(Lack of) Clarity, Consistency and

PredictabilityHow exporters and importers experience non-tariff

measures

Ursula HermelinkHead of programme, Non-tariff measures

ESCAP- ARTNeT Capacity Building Workshop on“Evidence-Based Trade Policy Making for Sustainable Development”27-28 November 2018

Market access: a different perspective

From an exporter’s point of view:

• Tariffs as “the last thing the exporter worries about”

A tax paid (or not) once you managed to reach the other country

• Some prerequisites:

• You found a buyer (importer) / someone interested in your product

• You comply with mandatory requirements of the importing country (e.g. product

quality requirements)

• At times: you comply with private standards required by the buyer (e.g.

GlobalG.A.P. certification)

• You managed to get the export licence and other documentation required by your

own country

If pre-requisites are fulfilled: preferential access = more competitive

Export

licence

What matters to exporters?Key messages from ITC’s interviews with nearly 30,000 businesses

1. Clarity of what is being applied when

Important for businesses and customs officials alike

2. Consistency of what is being applied when

Theory versus practice

3. Procedural efficiency

Predictability of cost and time

1. ITC and NTMs

2. ITC’s business surveys on NTMs

• Method

• Developing countries’ experiences with NTMs

• Exporter testimonies

3. Selected outcomes of ITC’s survey projects

4. Concluding remarks

Making the invisible barriers (a bit more) visible

What trade obstacles do

micro and small firms

encounter? Are they

different from those

experienced by large firms?

Which export sector

is particularly

affected by NTMs?

How can I make sure that

our exporters benefit from

the trade agreements we

have signed? Which

challenges do they currently

face when exporting to our

RTA partners?

How can I reduce

trade cost? Do I need

to (re-)negotiate trade

agreements or is

there something else

I can do to help my

businesses?

Challenge

How can I improve

my country’s trade

performance?

Which types of

regulations are most

challenging for

businesses and why?

The ITC programme on non-tariff measures

… the ITC programme on NTMs:

• Creates the evidence base that decision makers need to effectively reduce trade cost related to NTMs

• Establish national mechanisms to solve NTM-related trade obstacles experienced by developing country SMEs

• Builds capacity of SMEs, TISIs and policy makers to better understand NTMs and their effect on trade and competitiveness

• Increases the transparency of trade regulations and related procedures

Reducing

NTM-related trade cost Improving market access

With the aim of:

For more information: www.ntmsurvey.org

But before we start…. What do we mean by

non-tariff measures?

Official policy measures on export and import, other than

ordinary customs tariffs, than can potentially have an effect on

international trade in goods, changing quantities traded, or prices

or both.

Mandatory requirements, rules or regulations legally set by the

national authorities of the exporting, importing or transit country (in

contrast to private standards which are not legally set)

Can affect both export and import

Include technical measures and standards, as well as regulations

on customs procedures, para-tariff measures, financial measures,

prohibition, etc.

Tra

de O

bsta

cle

s

Procedural Obstacles

Practical challenges or

administrative hurdles

which make compliance to

NTMs difficult.

NTMs and trade obstacles

Excessively strict/

complex requirements

The requirements are too

strict or complex to comply

with.

NTMs

Regulations on trade and products,

other than tariffs, which may negatively

affect the international trade of goods.

NTBs

NTMs that have

a ‘protectionist or

discriminatory intent’

Business Environment

General operating conditions in the country that are not related to NTMs

but which may hinder a company’s ability to trade.

1. ITC and NTMs

2. ITC’s business surveys on NTMs

• Method

• Developing countries’ experiences with NTMs

• Exporter testimonies

3. Selected outcomes of ITC’s survey projects

4. Concluding remarks

ITC business surveys on NTMs

More than

30,000reported trade obstacles…

From over

developing

countries

+ 28 EU countries

40

185 …concerning

trade with

partner countries

8,200Face-to-face interviews

Complete Ongoing or Planned

29,000Phone Interviews

Source: www.ntmsurvey.org

Understanding companies’ difficulties with

NTMs: Three aspects

Affectedness

Type and Intensity

Cause

Which companies face difficulties

Which NTMs are experienced as challenging

Why NTMs are burdensomeInsights on how to reduce NTM-

related trade cost without undermining

legitimate objectives that regulations

serve

Type of data captured: Telephone interviews

12

1. Phone screen data gathering company level information

(representative sample by sector) on:

