Non -Tariff Barriers (NTBs) to trade in the Tripartite Region

Presentation at the RAME Conference Victoria Falls 18-20 June 2014 Helen Kenani (Trade Policy Expert) Email: [email protected]

www.comesa.int

Presentation Outline

 Introduction  Trade Liberalization in the Tripartite Region  Understanding NTBs  Argument For NTBs  An Overview of the Elimination of Non Tariff Barriers in EAC/COMESA/SADC  Efforts for Elimination of NTBs  Status of Negotiations on NTBs Annex 3 of the TFTA Agreement

Introduction

The three regional organizations (EAC,COMESA,SADC) have agreed to integrate their economies and two areas where such integration has advanced is

 

Trade Liberalization Investment Promotion

Trade Liberalization in the Tripartite Region

Main objective of the trade liberalisation programme is to create a single economic space in which there is free movement of goods, services, capital & labour.

Instruments used include:

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Tariff Reduction/Elimination

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Removal of Non-Tariff Barriers to Trade Regional experience in trade liberalization indicates that as tariffs are lowered over time, protectionist measures emerge in the form of Non Tariff Barriers.

Understanding NTBs

Non Tariff Barriers refer to the wide range of policy interventions other than Customs Duties (border tariffs) that affect and distort trade in goods, services and factors of production.

Non-Tariff Barriers are capable of nullifying benefits that accrue due to deepened trade liberalization despite Treaty provisions state across the region

Understanding NTBs Cont’d

Non Tariff Barriers have therefore become an important trade policy issue today because;

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They are capable of restricting trade,

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They are unpredictable and persistent

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They influence trade patterns and the free movement of goods and services within and across countries and regions.

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Add to the cost of the goods traded

Understanding NTBs - Arguments for NTBs

Non-tariff barriers that restrain trade are typically justified on four Main grounds, namely:

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To safeguard health, safety, and security of human beings, animals and plants, and against environmental pollution, generally classified under Sanitary and Phyto Sanitary (SPS) measures.(A 50c )

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To protect home industries and consumers(A 61)

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To safeguard national security

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To safeguard against revenue loss. However, such measures when legitimately applied through Notification comprise Non Tariff Measures. It is only when applied as protectionist barriers to trade, when such measures become NTBs.

Overview of the Elimination of Non Tariff Barriers in Tripartite Region

Legal Instruments that provide for the elimination of NTBs are enshrined in Articles 49 & 50 of the COMESA Treaty, 6 of SADC Trade Protocol and 75(5) and 13 of the EAC Treaty and Customs Union Protocol respectively.

The three RECs have agreed on Forum.

www.tradebarriers.org

common and comprehensive mechanisms of reporting, monitoring and eliminating NTBs including On-line Mechanism, Tripartite SMS tool as well as existing off-line modalities, TCM COMESA, SADC Trade Negotiating

Overview of the Elimination of Non Tariff Barriers in Tripartite Region

Institutional Arrangements and Responsibilities NTBs Focal Points (NFP)

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Informing Secretariat of reported NTBS through application of a common form to be used by importers and exporters

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Sensitization of stakeholders on the monitoring and evaluation mechanism and reporting tool including the online system

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Facilitating the immediate removal of NTBS by the imposing Countries and submission of the reports on their elimination based on the technical opinion submitted by the COMESA Secretariat.

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Facilitating Country missions by the Secretariat to resolve outstanding NTBs in a timely manner

Institutional Arrangements and Responsibilities National Monitoring Committees (NMCs) The National Monitoring Committees (NMCS) will be the national institutional structure aimed at facilitating NTB reporting, elimination/reduction, monitoring and feedback to business community. In summary, the NMCs will be responsible for:

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Defining the process of elimination

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Defining mandate and responsibilities

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Confirming deadlines for action

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Agreeing on recourse to non-action The National Focal Points will be restructured into National Monitoring Committees (NMCs), The NEPs will serve as the secretariat for the NMCs, under which technical assistance will also be factored in.

Prevalent NTBs

The most common sources of regional NTBs are:

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Customs Clearance Procedures (Administrative) Non Tariff fees/Transit fees (Administrative) Sanitary and Phyto-Sanitary Measures (SPS)/Standards (Health safety and environment) Technical Regulations (Health safety and environment) Import Regulations -licensing/quotas (Trade Policy) The NTB situation is characterised by great diversity in terms of the specific measures involved, the countries (and borders) where they are applied and the individual commodities affected, amongst other factors.

