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The Financial Express

Cooperation on NTMs in South Asia

| Updated: October 24, 2017 09:44:36


Cooperation on NTMs in South Asia

Non-Tariff Measures (NTMs) are rising across the world. It is like moving towards the opposite direction of tariff liberalisation and tariff elimination. Though all NTMs are not trade restrictive or curb the effort of trade liberalisation, there are a number of measures which are intended to contain imports from other countries. These measures ultimately turn into Non-Tariff Barriers (NTBs), Para-Tariff Barriers (PTBs) and also procedural obstacles. United Nations Conference on Trade and Development (UNCTAD) mentioned that developing countries are annually losing 10 per cent of their exports to the G-20 countries, the alliance of 20 major economies of the world, due to NTMs. According to the UNCTAD estimate, loss of exports are equivalent to some $23 billion as the developing countries failed to comply with NTMs in the major economies. It is not the developing countries alone which are sufferers, NTMs are causing trouble even to some members of G-20 group.
To be precise, NTMs are a set of rules and regulations or legitimate policy instruments which are sometimes used to protect health of people and environment of a country.  The measures are applicable for both trade and non-trade arenas. UNCTAD definition and classification of NTMs are globally used to determine whether any policy instrument is NTM or not.
In July this year, UNCTAD launched a comprehensive database on NTMs of 56 countries, covering 80 per cent of global trade. The database allows policymakers, businesses and researchers to search country- and product-base NTMs easily. Despite some limitations, this is the largest database on NTMs and the objective of the database is to increase transparency and understanding about regulations and trade control measures in different countries.
The database of the UN body under the Trade Analysis Information System (TRAINS) includes five countries of South Asia. These are: Afghanistan, India, Nepal, Pakistan and Sri Lanka. Three other countries of the region, Bangladesh, Bhutan and Maldives are excluded from the database. Nevertheless, there is a scope to continuously update the database.
MOVE IN SOUTH ASIA: Under the umbrella of South Asian Association of Regional Cooperation (SAARC), member countries have agreed to implement the South Asian Free Trade Area (SAFTA) by eliminating tariff barriers by 2016. They also agreed to establish a customs union and then an economic union in the region. But, member countries have failed to establish the proposed free trade area within the stipulated time.
Moreover, member countries of SAARC have gradually started to adopt and impose NTMs to each other. Thus, intra-regional trade in the region has not increased during the last 10 years. SAARC intra-regional trade, on average, is stagnant at 5.0 per cent of its global trade. According to statistics available with the International Trade Centre in Geneva, value of intra-regional trade in South Asia declined from $49.35 billion in 2014 to $46.51 billion last year.
NTMs in the South Asia has become a matter of growing concern. The positive side is that continuous efforts are now there to address the concern. The SAARC Trade Promotion Network (SAARC-TPN) has taken a long-term initiative to deal with the NTMs in the region. As a part of the initiative, all the leading chamber bodies of the SAARC countries (except Maldives) are now operating dedicated NTM desks. The desk officer is assigned to monitor NTMs on selected products and collect information on NTMs reported by the businesses of the country. After activating the NTM desk, the respective desk officers are now also closely working with the SAARC Chamber to exchange information among the different trade bodies of the region.  Some  NTMs have already been identified by the desks which are likely to appear as NTBs in the regional trade.  The first issue of NTM Bulletin, published by the SAARC Chamber few months ago, mentioned several examples in this regard.  
For example, Bangladesh has pointed out that sanitary and phyto-sanitary (SPS) standards imposed by India and related certification issues create problems for it to export processed food and agro-based products to its neighbouring country. There are no testing facilities at the Indian side of the borders which result in procedural delays. So, product quality gets degraded and shelf-life of the products is reduced.  Even, some consignments are damaged at the land customs stations. Though this is not a new problem, NTM desk placed the problem elaborately in a systematic manner.  
In a similar vein, Bhutan has pointed out that though the Bhutanese food and agriculture testing laboratory is accredited by the Indian authorities, the exporters need to produce a testing certificate from a laboratory of Kolkata that is certified under the Food Safety and Standard Regulation of India. So, Bhutanese exporters have to wait for a week or more at the Indian land customs stations. The NTM desk of Bhutan observes that the valid testing requirement (NTM classification A 82 or B 82 to ensure food safety) thus becomes a trade barrier, NTB, due to lack of coordination between Indian authorities or lack of adequate information dissemination at the border check points from the central authorities.  
Meanwhile, a policy advocacy strategy for intra-regional trade to deal with NTMs in South Asia has been launched. SARRC-TPN has published the policy advocacy paper for all the member countries with a uniform pattern for awareness build-up and information dissemination across the region. As a part of advocacy strategy, the policy advocacy group has already been formed in Bangladesh. Other countries are also in the process of forming such groups.
OUTCOME IS VITAL: While a series of initiatives are there, it is the outcome that is vital for the region. Removing or reducing NTMs is not the indicator of success. The ultimate objective is to get equipped to deal with the NTMs. It is because, the comprehensive nature of NTMs are applied to both local and foreign producers as a protection against health or environmental risks. Currently there is a growing concern on food safety and to ensure food safety, standards become stringent in many countries. But such measures may also affect trade and so their application is subject to regulation of the related agreements of the World Trade Organisation (WTO).
In fact, SPS and TBT (Technical Barriers to Trade) are two technical measures of NTMs under the classification of UNCTAD, and regulated by the WTO agreements. These two NTMs cover more than 90 per cent of all the NTMs. UNCTAD database shows that 56 countries of the world currently impose 38,504 NTMs. Of these, 17,485 are SPS and 14,015 are TBT measures. While, SPS are measures to protect human and animal health in general, TBT are technical regulations to ensure product standards.
NTMs create a dilemma: are these to protect human health or to reduce trade cost? Reduction of trade costs mean relaxation of NTMs. Again, human health safety requires stress on NTMs. The tricky thing is the interpretation of a particular NTM: is it trade restrictive or not? Devising some effective tools to detect its intention is now the biggest challenge for the South Asian countries in their efforts to deal with the NTMs.
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