructure, measures taken to protectintellectual property rights and inadequate governance.

y In this sense, the scope of NTBs becomes even wider intrade among developing countries. In general, exportproducts of interest to developing countries, such asfisheries products, electrical equipment, pharmaceuticaland textiles are more affected b y NTBs than other

products.


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y In many developed countries, regulatory policy focuses on protectionof the environment, public health and safetyand often includes higherstandards for the domestic market than existing internationalstandards.

y 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 residuesforagricultural imports, instead of its own standards.y Overall, it is estimated that at least 10 percent of export losses

ofall developing countries arise from SPS/TBT related measures.

III. NTBs: Experience of Developing CountriesIII. NTBs: Experience of Developing Countries (contd)(contd)

y Technical barriers have become a key concern regarding marketaccess. Annual notifications of new technical barriers to GATT/WTO

increased steadily from a dozen ortwo in the early1980s to over400 in1999.

y Low- and middle-income countries reported that over the periodfrom 199699 more than 50 percent of their potential exports offresh and processed fish, meat, fruit and vegetables into the EUwere prevented by their inability to comply with SPSrequirements(OECD, 2001b).


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y 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 maybe captured byspecial interests, particularly

when regulatory processes are not transparent.

III. NTBs: Experience of Developing CountriesIII. NTBs: Experience of Developing Countries(contd)(contd)

y From the above, one important challenge forthe current WTOmultilateral negotiations is to allow Governments to achievetheir genuine regulatory objectives while preventingprotectionist abuses.

y Another challenge for the multilateral negotiations is toensure that NTB rules in RTAs (both North-South and South-South) are coherent and compatible with the relevant WTOmultilateral rules and disciplines.


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y It cannot be denied that developing countries need to take steps toimprove their legal and regulatory environment to support theparticipation of their national firms in international markets andenhance theircompetitiveness. Product standards and domestic sectorregulations are areas that require attention.

y The modernization of standards systems, including institutions andinfrastructure forcertification, is essential for operating in the currentglobal trade environment.

y Meeting international standards forquality, safety, health, environmentand consumer protection is increasingly becoming a precondition forcompeting in international markets. It has also become a major factorconstraining many exporters, particularly in the LDCs, from benefitingfully from preferential access initiatives.

y Technical assistance for raising capacity to comply with regulationsand standards should also be strengthened.

y The participation of developing countries in international standardsetting activities should be facilitated.

y Finally, the promotion of mutual recognition agreements (MRAs)between developed and developing countries, as well as amongdeveloping countries, will also help substantively in reconcilingfrictions and disputes caused by different regulations between tradingpartners and lead to large cost savings for exporting firms worldwide.

III. NTBs: Experience of Developing CountriesIII. NTBs: Experience of Developing Countries(contd)(contd)


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IV. NTBs Applied by South Asian CountriesIV. NTBs Applied by South Asian Countries

India ImportLicensing

y India has eliminated its import licensing requirements for mostconsumer goods. Importers of vehicles of any type facerestrictive and trade-distorting import practices.

y India continues to maintain a negative import list. The negativelist is currently divided into three categories: (1) banned orprohibited items; (2) restricted items which require a non-automatic import license and (3) "canalized" items importableonly by government trading monopolies subject to cabinetapproval regarding timing and quantity.

y

India has liberalized many restrictions on the importation ofcapital goods. The government allows imports of all second-hand capital goods by the end-users without requiring animport license, provided the goods have a residual life of fiveyears.

Country Issues Description


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India CustomsProcedures

y Indian Customs requires extensive documentation, whichinhibits the free flow of trade and leads to frequentprocessing delays. In large part these delays are aconsequence of Indias complex tariff structure and multiple

exemptions, which may vary according to product, user, orspecific Indian export promotion program.

y India introduced a reference price system for soybean oil inSeptember 2002 to address alleged under-invoicing.

y Certain customs procedures impede importation of

automotive products. Motor vehicles may be importedthrough only three specific ports and only from the countryof manufacture. Declared transaction values of automotiveproducts may be rejected, insofar as legitimate reductions inthe wholesale price of such products are ignored.