Prevalent NTBs Illustrated

Excise Dut ies 16% Impor t Reg 8%

Specific NTBS (25 reported cases)

Cust oms Clear ance Pr ocedur e ( Roo, PSI,et c) 44% SPS 12% Adm 12% TBT 8%

Effect of NTBs Illustrated

6, 000 5, 000 4, 000 3, 000 2, 000 1, 000 2002

E F F E C T S O F N T B S ( S t e e l t u b e s a n d p i p e s )

EFFECT S OF NT BS ( St ell t ubes an d pipes) 2003 2004 2005 2006

12, 000, 000 10, 000, 000 8, 000, 000 6, 000, 000 4, 000, 000 2, 000, 000 -

Effect of NTBs Illustrated

EFFECT OF NTBS (general imports) EFFECT OF NTBS (general imports) 2000 2001 2002 2003 2004 2005 2006

Status of Negotiations on NTBs Annex 3 of the TFTA Agreement

Annex 3 of the TFTA Agreement provides for the modalities of dealing with NTBs when the TFTA comes into force.

The Annex was deliberated by Technical Working Group (TWG) on NTBs and finalized and was adopted by the TTNF in January 2014.

It draws its provisions from the existing approaches and recognizes the on-line and sms reporting tools as well as the regional and national structures, NFPs, NMCs and calls upon all MS/PS to establish the structures and REC Secretariats NTB Units

Status of Negotiations on NTBs Annex 3 of the TFTA Agreement Cont’d

The Annex provides for Request and Response on a Specific NTB including time frames for such responses as follows:

The responding Tripartite Member/Partner State shall provide, within twenty (20) days, a written response containing all the information and clarification requested. Where the responding Member/Partner State considers that a response within this period is not practicable, it shall inform the requesting Member/Partner State of the reasons for the delay, together with an estimate of the period within which it will provide its response. In all cases it shall not exceed thirty (30) days from the date of receiving the request for information unless the parties mutually agree to extend the days

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Status of Negotiations on NTBs Annex 3 of the TFTA Agreement Cont’d

Where the information provided does not lead to a resolution of the NTB, there is a provision of a Facilitator with Tripartite Secretariat playing a coordination role.

While the Facilitator will have full flexibility to information necessary to aid in the resolution of a specific NTB, Confidentiality is of paramount importance and should strictly be kept. The obligation of confidentiality does however not extend to factual information already existing in the public domain.

Status of Negotiations on NTBs Annex 3 of the TFTA Agreement Cont’d

It is envisaged that there will be mutually agreed solutions to a specific NTB and that the offending MS/PS would be expected to implement the agreed solution.

However, in the event that the mutually agreed solution is not implemented, the Annex provides that: Where a Tripartite Member /Partner States fail to resolve an NTB even after the mutually agreed solution the reporting Tripartite Member /Partner State may resort to Article 39, Annex 14 of the Agreement establishing the COMESA, EAC and SADC Tripartite Free Trade Area

.(the main Article on Dispute Settlement).

Status of Negotiations on NTBs Annex 3

  

of the TFTA Agreement Cont’d

Transparency and Exchange of Information The Tripartite Secretariat shall circulate to Member/Partner States biannually, a status report of notified requests and responses and of ongoing and recently completed NTB resolution together with reports from Facilitators.

The Annex also provides for technical assistance by the Tripartite Secretariat and, or the Secretariats of COMESA, EAC and SADC, to promote their understanding of the use and functioning of these procedures, or the resolution of a NTB.

The Annex provides for the Review and Amendment on the effectiveness of the Mechanism to be done by the Tripartite Council not later than 3 years after its adoption.

Monitoring and Evaluation

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The Trade and Customs Committees/ Trade Negotiating Forum and Council of Ministers meetings/Trade Industry and Investment Committee.

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National Focal Points (NFPs)

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The National Monitoring Committees.

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On-line Mechanism

End of Presentation

Thank you for your attention Merci Pour Votre Attention!

Ahsante Shukrani