Final Meeting on

Regional Economic Cooperation in South Asia

Katmandu; August 14 -15, 2006

SAFTA
(Trade Liberalisation Programme - Non Tariff Barriers)

Presented by
Khondaker Golam Moazzem
Research Fellow, CPD

CENTRE FOR POLICY DIALOGUE (CPD)

B A N G L A D E S H
a civil society think–tank 1
 Contents
I. Smooth Functioning of SAFTA: Major Challenges
II. NTBs: A Major Concern Worldwide
III. NTBs: Experience of Developing Countries
IV. NTBs Applied by South Asian Countries
V. NTBs Facing by South Asian Countries within the
Region
VI. Removing NTBs: Lessons from AFTA
VII. Conclusion

2
I. Smooth Functioning of SAFTA: Major Challenges
• In the backdrop of very limited intra-regional trade in South Asia,
SAFTA has started to operate since 1 July, 2006.
• The pace of tariff liberalization finalised under the SAFTA
Agreement is much slower than the one proposed in the GEP
Report, perhaps reflecting the current state of affairs in
terms of economic cooperation in the region.

• It needs to be recognized that the establishment of an FTA is not

likely to automatically lead to economic gains.
•Much depends on how the Agreement is crafted, how it is
able to cater to and reconcile the often conflicting interests
and concerns of member countries, and most important of
all, how other parallel complementary activities, often
outside the ambit of the narrow limits of trade cooperation,
are put in place with a view to translating the potential
opportunities into actual gains.

3
I. Smooth Functioning of SAFTA: Major Challenges
(contd…)
SAFTA Framework Agreement refers to such measures as
• Harmonisation of standards, reciprocal recognition of tests
and accreditation;
• Harmonisation of customs clearance and customs
cooperation;
• Transit facilities, particularly for land-locked contracting
states;
• Removal of barriers to intra-SAARC investments;
• Development of communication system and transport
infrastructure;
• Rules of fair competition and promotion of venture capital,
simplification of procedure for business visas.

These measures indicate elimination of non-tariff barriers (NTBs)

will be a major trade task in order to enhance intra-regional
trade in South Asia.
4
II. NTBs: A Major Concern Worldwide
 It is found that market access barriers faced by developing country
exporters are not decreasing under the liberalised trade regime for
some of their most important export sectors.
 LDCs are especially at risk.
 Recent research by ITC based on Market Access Map shows that
three hardles are blocking the track to better market access.
 First, specific tariffs are widespread. They are less transparent
than ordinary (ad valorem) tariffs and they tend to discriminate
against the developing countries.
 Second, commodity prices have plummeted. If tariffs were ad
valorem, the duties actually paid would have declined with the
prices. Since specific tariffs are so important–especially for
commodities in practice, developing countries and LDCs are
witnessing an effective rise in protection.
 Third, non-tariff barriers (food safety standards, environmental
certification etc.) are growing in case of LDCs, they are
particularly dramatic.

 A staggering 40% of LDC exports are subject to non-tariff

barriers. For developing and transition economies and developed
countries, the figure is only 15%. 5
II. NTBs: A Major Concern Worldwide (contd…)
 Even with preferential agreements that grant LDCs duty-free
access to markets, non-tariff barriers may prevent these
countries from entering those markets.
 In fact, between 1996 and 2001, the share of duty-free LDC
exports in their total exports-excluding oil and arms-fell
sharply from 81% to 69%. This has hardly been in line with the
spirit of the Uruguay Round.

 According to UNCTAD’s TCMCS/TRAINS, technical measures as

well as quantitative measures increased considerably during the
period 1994-2004.
 The nature of most NTBs as actually applied, however, changed.
 “Core measures”—meant to protect local producers—declined.
 “Non-core measures”—largely intended to protect local
consumers— increased.
 Among non-core measures, the use of technical
measures increased, which suggests that behind-the-
border measures will likely become the dominant
means for restraining trade in the future.
6
II. NTBs: A Major Concern Worldwide (contd…)
 By the end of November 2005, about 40 WTO member States had
submitted around 250 notifications/proposals on NTBs—78% of which
were notifications by developing countries.