Main

exported/imported

product (HS6) Destination/origin

markets (at region level)

Number of

employees

Whether or not

an obstacle is

faced

Gender information (firm management / ownership

/ employment)

Type of data captured: Face-to-face interviews

13

2. Face-to-face data gathering company-level information

(only those facing trade obstacles) on:

All traded

products and

partner countries

Related obstacles (description, category of

obstacles, implementing

agency, location)

All affected

trade flows

Burdensome regulations (description, official name, category of

NTM, implementing body, applying

country)

Recommendations

to overcome the

obstacles Where the

problem

occurs

NTM Survey: sector coverage

NTM Survey covers the following

sectors:

1. Fresh food and raw agro-based

products

2. Processed food and agro-based

products

3. Wood, wood products and paper

4. Yarn, fabrics and textiles

5. Chemicals

6. Leather

7. Metal and other basic manufacturing

8. Non-electric machinery

9. Computers, telecommunications;

consumer electronics

10. Electronic components

11. Transport equipment

12. Clothing

13. Miscellaneous manufacturing

Goods

• Covers companies involved in international

trade in goods.

• Products from all sectors included except

minerals and arms.

• Sectors with more than a 2% share in total

exports are included

• Cumulatively, sectors covered account for

at least 90% of country’s total export value

Services

• Covers companies involved in international

trade in services.

• Services sectors covered by the survey:

• Transport & logistics,

• ICT and

• Tourism

15

⁻ Local presence requirements

⁻ Safety and security standards

⁻ Restriction to the movement of

employees

⁻ etc.

SERVICE EXPORTS

ServicesGoods

IMPORT OF INTERMEDIARY INPUTS

⁻ Import bans

⁻ Custom evaluation

procedures

⁻ etc.

⁻ Quotas on the number of

licenses

⁻ Sectoral and professional

association fees

⁻ etc.

⁻ Compulsory use of

national services

⁻ Restriction on

payments systems

⁻ etc.

Services trade: business survey focus

16

Objectives of the survey

ITC’s business surveys on regulatory and procedural trade obstacles

…document the private sector experience with NTM-related trade obstacles with a

view to identify feasible options to overcome these.

…are part of a wider, collaborative approach, beyond company perceptions, which

integrates all stakeholders of the import and export process. A survey report is

finalized and published after stakeholder consultations have taken place through

additional interviews and a validation meeting.

…aim at identifying concrete actions that enable surveyed countries to reach

greater efficiency in the export process and reduce trade cost.

The surveys are NOT

…a collection of or platform for complaints.

…a research exercise.

…intended to single out specific institutions to blame for inefficiencies.

How do exporters and importers perceive

non-tariff measures?

18

Who is affected? Who applies the burdensome NTMs?ITC’s NTM Survey results: www.ntmsurvey.org

The share of companies affected by burdensome NTMs varies across sectors

and trade direction

- Exporters of agricultural products report more problems than those in manufacturing

- Exporters are more affected than importers

Small firms report more frequently problems related to burdensome NTMs

- 57% of firms with 1-4 employees face burdensome NTMs compared to about 43% of firms

with more than 250 employees

Trade-hampering measures lie much closer to home than one might expect

- About 25% of obstacles reported by exporters concern measures applied by the home

country on exports

- Another 20% (agriculture) to 30% (manufacturing) are NTMs applied by regional trading

partners (members of regional trade agreements)

Despite existing agreements, regional market access is disproportionately difficult,

especially for manufactured products

Source: ITC (2015);The Invisible Barriers to Trade – How Businesses Experience

Non-Tariff Measures; www.intracen.org/publications/ntm

Exporters of agricultural products report more problems

than those in manufacturingShare of exporters who encounter burdensome NTMs, by sector

Source: ITC (2015);The Invisible Barriers to Trade – How Businesses Experience

Non-Tariff Measures; www.intracen.org/publications/ntm

39%

20%

13%

28%31%

30%

13%

26%

Agriculture Manufacturing

Home

(exporting)

country

OECD countries

Other developing

countries

The trade-hampering measures lie much closer to home

than one might expect

Distribution of reported NTM cases, by country applying the measure

Source: ITC business surveys on NTMs; www.ntmsurvey.org

Regional trade

agreeement partners

4% 5%

11%

35%

5%

4%

5%

9%

5%

13%

48%

23%

22%

11%

Agriculture Manufacturing

Source: ITC (2015),The Invisible Barriers to Trade – How Businesses Experience

Non-Tariff Measures; www.intracen.org/publications/ntm

The challenge? SPS & TBT measures for agriculture, rules of origin for manufacturing

Finance measures, anti-competitive measures, trade remedies, etc.