IV. NTBsApplied by South Asian CountriesIV. NTBsApplied by South Asian Countries(contd)(contd)

Country Issues Description


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India Standards,Testing,LabelingandCertification

y The GOI has identified 109 specific commodities that the BISmust certify before the products are allowed to enter thecountry. A system now exists by which foreign companies canreceive automatic certification for products made outsideIndia provided BIS has first inspected the production facility.

y In 2004, Indian Customs began to require registration or an

exemption certificate for imported boric acid. The Ministry ofAgriculture's Central Insecticides Board and RegistrationCommittee has not yet published criteria and procedures forobtaining this documentation.

y India's procedures for establishing emissions standards arenon-transparent. Even the latest low-emission technology

used by developed country-manufacturers fails to meet India'srequirements.

y In 2001, India banned textile and apparel imports that containcertain dyes. In January 2004, the GOI relaxed its textile-testing requirement by announcing that it would accept, asproof of the absence of azo-dye, certification that the

exporting country had banned azo-dyes in textiles.

IV. NTBs Applied by South Asian CountriesIV. NTBs Applied by South Asian Countries(contd)(contd)


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India Sanitary and

Phytosanitary(SPS)Measures

y In 2003, the Ministry of Health implemented amendments under

its PFA Act which could potentially restrict Indian imports ofseveral agricultural products. In addition, at the end of 2003, theMOA issued a set of new phytosanitary regulations andquarantine requirements for imports of agricultural products.GOI implementation of these measures prior to notifying them tothe 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 nonagriculturalproducts.

y The Indian government has implemented several sanitaryrestrictions, which do not appear to coincide with the Office ofInternational Epizootics (OIE) and CODEX recommendations.Such restrictions have affected Indian imports of poultry andpoultry products, and pet food and dairy products.

y The GOI reports that it is currently reviewing its policy forevaluating the safety of biologically engineered foods. In 2002,the Genetic Engineering Approval Committee (GEAC),conditionally approved the import of refined soy oil and crudede-gummed soy oil. It declined to consider importation of a corn-

soy blend (CSB) without a special certification.



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India Other

barriers

y 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.

y 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 governments 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.

y Indias implementation of its antidumping regime has raised concerns inkey 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.



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Pakistan Importpolicies

y Pakistans trade policy in 2005 continued to ban the import of 30items, mostly on religious, environmental, security, and healthgrounds. Effective July 1, 2005, Pakistan further reduced duties onimported automobiles to between 50% and 75% from the previousrange of 75% to 150%. The government exempted all domesticallyproduced pharmaceutical related inputs from its General Sales Tax(GST). Imported pharmaceutical inputs subject to a 10% customsduty are also exempt from payment of GST.

y In January 2000, the Pakistani government began implementing atransactional valuation system, pursuant to which 99% of importvaluation is based on invoice value, in accordance with the WTO'sCustoms Valuation Agreement. A number of traders in food andnonfood consumer products, however, report experiencingirregularities and deviations in the application of that system.

y A U.S. freight forwarding company reported in 2005 that Pakistanimposed a new SRO requiring that the commercial invoice and thepacking list must be included within a container. This practice isdifficult in situations when shipments originate from a locationthat is different from where the invoice and packing list arecreated; when, for security, invoices are created after theshipment departs; or when several companies are involved.



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Pakistan Standards,Testing,Labeling,andCertification

yAs of June 30, 2005, Pakistan Standards and QualityControl Authority (PSQCA) had established over 21,000standards (including 15,500 ISO standards) foragriculture, food, chemicals, civil and mechanicalengineering, electronics, weights and measures, andtextile products. However, no new standards wereapproved in 2005.

yTesting facilities for agricultural goods are inadequateand standards are inconsistently applied. Generally,however, foreign exporters have not reported problemsdue to the restrictive application of SPS orenvironmental standards.

yPakistan approved biosafety guidelines and rules inApril 2005, but the action plan to implement theseguidelines is still pending. At present Pakistan haspermitted the import of biotech soybeans. The delay inthe implementation of biosafety guidelines, however,has impeded the introduction of other biotechnologyproducts.