 Of the notifications or proposals, major concerns are:

 Customs and administrative entry procedures (32.5%)
 Technical barriers to trade (21.9%)
 Specific limitations, such as requirements for marking, labelling &
packaging, quantitative restrictions, and export restrains (25%)

 On a sectoral basis, the top five sectors affected by NTBs are:

 Chemicals (11.5%)
 Machinery and equipment (9.2%)
 Textiles and clothing (9.2%)
 Motor vehicles and parts (7.3%)
 Fish/fishery products (6.1%)

 The results of OECD surveys with the business communities in several

developed and developing countries (in 1995-2002) suggest that
natural resource-based industries are most strongly affected by NTBs.
7
III. NTBs: Experience of Developing Countries
 Developing countries confront different types of NTBs when
accessing different markets.
 In markets of developed countries, developing countries
often face NTBs, such as conditions regarding technical
specification of products, price controls and other NTB
measures.
 In South-South trade, developing countries confront NTBs
such as customs and administrative entry procedures,
para-tariff measures (for example, import surcharges and
other additional charges), as well as other obstacles, such
as poor infrastructure, measures taken to protect
intellectual property rights and inadequate governance.
 In this sense, the scope of NTBs becomes even wider in
trade among developing countries. In general, export
products of interest to developing countries, such as
fisheries products, electrical equipment, pharmaceutical
and textiles are more affected by NTBs than other
products.
8
III. NTBs: Experience of Developing Countries (contd…)

 In many developed countries, regulatory policy focuses on protection

of the environment, public health and safety and often includes higher
standards for the domestic market than existing international
standards.
 It has been estimated that African banana exports could grow by
$410 million a year if the EU used international standards for
traceability requirements and regulations on pesticide residues
for agricultural imports, instead of its own standards.
 Overall, it is estimated that at least 10 per cent of export losses
of all developing countries arise from SPS/TBT related measures.

 Technical barriers have become a key concern regarding market

access. Annual notifications of new technical barriers to GATT/WTO
increased steadily from a dozen or two in the early 1980s to over 400 in
1999.
 Low- and middle-income countries reported that over the period
from 1996–99 more than 50 percent of their potential exports of
fresh and processed fish, meat, fruit and vegetables into the EU
were “prevented” by their inability to comply with SPS
requirements (OECD, 2001b).
9
III. NTBs: Experience of Developing Countries (contd…)

 Many developing countries are concerned that they are ill-

prepared to meet increasingly complex and burdensome
standards and regulations. There is often a risk that such
regulations may be captured by special interests, particularly
when regulatory processes are not transparent.

 From the above, one important challenge for the current WTO
multilateral negotiations is to allow Governments to achieve
their genuine regulatory objectives while preventing
protectionist abuses.

 Another challenge for the multilateral negotiations is to

ensure that NTB rules in RTAs (both North-South and South-
South) are coherent and compatible with the relevant WTO
multilateral rules and disciplines.

10
III. NTBs: Experience of Developing Countries (contd…)
 It cannot be denied that developing countries need to take steps to
improve their legal and regulatory environment to support the
participation of their national firms in international markets and
enhance their competitiveness. Product standards and domestic sector
regulations are areas that require attention.
 The modernization of standards systems, including institutions and
infrastructure for certification, is essential for operating in the current
global trade environment.
 Meeting international standards for quality, safety, health, environment
and consumer protection is increasingly becoming a precondition for
competing in international markets. It has also become a major factor
constraining many exporters, particularly in the LDCs, from benefiting
fully from preferential access initiatives.
 Technical assistance for raising capacity to comply with regulations
and standards should also be strengthened.
 The participation of developing countries in international standard
setting activities should be facilitated.
 Finally, the promotion of mutual recognition agreements (MRAs)
between developed and developing countries, as well as among
developing countries, will also help substantively in reconciling
frictions and disputes caused by different regulations between trading
partners and lead to large cost savings for exporting firms worldwide.

