Transcript Obstacles to Trade from the Perspective of the Business Sector: A Cross-Country comparison Third Meeting of Trade Ministers of Landlocked Developing Countries By Mondher Mimouni,

Obstacles to Trade from the
Perspective of the Business Sector:
A Cross-Country comparison
Third Meeting of Trade Ministers of
Landlocked Developing Countries
By Mondher Mimouni, ITC
Ezulwini, Swaziland, 21-22 October 2009
Plan
• Obstacles to trade
Raising concern of the business sector
Trade costs
Empirical evidence
Types of obstacles
• ITC’s Project on non-tariff Measures
NTM classification
Official data collection
Survey of the business sector perceptions
• Conclusions
NTMs – Why important for ITC?
NTMs – Why important for ITC?
Definition of non-tariff measures (NTMs)
Several definitions exists.
Definition adopted by multi-agency team working on NTMs:
Non-tariff measures (NTMs) are policy measures, other than
ordinary customs tariffs, that can potentially have an economic effect
on international trade in goods, changing quantities traded, or prices
or both.
Difficult to make a distinguish between NTMs and non-tariff barriers.
Business sector is most concerned with the costs associated with NTMs
and related trade cost.
Trade costs composition (I/III)
Trade costs include all costs incurred in getting a good to a final user
other than the marginal cost of producing the good itself:
•transportation costs (both freight costs and time costs);
•policy barriers (tariffs and non-tariff barriers);
•information costs;
•contract enforcement costs;
•costs associated with the use of different currencies;
•legal and regulatory costs;
•local distribution costs (wholesale and retail).
Trade costs composition (II/III)
Estimate of the tax equivalent of representative trade costs for
industrialised countries is … 170%.
This number breaks down as follows (2.7=1.21*1.44*1.55):
21% transportation costs have to be added to
44% border related trade barriers, plus
55% retail and wholesale distribution costs.
The border related barrier is a combination of direct observation and
inferred costs.
Anderson and van Wincoop (2004)
Trade costs composition (III/III)
High transaction costs in trade are not simply analogous to high tariffs,
which arise from a single policy instrument and can be reduced by a
single action. High transaction costs are associated with interactions
among multiple layers of transport, infrastructure, policy, and geography,
often involving several countries. This means that trade facilitation
efforts targeted at a single point in the process can be easily
frustrated.
With the increased supply chains interdependency, imported products
delivery delays have turned into a severe constraint on production.
This is why customs clearance and delivery of imported products have
become a quite important determinant of the production process. That is
why Trade Facilitation has become a crucial aspect of trade policy.
Documents, time and cost for export and import
Documents Time to Cost to export Documents Time to
to export export (US$ per
to import
import
(number) (days) container)
(number)
(days)
LLDCs examples
Bhutan
Bolivia
Botswana
Burkina Faso
Burundi
Central African Republic
Chad
Ethiopia
Lesotho
Malawi
Mali
Niger
Swaziland
Uganda
Uzbekistan
Best practice economies
Denmark
France
Malaysia
Singapore
Developing economy
Egypt
8
8
6
11
9
8
6
8
6
12
9
8
9
6
7
38
19
31
45
47
57
78
46
44
45
38
59
21
39
80
1210
1425
2508
2132
2147
5121
5367
2087
1549
1671
2012
3547
2184
3090
3100
11
7
9
11
10
18
9
8
8
10
11
10
11
7
11
Cost to
import (US$
per container)
38
23
42
54
71
66
102
42
49
54
42
64
33
37
104
2140
1747
3064
3630
3705
5074
6020
2893
1715
2550
2902
3545
2249
3290
4600
3
439
15
823
5
2
2
450
6
14
World Bank, Doing Business Report 2009
737
6
Estimated Ad valorem Tariff Equivalent for
trade facilitation barriers in Egypt
Chahir Zaki (2009)