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SriLanka

ImportPolicies

y Import tariffs and other import charges: Currently, there are 5 tariffbands of 0 percent, 2.5 percent, 6 percent, 15 percent, and 28 percent.Textiles, pharmaceuticals, and medical equipment are free of duty. Basicraw materials are generally assessed a 2.5 percent duty. Semi-processed raw material tariffs are 6 percent, while intermediate producttariffs are 15 percent. Most finished products are at 28 percent. Thereare also a number of deviations from the five-band tariff policy (Tobaccoand cigarette). In addition, there are specific duties on certain items,including footwear, ceramic products, and agricultural products. Importsfor export industries enter duty free.

y Ex port Development Board (EDB) Levy: In November 2004, the SriLankan government introduced a new additional tax on a range ofimports identified as non-essential. The EDB levy is applied on C.I.Fvalue, and ranges from 10 percent to 20 percent.

y Import prices are increased by 7 percent (by adding an imputed profitmargin) when calculating the VAT and excise duty.

y According to U.S. trade data, the total value of imports affected by theEDB will be about $5 million out of a total of about $143 million annualU.S. exports to Sri Lanka. The total effect on U.S. exports could be muchhigher, while calculating U.S.-sourced products sent via other trading

hubs.



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Sri

Lanka

Import

Licensing

y 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 0.1percent fee of the import price to receive an import license.

CustomsBarriers

y The Government of Sri Lanka implemented the WTO Customs ValuationAgreement in January 2003 and follows the transaction value methodto determine the C.I.F. value. Customs is also in the process ofinstalling an Electronic Data Interchange (EDI) system to support anautomated cargo clearing facility. When implemented, this system

should improve customs administration and facilitate trade.

Standards,Testing,Labeling,andCertification

y There are 85 items that come under the Sri Lanka Standards Institution(SLSI) mandatory import inspection scheme. These importers have toobtain a clearance certificate from the SLSI to sell their goods. SLSIaccepts letters of conformity from foreign laboratories, but retains thediscretion to take samples and perform tests.

y The Ministry of Health has drawn up a draft law to regulate the import

of GM food. Some large foreign food exporters have expressed concernabout this proposed regulation, which is thought to be excessive andcould hinder exports of US brands to Sri Lanka.

y A new labeling and advertising regulation came into effect from April01, 2004. New features of the latest regulations include the date ofmanufacture, the name or INS number of the food additives, claims thatare allowed and disallowed, etc.

y 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 dueto fears of Bovine Spongiform Encephalopathy (BSE).



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Bangla

desh

Import

Licensing

y Import licenses are not required for any imports into Bangladesh. However, in

addition to the standard LCA import procedure, a permit, clearance, priorpermission 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.

y 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.

y 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 thatthe consignment does not contain any banned items.

y 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.



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Bangla

desh

Standards,

Testing,Labeling, andCertification

Standards, testing, and certificationy

There are 1,612 standards in Bangladesh of which about 8% are compulsory.Testing and certification procedures for compulsory standards are the samefor domestic and imported products. Bangladesh has notified the WTO of itsacceptance of the Code of Good Practice of the WTO Agreement onTechnical Barriers to Trade.

y At present, some 36 Bangladeshi standards are identical to ISO standards,and another 15 are identical to IEC standards. Bangladesh has been amember of the ISO since 1974, but is not yet a member of the International

Electrotechnical Commission (IEC). The internationally equivalent standardsin Bangladesh are mostly voluntary.

y The adoption of ISO 9000 and ISO 14000 certification is regarded as anessential instrument for the Bangladeshi exporters to market their productsin foreign markets. So far, 25 companies have obtained ISO 9000 certificatesand two companies have obtained ISO 14000 certificates. Some 12companies have been awarded HACCP certificates.

y At present, there is no laboratory accreditation scheme in Bangladesh. While

there are no accredited Bangladeshi laboratories, there are somemultinational companies operating in Bangladesh whose certificates areaccepted in the country.

y Bangladesh does not as yet participate any bilateral or mutual recognitionagreements with its trading partners in the areas of standards, testing, andcertification. However, the Government is currently promoting suchinitiatives 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.



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Bangla

desh

Standards,

Testing,Labeling,andCertification

Labeling and packagingy All imports are required to carry a label indicating the country of origin.

The label must also indicate quantity, weight, measure, tradedescription, component materials, and date of manufacture/expiry.Bangla or English is permissible for labeling.

y For imports of food and beverages, the dates of manufacture and ofexpiry must be clearly printed. Marking of the ingredients andcomposition 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, andimport of non-fat dried milk must be in a bag or tin.

y For imports of pesticides and insecticides, labels must containinformation on the manufacture and ingredients, as well as warning,antidote, and direction for use, in Bangla.