Other import-related measures

Regulations on product characteristics,

quality, poduction process. etc.

Technical requirements

Conformity assessmentTechnical inspections, testing, certificaiton etc

to prove compliance with technical regulations

Customs clearance and border control

Inspections and other entry formalities

Service charges, customs surcharges, etc.

Charges and taxes

Quotas, licences, prohibitions

Quantity control measures

Rules of origin and related certificateCriteria & related certificate to determine the country of

origin of a product.

And what about the exporting country?

22

Types of challenging NTMs that are applied by the exporting

country

Export

inspectionsExport taxes

and charges

Export

prohibitions

Export

certificationsExport

licence

Source: ITC business surveys on NTMs; www.ntmsurvey.org

Most regulations pose a problem because of procedural

obstacles

Source: ITC (2015);The Invisible Barriers to Trade – How Businesses Experience

Non-Tariff Measures; www.intracen.org/publications/ntm

Share of NTM cases, by type of difficulty

35%23%

25%

19%

40%

58%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Agriculture Manufacturing

The regulation is difficult onlybecause of procedural obstacles

The NTM is too strict + thereare procedural obstacles

The regulation itself is toostrict/difficult

What types of home country procedural obstacles are reported?

Other

12%

Admin

burden

15%

Lack of

facilities

7 %

High cost

24%

Delays

42%

Source: ITC (2015);The Invisible Barriers to Trade – How Businesses Experience Non-Tariff Measures; www.intracen.org/publications/ntm

Exporting

Exporting country

Where should we look to find the solutions?

Source: ITC (2015);The Invisible Barriers to Trade – How Businesses Experience

Non-Tariff Measures; www.intracen.org/publications/ntm

Distribution of procedural obstacles, by agency

Type of

procedural obstacles

Location of the

procedural obstacles

Tim

e c

on

str

ain

ts

Info

rma

l o

r u

nu

su

ally

hig

h

pa

ym

en

t

Ad

min

istr

ative

bu

rde

ns

rela

ted

to

re

gu

lation

La

ck o

f se

cto

r-sp

ecific

facili

ties

Dis

crim

ina

tory

be

ha

vio

ur

of o

ffic

ials

Info

rma

tion/ tr

an

sp

are

ncy

issu

es

La

ck o

f re

co

gn

itio

n/

accre

dita

tion

Oth

er

Customs authority

Ministry in charge of international trade

Ministry in charge of agriculture

Ministry in charge of public health

Public/private organization for standard and quality

Chamber of commerce and trade support institution

Public/private organizations for certification

Ministry in charge of environmental affairs

Public/private organizations for inspection

Products testing and analysis laboratory

Port authority

Airport

Ministry in charge of finance

Other ministries/agencies

Other private companies/banks

Not specified

Main challenges reported: Example export licence

Export

licence

Main challenges reported: Example SPS/TBT

29

Lengthy procedures

Frequent renewal

Excessive paperwork and numerous

administrative windows

Inaccessible or absent infrastructure

The problem? It’s the

quantity of papers to

submit! There are

too many documents

needed to prepare

the dossier. More

than 20 different

documents are

required for the

conformity

assessment process. The testing process takes 1 - 2 months

while the validity of the product itself is

just a year. Another issue is that it is

very expensive to undertake this test

which hinders us from exporting.

Inefficient testing and certification procedures

Source: ITC Businesses Surveys on NTMs in 66 countries, www.ntmsurvey.org

Main challenges reported: Example SPS / TBT

Challenges reported: Example Rules of Origin Or: About the “nationality” of fish caught in international

waters

So what about me?

Example EU-Algeria agreement

Me

My boat

My work

My fish

Anything else? My boat?