Cost
Rwandan coffee:
1,500 km to Mombasa
(up to 40% of total costs)
Uganda apparel:
transport costs add the
equivalent of an 80% tax on
clothing exports
West Africa shea butter producers:
high transport costs from poor
roads and vehicle repair costs
Unexpected detours increase costs
Source: N. Christ & M. Ferrantino(2009) (extracted from M. Ferrantino presentation Chile 2009)
Land Transport for Exports: The Effects of Cost, Time, and Uncertainty in Sub-Saharan Africa
Time
Kenya–Uganda border:
avg. 2 days to cross
Uganda–Rwanda border:
avg. 1 day to cross
CAR–Cameroon border:
up to 2 weeks to cross
In 2003, wait at Bietbridge
reached 6 days
Some West African corridors may
have roadblocks every 30 km
Unexpected detours increase time
Source: N. Christ & M. Ferrantino(2009) (extracted from M. Ferrantino presentation Chile 2009)
Land Transport for Exports: The Effects of Cost, Time, and Uncertainty in Sub-Saharan Africa
Road transport corruption:
Landlocked countries more affected
USAID (2009) West Africa Trade Hub
Developing Country Exports Decline in 2009
Decline in Imports from Developing Country Groups 2008-2009 (USD Billions)
Exporter
World
Imports Q1-2
2008
$ 5,584.2
Imports Q1-2
2009
$ 3,776.7
LDC
$ 61.2
$ 34.4
-43.8%
LLDC
$ 46.5
$ 23.4
-49.7%
SIDS
$ 66.5
$ 46.1
-30.8%
SSA
$ 137.2
$ 70.5
-48.6%
SVE
$ 55.7
$ 38.3
-31.2%
% Change
-32.4%
Decline in Imports from Developing Country Groups 2008-2009 (USD Billions) exl HS27
Exporter
World
LDC
LLDC
SIDS
SSA
SVE
Imports
Q1-2 2008
$ 4,566.3
$ 17.7
$ 16.0
$ 50.0
$ 49.7
$ 39.1
Imports
Q1-2 2009
$ 3,245.0
$ 15.3
$ 10.0
$ 36.6
$ 33.1
$ 28.9
% Change
-28.9%
-13.5%
-37.7%
-26.7%
-33.4%
-26.1%
Per Capita
Change*
$ -181
$ -3
$ -15
$ -232
$ -20
$ -38
Decline in Imports from Developing Country Groups 2008-2009 (USD Billions)
Importing countries: USA, EU27, Japan, Switzerland, China, Turkey, Australia; Period: Q1-2 2008, 2009 Source: TradeMap, Market Analysis Tools, International Trade Centre,
Q1-2 2008-2009
%
Change
Change
Exporters
1 Afghanistan*
2 Armenia
3 Azerbaijan
4 Bhutan*
5 Bolivia
6 Botswana
7 Burkina Faso*
8 Burundi*
9 Central African Republic*
10 Chad*
11 Ethiopia*
12 Kazakhstan
13 Kyrgyzstan
Lao People's Democratic
14 Republic*
15 Lesotho*
16 Malawi*
17 Mali*
18 Mongolia
19 Nepal*
20 Niger*
21 Paraguay
22 Republic of Moldova
23 Rwanda*
24 Swaziland
25 Tajikistan
The former Yugoslav Republic
26 of Macedonia
27 Turkmenistan
28 Uganda*
29 Uzbekistan
30 Zambia*
31 Zimbabwe
Total LLDCs
LLDCs (USD Thousands) - including 16 LDCs
Top Exports (HS2, Desc, % Share 2008)
1
2
3
$
-27,540
$ -144,500
$ -6,638,313
$
1,540
$ -210,171
$ -273,736
$
-52,338
$
19,949
$
-14,219
$ -936,481
$
44,114
$ -11,400,344
$
-70,378
-33.8%
-53.1%
-56.8%
89.0%
-31.3%
-41.6%
-32.2%
113.1%
-25.7%
-48.7%
9.9%
-53.7%
-62.7%
8
72
27
27
27
71
52
71
44
27
9
27
8
Fruit
Iron, steel
Oil
Oil
Oil
Precious stones
Cotton
Precious stones
Wood
Oil
Coffee
Oil
Fruit
51%
20%
97%
49%
59%
50%
53%
43%
49%
97%
36%
69%
24%
57
71
73
9
26
75
71
9
71
52
12
72
62
Carpets
Precious stones
Articles of iron, steel
Coffee
Ores
Nickel
Precious stones
Coffee
Precious stones
Cotton
Oil seed, etc
Iron and steel
Apparel, not knit
41%
16%
0%
46%
8%
29%
17%
33%
28%
1%
16%
9%
12%
9
22
8
8
23
26
12
87
52
13
7
74
7
Coffee
Beverages
Fruit
Fruit
Food residue
Ores
Oil seed, etc
Vehicles
Cotton
Gums, etc
Vegetables
Copper
Vegetables
3%
15%
0%
1%
6%
6%
16%
6%
13%
1%
14%
4%
11%
$
$
$
$
$
$
$
$
$
$
$
$
108,925
-68,939
71,252
-52,149
-340,563
-21,276
-33,157
-220,243
-174,185
2,380
-49,232
-93,108
62.3%
-25.2%
40.1%
-60.3%
-41.1%
-18.5%
-26.1%
-49.1%
-29.7%
5.4%
-24.7%
-32.7%
74
71
24
71
26
57
26
12
22
9
17
76
Copper
Precious stones
Tobacco
Precious stones
Ores
Carpets
Ores
Oil seeds, etc
Beverages
Coffee
Sugar
Aluminum
36%
41%
67%
75%
57%
12%
58%
37%
12%
45%
21%
63%
61
61
17
52
27
72
1
2
62
26
33
52
Apparel, knit
Apparel, knit
Sugars