Sanitary and phytosanitary standardsySanitary certificates and radioactivity test certificates are required for

imports of food and edible products. A sanitary certificate issued by thecompetent authority of the exporting country must indicate that thespecific product is free of injurious insects, pests, and diseases. TheBangladesh Atomic Energy Commission conducts radioactivity tests onsamples upon the arrival of food items, and issues a clearancecertificate for release of the items by the customs authority. Foreigncertifications of radioactivity test are also accepted in Bangladesh. All

expenses incurred for the tests are borne by importers.


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Bangladesh

Otherbarriers

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 behalfof a domestic industry. Provisional anti-dumping or countervailing duties,not greater than the margin of dumping or of the subsidy rates, may beimposed within 60 days of initiation and applied for a period of six months,extendable by three months.

y Final measures may be taken for a period of five years from the date ofimposition; however, the Government may renew the duty for a furtherperiod of five years, upon review, if it is believed that there would becontinued injury.

y Hitherto, there has been no investigation initiated on anti-dumping orcountervailing measures in Bangladesh. A number of local producers havecomplained that trade liberalization in recent years has helped foreign

suppliers to sell their products in Bangladesh. However, lack of technicalexpertise and financial resources both by the administration and industries,as well as lack of authenticated data essential for submission ofapplication, have made difficult to initiate investigations.

y A provision on safeguards was introduced in 1997 by amendments toSection 18 of the Customs Act, 1969. However, rules regarding impositionof safeguard measures have not yet been made.



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Maldives Registration,documentation,and customsclearance

y

Any entity or person, including non-nationals, may import goodscommercially for a registered business activity or outlet to sellimports, provided that it has a general import license from theMinistry of Trade and Industries.

y Since 25 May 2000, Customs has authorized registered users toaccess the customs declaration processing software system forprocessing 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 fromsubstantial importers are submitted electronically, either using EDIor floppy disc.

y The Maldives Customs Service inspects imports for clearance afterpayment of duty. All single-item consignment goods and direct-delivery cargo, such as river sand and cement, are released on arisk-assessed basis. About 25% to 30% of consignments of reliable

parties judged on past importing history are physically inspected.y There are no preshipment inspection (PSI) requirements. The

Maldives has commenced computerizing customs operations, andUNCTAD's ASYCUDA++ implemented during 2002,

y The Maldives has post-entry audit arrangements and importdeclarations are checked after release. Importers must pay theduties in full on shipments subject to valuation disputes while

seeking court relief. No system of security guarantees exists.



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Maldives Registration,documentation, andcustomsclearance

y The Maldives became a member of the WorldCustoms Organization in September 1995. While it isnot a member of the ATA Carnet System, similarprocedures and privileges are followed. The Maldivesis considering joining this system.

y The Maldives and other SAARC members haveapproved the Customs Action Plan to harmonize theapplication and simplification of customs proceduresand practices. This is to be achieved through theprogressive implementation of the Kyoto Conventionon Customs Procedures and developing acoordinated and cooperative approach to customs,including adoption of standardized forms andsimplified procedures.

y According to the authorities, the new customslegislation due to be passed in 2003 will be consistentwith the Kyoto Convention.


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Maldives Standards

and othertechnicalrequirements

Standards, testing, and certification

y There are no known Maldivian standards, and no formalmechanism exists on standards. Australian, United Kingdom,and United States standards are sometimes required.

y The Maldives, along with other SAARC members, has agreed toa Regional Action Plan on Standards, Quality Control andMeasurement aimed at identifying trade in products adverselyaffected by variations in national standards, and their

harmonization, including the prospects of developing regionalstandards.

y Efforts also include the promotion of mutual acceptability andrecognition of certification schemes and accredited testing.Initial focus is on agricultural and food products, buildingmaterials and household electrical appliances.

Sanitary and phytosanitary (SPS) requirementsy Imports of live animals, birds and plants require a phytosanitary

or sanitary certificate. The Maldives is not a member of theFAO's Codex Alimentarius, OIE, or IPPC.

Marking, labelling, and packagingy The Maldives has no special marking, labelling, or packaging

requirements.



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India CommunicationProblems

y Whenever there are disturbances at the Indo-Pak border, the mobileconnections are not operational.

Trade Logistics While road routes for trade between India and Pakistan are non-existent, railand air connectivity between the two countries has been erratic.

Differentproducts

y Indian entrepreneurs facing NTBs of their products like electronic items, jute goods, machinery, plastic goods, textile and chemical items inBangladesh.