+

+

+

So what’s the problem?

1• Cost of obtaining the certificate of origin

2• De jure versus de facto preferential treatment

3

• Strict origin requirements / mutually exclusive requirements between agreements

Main challenges reported: Rules of OriginThe cost of preferential market access

Source: ITC business surveys on NTMs in 38 developing countries and the EU, 2010-2018, www.ntmsurvey.org

Sometimes it is more costly to prove product

origin than to pay MFN

The majority of difficulties linked to the certificate of origin are

encountered at home (in the exporting country)

Share of procedural obstacles*, by location

Rules of Origin Other types of NTMs

94%59%

6%

41%

In the home country In the home countryIn the partner

country

In the partner

country

*Note: Only cases reported by exporters

Source: ITC business surveys on NTMs in 30 developing countries, 2010-2016

www.ntmsurvey.org

What matters to exporters?Key messages from ITC’s interviews with nearly 30,000 businesses

1. Clarity of what is being applied when

Multitude of regulations and agreements, types of certifications and related procedures

leads to confusion not only of businesses but also of customs officials

Transparency; policymakers’ awareness of practical implications of rules

2. Consistency of what is being applied when

(Preferential) rules versus (non-preferential) practice: At times, the practice on the

ground differs from what is written in laws / has been negotiated. Unpredictability

comes with significant cost for businesses.

Training of customs officials; transparency; appeal procedures

3. Procedural efficiency

Rules imply procedures and procedures have time and cost implications. Example

RoO: if a preference can be gained, it may be worth it (but at times is not…). In cases

of non-preferential rules, this is just a cost with (in most cases) no gains

Review procedures; Think (again) about non-preferential rules

Take-aways from ITC’s NTM Surveys

Market access begins at home

The ‘advantage’ of home-based problems is that you can solve them, e.g.:

simplify trade procedures

There is a great need to tackle before-the-border problems that

businesses experience with behind-the-border measures

Trade facilitation: make trade agreements work

Having policies, laws and agreements is one thing – effectively

implementing them another

Transparency is key

Processes may be complicated and lengthy for good reasons. But there is

no good reason for them to be unclear or non-transparent.

1. ITC and NTMs

2. ITC’s business surveys on NTMs

• Method

• Developing countries’ experiences with NTMs

• Exporter testimonies

3. Selected outcomes of ITC’s survey work

4. Concluding remarks

Example “over-regulation”: opportunities for

simplification

ITC’s business survey on NTMs in Mauritius

highlighted that companies suffered from

what they felt were excessive import

licensing requirements.

Stakeholders, including government

agencies, concluded that a simplification

was warranted and that some licenses may

no longer be needed.

More than 70 import licence

requirements have to date

been eliminated by the

government after a thorough

review of existing requirements

“A direct consequence of the

survey and the ITC

consultations was the

elimination of the need for

Tea Board clearance of

rooibos tea imports. This

resulted in reduced time

and cost for my business.”

A Mauritian tea importer

Avoiding costly mistakes: Mitigating the negative

impact of changes in regulations

SMEs are informed about

relevant regulatory changes

and can take action to

adjust

Policy makers are enabled

to clarify implications of

changes and to report

concerns back to the

multilateral level

“Countries change

their laws so quickly.

How can I keep up?”

A frequently voiced concern

among the 28,000 exporters

interviewed by ITC across the

world (including in the EU)

“Thanks to ePing, I am now able to

receive timely information on

changes in technical regulations

concerning fisheries, share it with our

members and engage in discussions on

the chat forum relating to notifications

of concern and help members, for

example when our companies face

problems with compliance.”

Head of the Uganda Fish Processors & Exporters

Association

www.epingalert.org

Example ePing: ITC alerts SMEs

about changes in regulations for

products and markets of their

interest, including changes that

have not yet been implemented

solving trade obstacles before

they occur

Example export procedures: knowing where to start

reduces time and cost

Source: ITC business survey in Bangladesh 2015 Simplification: identifying

unnecessary duplications

allows streamlining

procedures

“There are so many institutions to go to and so many

documents to fill in and provide. The procedures

should be made simpler and more transparent. This

will also reduce informal payments.”