Cotton
Oil
Iron and steel
Live animals
Meat
Apparel, not knit
Ores
Essential Oils
Cotton
12%
34%
6%
11%
18%
12%
9%
14%
10%
34%
12%
16%
44
62
9
1
71
39
63
15
85
22
21
8
Wood
Apparel, not knit
Coffee
Live animals
Precious stones
Plastics
Other textiles
Fats & oils
Electronics
Beverages
Misc edible
Fruit
11%
21%
5%
6%
9%
7%
6%
13%
7%
8%
10%
11%
$ -661,482
$ -912,242
$
-66,292
$ -538,390
$ -114,571
$ -251,485
$ -23,117,174
-45.0%
-60.0%
-17.9%
-45.6%
-15.2%
-47.6%
-49.7%
72
27
9
27
74
75
27
Iron, steel
Oil
Coffee
Oil
Copper
Nickel
Oil
32%
94%
26%
36%
66%
21%
63%
62
52
3
52
26
24
72
Apparel, not knit
Cotton
Fish
Cotton
Ores
Tobacco
Iron and steel
17%
3%
7%
12%
13%
14%
5%
73
39
85
87
81
72
74
Articles of iron, steel
Plastics
Electronics
Vehicles
Other metals
Iron, steel
Copper
6%
1%
5%
12%
6%
13%
4%
Non-tariff measures and trade liberalisation
Shallow liberalisation (only tariff elimination) can in certain
cases lead to a small welfare decline.
Deep integration (inlcluding elimination of regulatory
barriers and red tape and an improvement in the business
environment) can results in the substantial welfare gains.
Example: Egypt-EU
- Egypt already has duty-free access to the EU for manufactures. Given
Egypts trade patterns, the loss in tariff revenues that will be incurred
outweighs any trade creation.
- Deep integration can results in welfare gains (more than 4% growth in
real GNP)
Hoekman, B. and D. E. Konan (1999), Konan, Denise and Keith E. Maskus (1997)
Types of NTMs: Current situation
•Only limited information on NTMs existing
•Existing information scattered across various countries &
various sources within countries
•Poor access to existing information
•Time consuming for exporters to research measures that
may concern their products
Implications
Urgent need for a common international NTM
classification and methodology to systematically collect,
analyse and disseminate data on NTMs
This can address the following issues:
•Lack of common definition
•No agreed taxonomy
•Inadequate data: Existing data is limited, not structured and
not comparable
•No agreed methodology for quantification: In-depth analysis
currently not possible due to lack of information
Multi-Agency Team
Members: FAO, IMF, ITC, OECD, UNIDO, UNCTAD, World Bank, WTO.
Observers: EC, USDA, USITC
Biannual meetings
Agenda
•Provide clear and concise definition of NTMs
•Develop classification system of NTMs to facilitate data collection
process and analysis
•Devise ways to collect efficiently the information on NTMs taking into
account existing mechanism of collecting specific elements of NTMs by
each member agency
•Provide guidelines for the use of data, including their quantification
methodology
ITC-UNCTAD pilot project – Activities
Country programme in 7 pilot countries:
• Large-scale business survey (300-500 face-to-face interviews) with
exporters and importers about their daily experiences with NTMs;
• Collection and classification of official NTM data applied by the pilot
countries;
• Inititialisation of sustainable country-level data collection mechanism;
• Inititialisation of public-private dialogue.
Initialisation of official NTM data collection from major importing countries
(share in world imports larger than 1%; including EU, US, Japan, China,
Canada, Russia, Mexico, Turkey, etc.)
The way forward
Official launch of new NTM classification (5 November 2009)
UNCTAD Group of Eminent Persons Meeting
ITC-UNCTAD collaboration on the collection, classification and
dissemination of NTM regulations
Data collection:
•
Targeting 50 countries by year (ITC and UNCTAD),
•
Collaboration with national and regional partners,
(ALADI, ASEAN, COMESA, monitoring intra-regional NTMs);
•
priority on major importing countries (>1% of world’s imports)
Dissemination:
•
New, integrated application on market access data, including NTMs
(ITC, UNCTAD, World Bank).