Rice y There are about 600 varieties of rice are grown in India. These include bothbasmati and non- basmati rice. Sri Lanka, accepts up to 100% broken rice

(non-basmati).Transformers y In Sri Lanka, exporters require the KEMA4 certificate (ISO standards) even

though the product certified by several reputed third-party inspectionagencies 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 certificateis not very complex or expensive, it demands lot of time and effort, which isan irritant to exporters.

Cosmetics y Sri Lanka specifies registration in their country even if the Indian exporterhas registration in India. This registration is specific to Sri Lanka and is nota mandatory procedure for exports to other countries. Hence, thisaggravates the agony of the exporter especially while exporting to Sri Lanka

Mango pulp y In case of mango pulp export to Sri Lanka, Indian exporters are required toobtain a Health certificate from the Ministry of Health of Sri Lanka. This testis conducted in order to specify the exact contents of the product. This testis conducted over a period of 2 days and costs about Rs.5000- Rs.7000 per

consignment.

V. NTBs Facing by South Asian Countries within RegionV. NTBs Facing by South Asian Countries within Region


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India Textile

products

y Although most importing countries accept the quality certification from ISO

and Bureau Veritas, Sri Lanka asks for certification from its own agencies likeSri Lanka Standards Institution. This is a problem for Indian exporters as theyhave to get this certificate and incur the cost and the time even though theyhave an ISO certificate from a recognised agency in India.

Sanitaryware

y Sri Lanka does not accept products packed in straws. They demand that suchproducts be packed in 5-ply corrugated boxes. India does not manufactureenough 5-ply corrugated boxes to meet the existing demand. The prices are toohigh compared to the other countries. This actually increases the costs of thepackaging and affects the product pricing in the international market.

Others y Regarding the first category of barriers in Sri Lanka majority of the firms facedbarriers related to product standards. In the second category of barriersmajority of the firms felt there were barriers related to banks and tocompetition.

y Majority of the firms exporting to Sri Lanka disagreed that there was any kindof discrimination against them vis--vis other competitors.

y

Majority of the firms exporting to Sri Lanka stated that they incurred expensesbetween 0 and 5% of total sales revenue to meet standards.

Otherbarriers

y Many buyers in Sri Lanka demand under invoicing in order to save themselvesfrom import duties. This causes exporters undue harassment. Also Indianbanks like the State Bank of India do not confirm the LC issued by Banks ofThailand and most banks of Vietnam. Due to non-confirmation of the LCs theexporters are not able to take orders. On the other hand, some of the privatebanks like Citibank, HSBC do confirm the Letter of Credit.



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Pakistan Lack ofAdequateBankingRelations

y

Lack of banking facilities of each others bank is mentionedas a barrier to trade with Indiay Some Indian banks do not recognize L/Cs from all Pakistani

banks. Moreover payments through Asian currency union aredelayed.

CommunicationProblems

Whenever there are disturbances at the Indo-Pak border, themobile connections are not operational.

Trade Logistics While road routes for trade between India and Pakistan arenon-existent, rail and air connectivity between the twocountries has been erratic.

Stringentchecking

Pakistani consignment are subject to more stringentchecking and detailed security checks in India (e.g. PakistaniMolasses is allowed in 1 ton packs only because of securityreasons)

Closure of landroutes

Closure of land routes (Wagha, Khokrapar, and Ganda SinghWala (near Kasur) is also seriously hampering trade withIndia

Portcongestions

There is higher port congestions, higher port and demurragecharges, more paper work, and generally more issues oftrade and transport facilitation in Pakistan



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Bangladesh

Majorproducts

y India has imposed non-tariff restrictions on Bangladesh export items whichinclude biscuits, jam, jelly, fruit juice, soft beverage, vegetables, Jamdanisaree, jute, jute goods, and cement. India also imposed anti-dumping duty ondry cell battery exports.

Dye y In India, it is being tested for dyes in Lucknow instead of Kolkata.

Cement y India recently refused to allow cement export to its north-eastern states takingquality certification as a pretext. India has instructed its Customs officials tobar cement import from Bangladesh to Tripura state citing ground that theseexports have no quality certification of Bureau of Indian Standards (BIS).

Bangladeshi cement manufacturers have quality certification from appropriategovernment agencies such as Bangladesh Standard and Testing Institute(BSTI).

y It is not practical in any way that each and every Bangladeshi exporters willseek quality certificate from BIS to avail of export facility to Indian market.

