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: hkenani@comesa.int

www.comesa.int

Presentation OutlineIntroductionTrade Liberalization in the Tripartite RegionUnderstanding NTBsArgument For NTBsAn Overview of the Elimination of Non Tariff

Barriers in EAC/COMESA/SADC Efforts for Elimination of NTBsStatus 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 RegionMain objective of the trade liberalisation programme is tocreate a single economic space in which there is freemovement of goods, services, capital & labour. Instruments used include:

Tariff Reduction/Elimination Removal of Non-Tariff Barriers to Trade

Regional experience in trade liberalization indicates that as tariffs are lowered over time, protectionistmeasures emerge in the form of Non TariffBarriers.

Understanding NTBs

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

Non-Tariff Barriers are capable of nullifyingbenefits that accrue due to deepened tradeliberalization despite Treaty provisions stateacross the region

Understanding NTBs Cont’d

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

They are capable of restricting trade,

They are unpredictable and persistent

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

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:

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 )

To protect home industries and consumers(A 61)To safeguard national securityTo safeguard against revenue loss.

However, such measures when legitimately appliedthrough Notification comprise Non Tariff Measures. It isonly when applied as protectionist barriers to trade, when suchmeasures become NTBs.

Overview of the Elimination ofNon 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 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 Forum. www.tradebarriers.org

Overview of the Elimination ofNon Tariff Barriers in Tripartite Region

Institutional Arrangements and ResponsibilitiesNTBs Focal Points (NFP)

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

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

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.

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: Defining the process of elimination Defining mandate and responsibilities Confirming deadlines for action 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 NTBsThe most common sources of regional NTBs are:

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

Specific NTBS (25 reported cases)

TBT

8%

Customs Clearance Procedure

(Roo, PSI,etc)

44%

SPS

12%

Adm

12%

Excise Duties

16%

Import Reg

8%

Effect of NTBs IllustratedEFFECTS OF NTBS (Steel tubes and pipes)

-

1,000

2,000

3,000

4,000

5,000

6,000

2002 2003 2004 2005 2006

EFFECTS OF NTBS (Stell tubes and pipes)

Effect of NTBs IllustratedEFFECT OF NTBS (general imports)

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

2000 2001 2002 2003 2004 2005 2006

EFFECT OF NTBS (general imports)

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

Status of Negotiations on NTBs Annex 3of 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 3of 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 3of 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 EvaluationThe Trade and Customs Committees/ Trade

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

National Focal Points (NFPs)The National Monitoring Committees. On-line Mechanism

End of Presentation

Thank you for your attentionMerci Pour Votre Attention!AhsanteShukrani