ITC country projects on obstacles to trade (company surveys)
2009-2012: Roll-out in 27 countries; financed by DFID
Collaboration on NTM: official data
NTM Classification: 16 Chapters
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Sanitary and phytosanitary measures
Technical barriers to trade
Pre-shipment inspection and other formalities
Price control measures
Licences, quotas, prohibitions and other quantity control
measurestaxes and other para-tariff measures
Charges,
Finance measures
Anti-competitive measures
Trade-related investment measures
Distribution restrictions
Restriction on post-sales services
Subsidies (excluding export subsidies under p700)
Government procurement restrictions
Intellectual property
Rules of origin
Export related measures
Official data on NTMs (I/III)
Example: Descriptive overview of applied measures/regulations by the Philippines
2%
Share of different types
of measures/regulations
Share of different types
of measures/regulations
(number of regulations 819)
(number of regulations at the
national product line level is 404'909)
17%
2%
1%3%
30%
23%
4%
1%
54%
21%
6%
4%
A. Sanitary and phytosanitary measures
B. Technical barriers to trade
C. Pre-shipment inspection and other formalities
D. Price control measures
E. Licences, quotas, prohibitions and other quantity control measures
F. Charges, taxes and other para-tariff measures
H. Anti-competitive measures
I. Trade-related investment measures
J. Distribution restrictions
P. Export related measures
32%
Official data on NTMs (II/III)
Example: Applied measures/regulations and imports in the Philippines
Distribution of regulations and imports by HS Section, in %
(number of regulations at the national product line level is 404'909)
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
1
2
3
4
5
6
7
8
9
10
Share of regulations
11
12
13
14
15
16
Share of imports
17
18
19
20
21
Company level survey on non-tariff barriers
(NTBs) experienced by the business sector (I/II)
Interview period:
July-September 2008
Objectives:
Identify measures that companies
perceive as non-tariff barriers and their possible patterns across
sectors, countries and regions; identify potential bottlenecks at the
national level.
Countries:
Brazil, Chile, India, the Philippines, Thailand, Tunisia and
Uganda
Nb. of responded
companies:
1 730 responded companies in total
(290-500 per country)
Nb. of contacted
companies
7 000 + contacted companies
Method:
Face-to-face interviews
Company level survey on non-tariff barriers
(NTBs) experienced by the business sector (II/II)
Categorisation of obstacles to trade
New classification of non-tariff measures that has been prepared in the
framework of UNCTAD’s multi-agency initiative on NTMs.
Questionnaire
Companies were asked to report cases of non-tariff barriers impeding their
trade. Each case includes a reference to 1 product (or product group) 1 export
destination, 1 measure according to the new NTM classification and the
related “procedural obstacle” they face in relation to the applied measure.
Example of one non-tariff barrier case:
Export of Cane or Beet Sugar from Uganda to Burundi, “Inspection and
clearance requirement”, “Too complex mechanism”.
Survey: Key Findings from 5 Countries*
• The analysis suggests that trade barriers vary considerably across countries, sectors
and trading partners.
• Destination countries:
•Many obstacles to trade are experienced when trading regionally.
•Many obstacles to trade are highly concentrated on specific sectors – sometimes,
these sectors account for a major share in exports to this destination, sometimes
only for a marginal share.
•The affected goods often enjoy preferential tariff treatment by the destination
country.
• The experienced obstacles to trade can be often associated with a lack of infrastructure
and efficient procedures in the country of origin.
* One landlocked country (Uganda) and
four developing countries (Chile, The Philippines, Thailand, and Tunisia)
Survey:Types of Reported Barriers
Reported non-tariff barries
average of the surveyed countries
Sanitary and phytosanitary measures (SPS)
Technical barriers to trade (TBT)
Pre-shipment inspection and other formalities
Licences, quotas and other quantity control measures
Charges, taxes and other para-tariff measures
Finance measures regulating the access to and cost of foreign exchange
for imports and define the terms of payment.