Potato y India refused export of potatoes to Tripura last year citing health ground.Mizoram's attempts to buy some other merchandise have also failed in likesituations.

RMG y The Indian government had also raised duty on garment import fromBangladesh, which affected Bangladeshs export.

BISCertificate

y In order to obtain the BIS certificate, Bangladeshi companies in the firstshould apply, then the BIS inspectors will come to Bangladesh at thecompany's cost, make inspection, evaluate manufacturing process and qualityof products, and take data back to India for further evaluation.

y The final issue of quality certificate, if they do it at all, will take several months

if not some years.


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Bangladesh Pharmaceuticalproducts

Registration from Pakistan is very tough as theyrestricted import of Bangladeshi pharmaceuticalsby law to that country.

Jute yarn The BTC study (2003) noted that packagingrequirements, phyto-sanitary measures, special

certificate of origin, customs valuation, pre-shipment inspection requirements are restrictingthe export of jute yarn to India, Canada and othercountries.

Problems atcustoms point

Exporters face problems while exporting goods alsoto India. For example, lack of truck parking space,

unavailability of customs officials in time etc.

VisaRestrictions

Visas can be obtained only for specific cities priorto entry into Pakistan.


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Country Products NTBs

Nepal Tea yThere is a 100 per cent incidence of NTMs in exports of all types ofgreen and black tea to India and Pakistan. For Bangladesh and SriLanka, the incidence is zero per cent.

Honey y There is a 100 per cent incidence of NTMs in exports of naturalhoney to India and Pakistan. However, in the case of othercountries, the incidence is zero per cent.

Floriculture y There is a 100 per cent incidence of NTMs in exports of cutflowers, fresh and other to India. However, in the case of othercountries, the incidence is zero per cent.

MedicinalPlant

y There is a 100 per cent incidence of NTMs in exports of Liquoriceroots to Pakistan. However, the incidence is zero per cent in thecase of other countries.

y There is a 100 per cent incidence of NTMs in exports of Ginsengroots to Pakistan followed by China (25 per cent). However, theincidence is zero per cent in the case of other countries. And, forexports of other medicinal plants (121190) to India and Pakistan,there is a 100 per cent incidence of NTMs. However, the incidenceis zero per cent in other countries.

VegetableSeed Export

y There is a 100 per cent incidence of NTMs in exports of vegetableseeds to Pakistan. However, the incidence is zero per cent in thecase of other countries.


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SriLanka

Vanaspati At present, under the Free Trade Agreement (FTA) betweenSri Lanka and India, vanaspati can be imported from SriLanka at zero import duty, and without any quotarestriction.

As an offshoot of the FTA, about 2.7 lakh tonnes ofvanaspati have entered into the country from Sri Lankabetween September 2005 and March 2006.

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 ofthe product specification categories under the IndianCustoms law.


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Table: Selected Bangladeshi Products Facing NTBs in Indian Market, 1997

HS Code Product Name NTMs

30310 Salmon, Pacific, frozen, whole 100

30339 Flatfish except halibut, plaice or sole, frozen, whole 100

30376 Eels, frozen, whole 100

30379 Fish nes, frozen, whole 100

30410 Fish fillet or meat, fresh or chilled, not liver, roe 100

30420 Fish fillets, frozen 100

30520 Livers and roes, dried, smoked, salted or in brine 100

30549 Smoked fish & fillets other than herrings or salmon 100

30614 Crabs, frozen 100

30619 Crustaceans nes, frozen 100

50510 Feathers and down used for stuffing 100

50610 Ossein and bones treated with acid 100

60499 Foliage,branches, for bouquets, etc. - except fresh 100

70390 Leeks & other alliaceous vegetables, fresh or chilled 100

70910 Globe artichokes, fresh or chilled 100

70990 Vegetables, fresh or chilled nes 100

90230 Tea, black (fermented or partly) in packages < 3 kg 100

90240 Tea, black (fermented or partly) in packages > 3 kg 100

Source: Deb (2006), "Rules of Origin and Non-Tariff Barriers in AgriculturalTrade: Perspectives from Bangladesh and

Cambodia"



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VIVI.. RemovalRemoval ofof NTBsNTBs:: ExperienceExperience ofof AFTAAFTA

AFTA has taken different measures in order to removeNTBs 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 adatabase on all NTMs maintained by Member Countries;and the eventual elimination of unnecessary andunjustifiable NTBs.