A Bangladeshi exporter

In response, ITC is working with UNCTAD and

national partners in Bangladesh to make

export procedures fully transparent in a

publicly available step-by-step guide,

validated by institutions and regularly updated.

It provides detailed and practical

description for businesses on the

paperwork to complete, addresses of

institutions, administrative fees, duration of

processes, etc.

52%

32%High fees and unexpected charges,

including informal payments

86%

of these relate to unclear or overly time-

consuming administrative processes to obtain

necessary documents

of procedural trade obstacles occur in

Bangladeshi agencies

Exporting becomes more

accessible and time and

cost more predictable for

SMEs

Example Bangladesh:

Eliminating unnecessary red tape: connecting

businesses with institutions

Thanks to the TOAM, the

institution-internal procedure

was simplified and the waiting

time has dropped to two weeks.

“The platform simplifies our life by

providing concrete answers within a

short time. Having the certificates

issued quickly makes a huge

difference for us. It increases our

competitiveness and will lead to

higher exports. What is good for our

company is good for employment and

growth of Côte d’Ivoire.”

An Ivorian exporter whose problem got resolved

through ITC’s trade obstacles alert mechanism

NTM stakeholder consultations in Côte d’Ivoire

highlighted the lack of awareness of

institutions about practical problems

encountered by businesses

For example, Ivorian exporters used to wait

up to six months to get the weight certificate

required to export cocoa beans.

As a response, ITC implemented a Trade

Obstacles Alert Mechanism (TOAM), which:

- Connects exporters directly with relevant

institutions in the export and import process

- Enables institutions to respond to / solve trade

obstacles encountered by businesses

- Alerts SMEs in real time on trade obstacles

encountered by other businesses and corrective

steps taken

1. ITC and NTMs

2. ITC’s business surveys on NTMs

• Method

• Developing countries’ experiences with NTMs

• Exporter testimonies

3. Selected outcomes of ITC’s survey work

4. Concluding remarks

ITC’s work on NTMs: …and where do we go from here?

Increased country coverage and adding the time dimension

ITC is committed to expanding the country coverage of NTM Surveys to meet

demand. For a number of countries already surveyed, governments wish to take

stock of changes.

Services

In 2018, ITC has also started assessing business concerns with services trade

regulations, particularly for transport and logistics, ICT & ICT-enabled services and

tourism. This complements the surveys on trade in goods.

Additional research and analysis

Exploit the potential represented by the survey data in collaboration with partners

Stay tuned: upcoming joint ITC-ESCAP publication on NTMs in Asia

Transparency

Upcoming data collection project (regulations applied on exports and imports) in

Central Asia in collaboration with UNDP and GIZ

Navigating non-tariff measures –

Insights From A Business Survey in the European Union (2016)

Making Regional Integration Work –

Company perspectives on Non-Tariff Measures in Arab States (2015)

The Invisible Barriers to Trade –

How Businesses Experience Non-Tariff Measures (2015)

Country reports

Bangladesh (English, 2017) Mali (French, 2018)

Benin (French, 2017) Mauritius (English, 2014)

Burkina Faso (French, 2011) Morocco (French, 2012)

Cambodia (English, 2014) Nepal (English, 2017)

Comoros (French, 2018) Paraguay (Spanish, 2013)

Côte d’Ivoire (French, 2014) Peru (English, 2012; Spanish, 2013)

Ecuador (Spanish, 2018) Philippines (English, 2017)

Egypt (English, 2016) Rwanda (English, 2014)

Guinea (French, 2015) Senegal (French, 2014)

Indonesia (forthcoming 2016) Sri Lanka (English, 2011)

Jamaica (English, 2013) State of Palestine (English, 2015)

Kazakhstan (English, Russian, 2014) Thailand (English, 2016)

Kyrgyzstan (English, Russian, 2018) Trinidad and Tobago (English, 2013)

Kenya (English, 2014) Tunisia (French, 2014)

Madagascar (French, 2013) Uganda (English, 2018)

Malawi (English, 2013) Uruguay (Spanish, 2013)

Available from: www.ntmsurvey.org/publication

Our publications: ITC series on NTMs

ITC Survey results online: www.ntmsurvey.org

For more information:

www.ntmsurvey.

org

ntm@intracen.org

ITCmarketanalysistools @ITC_MktAnalysis