Other
*Based on the data analysis for 5 countries: Chile, the Philippines, Thailand Tunisia, Uganda
Survey: Export destination matters
NTM cases reported in the surver of Ugandan exporters and corresponding trade data,
for top 20 Ugandan export destinations, broken down by region
Ugandan
export value,
USD (*)
Share in total
Ugandan export
Number of
reported
complaints about
this market
157,066,535
118,054,232
100,046,098
83,284,389
42,718,942
42,231,387
30,594,091
10,710,972
584,706,646
11.8%
8.8%
7.5%
6.2%
3.2%
3.2%
2.3%
0.8%
43.8%
51
59
25
110
28
7
20
8
308
70,476,613
51,124,302
30,594,081
27,545,528
15,132,939
46,187
1,087,705
14,320
196,021,675
44.9%
43.3%
30.6%
33.1%
35.4%
0.1%
3.6%
0.1%
33.5%
177,887,225
22,515,163
14,406,211
13.3%
1.7%
1.1%
6
0
18
119,797
0
350,038
0.1%
0.0%
2.4%
Sub-total developing countries
outside Africa
214,808,599
16.08%
24
469,835
0.2%
Sub-total developing countries
799,515,245
59.84%
332
196,491,510
24.6%
Developed countries
Switzerland
Netherlands
Germany
United Kingdom
Belgium
France
Spain
United States of America
Italy
Sub-total developed countries
86,618,601
66,506,134
65,093,340
53,265,627
52,787,915
32,708,525
26,647,552
19,588,130
13,239,898
416,455,722
6.5%
5.0%
4.9%
4.0%
4.0%
2.4%
2.0%
1.5%
1.0%
31.2%
10
40
21
52
7
10
8
20
10
178
79,221,211
30,477,476
57,177,212
39,034,002
27,283,006
28,212,641
17,971,571
7,353,283
10,265,539
296,995,941
91.5%
45.8%
87.8%
73.3%
51.7%
86.3%
67.4%
37.5%
77.5%
71.3%
Importing country/Market
(top 20 export destinations for
Ugandan products)
Africa
Sudan
Kenya
DRC
Rwanda
Burundi
Congo
United Republic of Tanzania
South Africa
Sub-total Africa
Developing countries outside
Africa
United Arab Emirates
Singapore
China
Share of affected
Export value of
products in the value of
Ugandan affected
Ugandan export to this
products, USD (**)
market
Other
120,200,644
9.0%
85
6,185,817
5.1%
Total
1,336,171,611
100.0%
595
499,776,022
37.4%
(*) Data source: UNSD Comtrade, 2007.
(**) Affected product is the product for which one or more complaints were reported in the survey with the corresponding country.
Selected results from the survey of the business perceptions
in Uganda
Overwhelming number of the interviewed exporters complained about poor
infrastructure (roads and railway), high air freight charges, power shortages, access to
loans, low skills on technology, low access to information. Very few comments concern
destination markets outside Africa (EU, US, Asian markets).
•
“The government should standardise and improve on its facilities like warehouses and
cold rooms. Sometimes the Entebbe cold room malfunctions and this leads to spoiling
of many flowers awaiting export, thus revenue is lost.”
•
“Trade with Sudan is really ok. The only problem is roads.”
•
“Transport from Mombasa to Kampala is more expensive than transporting a container
from China to Mombasa.”
Survey: Business environment at home matters
Selected results from the survey of the business sector in the Philippines:
Procedures in the Philippine Customs (89 reports):
• the behaviour of the customs officers (46; 52%)
- corruption (25)
- too slow (17)
•recognizing other registrations (3)
•inconsistent (1)
•increasing rate of duty / varying rate of duty (11; 12%)
•excessive documentation causing delays (6; 7%)
•regulations to obtain export permit to strict (6; 7%)
Certificates needed from the Philippine authorities (169 reports)
•the Certificate of Origin (41; 11%)
•the phytosanitary certificate needed from the Bureau of Plant Industry (BPI) (30; 8 %)
•the fumigation certificate (19; 5%)
•too detailed, strict or excessive documentation (17; 4,5%)
•documents should be authenticated by embassy (8; 2%)
•quarantine clearance (8; 2%)
Survey: Reported Procedural Obstacles
Conclusions
Survey and research show that
•
NTBs are a major impediment to trade
•
Part of the NTBs are directly related to business environment
•
In many cases intra-regional trade is more affected.
Business sector in the landlocked countries experience more obstacles to trade due to
•
Implications for transport (cost, time, uncertainty)
•
Requirements to comply not only with domestic and partner country
requirements but also with the requirements in the transit country(ies)
The target ITC’s project on non-tariff measures:
•
Identify problems (through business surveys and official data collection)
•
Discuss them with national, regional and international institutions
In order to be effective, economic policies should address NTBs.
Thank you for your attention!