With the effective realisation of AFTA, ASEAN MemberCountries are now placing more emphasis on theelimination of NTBs to trade, particularly with regard tothose that are associated with standards, technical

regulations, and conformityassessmentprocedures.


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In 2004, 82 standards on safety and electromagnetic compatibility(EMC) were completed with another 24 standards for electrical andelectronic equipment set for harmonisation before 2007.

Currently, a survey is being conducted to identify more standards forharmonisation to support the integration ofthe eleven prioritysectors.

Member Countries have indicated their acceptance of test reportsand/or product certifications under the ASEAN Sectoral MutualRecognition Arrangement for Electrical and Electronic Equipment(ASEAN EE MRA).

A regulated product that has been tested bya designated testinglaboratory or certified by a designated certification body canenterand be marketed in the importing Member Country without

being subject to furthertesting and certification.

Four testing laboratories and one certification body have beendesignated to provide testing and certification services under theASEAN EE MRA. Another five testing laboratories are undergoingverification processesfortechnical competence.

VIVI.. RemovalRemoval ofof NTBsNTBs:: ExperienceExperience ofof AFTAAFTA (contd(contd))


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ASEAN Member Countries have also agreed to work towardsthe harmonisation of regulatory regimes in the electrical andelectronics sectorby2010.

ASEAN Member Countries made considerable progress inimplementing the Agreement on the ASEAN Harmonised

Cosmetic Regulatory Scheme.

This agreement includes an MRA and the ASEAN CosmeticDirective, which lays down the requirements for cosmeticproducts marketed in ASEAN. Seven Member Countries haveindicated their readiness to implement the Directive on or

before 2008.

To support Member Countries to implement the Scheme, aseries oftechnical documents, guidelines and training moduleshave been developed, especially in the areas of goodmanufacturing practice and post marketing surveillance.



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ASEAN continued efforts to harmonise regulations in order tofacilitate trade in pharmaceuticals.

All Member Countries have indicated their readiness toimplement the ASEAN Common Technical Dossiers (ACTD) andthe ASEAN Common Technical Requirements (ACTR) on orbefore31 December2008.

The ACTD is part ofthe marketing authorisation applicationdossier that is common to all ASEAN Member Countrieswhile the ACTR is the set of written materials intended toguide applicants to prepare application dossiers in a waythat is consistent with the expectations of all ASEAN DrugRegulatory Authorities.

In addition, a series of guidelines forthe implementation of theACTR has been developed. ASEAN is also pur suing theharmonisation of labelling requirements for pharmaceuticals andis considering an MRA on Good Manufacturing PracticeInspection.



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Concerning prepared foodstuffs, four areas were identified for theharmonisation oftechnical requirements. These are food labelling; theimport export certification and registration procedure; foodfortification and GMO; and Hazard Analysis and Critical Control Point(HACCP) and Good Manufacturing Practices (GMP) Inspection andCertification. This harmonisation of technical requirements will pavethe way for future MRAs.

An ASEAN Common Requirements for Prepared-Packaged Productswas developed with the objective of eliminating technical barriers totrade associated with legal metrology regulations. A majorit y ofMember Countries have indicated their readiness to implement theharmonised requirements by December2008.

Overall, substantive work was taken to facilitate the integration oftheeleven prioritysectors. This includes the adoption of action plans onstandards, technical regulations and conformity assessments formedical devices, automotives, wood-based and rubber-based products,and traditional medicines and health supplements. A number ofareashave been identified forthe harmonisation of technical requirementsand regulations in these sectors. (ASEAN Annual Report, 2005)



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VII. Concluding Remarks: How to Remove NTBs?VII. Concluding Remarks: How to Remove NTBs?

The first step to eliminate NTBs is to make documentation ofall the NTBs currently applied b y South Asian countriesagainsteach other.

A committee can be set up for documentation andupdating the NTBs.

Find out the real NTBs practised in intra-regional trade. In orderto develop competitiveness, immediately harmonize

the regulatory regimesofmajor exportproducts.

Working on signing a Mutual Recognition Agreement forspecific categoriesof products.

Under one certification body, accredited testinglaboratories of different South Asian countries willwork on product certification.

In case of developmentoftesting process, standardizationsystem, labeling system etc., sufficienttechnical and financial

supportneed to be assured for LDCs.


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