11
IV. NTBs Applied by South Asian Countries

Country Issues Description

India Import  India has eliminated its import licensing requirements for most
Licensing consumer goods. Importers of vehicles of any type face
restrictive and trade-distorting import practices.

 India continues to maintain a negative import list. The negative

list is currently divided into three categories: (1) banned or
prohibited items; (2) restricted items which require a non-
automatic import license and (3) "canalized" items importable
only by government trading monopolies subject to cabinet
approval regarding timing and quantity.

 India has liberalized many restrictions on the importation of

capital goods. The government allows imports of all second-
hand capital goods by the end-users without requiring an
import license, provided the goods have a residual life of five
years.

12
IV. NTBs Applied by South Asian Countries (contd…)

Country Issues Description

India Customs  Indian Customs requires extensive documentation, which

Procedures inhibits the free flow of trade and leads to frequent
processing delays. In large part these delays are a
consequence of India’s complex tariff structure and multiple
exemptions, which may vary according to product, user, or
specific Indian export promotion program.

 India introduced a reference price system for soybean oil in

September 2002 to address alleged under-invoicing.

 Certain customs procedures impede importation of

automotive products. Motor vehicles may be imported
through only three specific ports and only from the country
of manufacture. Declared transaction values of automotive
products may be rejected, insofar as legitimate reductions in
the wholesale price of such products are ignored.

13
IV. NTBs Applied by South Asian Countries (contd…)

India Standards,  The GOI has identified 109 specific commodities that the BIS
Testing, must certify before the products are allowed to enter the
Labeling country. A system now exists by which foreign companies can
and receive automatic certification for products made outside India
Certification provided BIS has first inspected the production facility.

 In 2004, Indian Customs began to require registration or an

exemption certificate for imported boric acid. The Ministry of
Agriculture's Central Insecticides Board and Registration
Committee has not yet published criteria and procedures for
obtaining this documentation.

 India's procedures for establishing emissions standards are

non-transparent. Even the latest low-emission technology
used by developed country-manufacturers fails to meet India's
requirements.

 In 2001, India banned textile and apparel imports that contain

certain dyes. In January 2004, the GOI relaxed its textile-
testing requirement by announcing that it would accept, as
proof of the absence of azo-dye, certification that the
exporting country had banned azo-dyes in textiles.
14
IV. NTBs Applied by South Asian Countries (contd…)
India Sanitary and  In 2003, the Ministry of Health implemented amendments under
Phytosanitary its PFA Act which could potentially restrict Indian imports of
(SPS) several agricultural products. In addition, at the end of 2003, the
Measures MOA issued a set of new phytosanitary regulations and
quarantine requirements for imports of agricultural products.
GOI implementation of these measures prior to notifying them to
the WTO SPS Committee restricted Indian imports of almonds,
pulses, fresh fruits and vegetables. Furthermore, new
requirements affecting solid Wood Packaging Material (SWPM),
affected adversely to exports of other countries nonagricultural
products.

 The Indian government has implemented several sanitary

restrictions, which do not appear to coincide with the Office of
International Epizootics (OIE) and CODEX recommendations.
Such restrictions have affected Indian imports of poultry and
poultry products, and pet food and dairy products.

 The GOI reports that it is currently reviewing its policy for

evaluating the safety of biologically engineered foods. In 2002,
the Genetic Engineering Approval Committee (GEAC),
conditionally approved the import of refined soy oil and crude
de-gummed soy oil. It declined to consider importation of a corn-
soy blend (CSB) without a special certification.
15
IV. NTBs Applied by South Asian Countries (contd…)

India Other  In case of pharmaceutical markets, while the scope of the rigid
barriers government-controlled pricing system has been reduced, final steps to
eliminate it have stalled.

 Indian states fail to apply consistently certain national laws and

regulations. This creates uncertainty for foreign companies exporting to,
and investing in India. Foreign companies affected by such inconsistency
that include: pesticide manufacturers whose products have been
approved at the national level and banned at the state level, and distilled
spirits producers who face nonuniform state-level taxes despite the
national government’s directive to harmonize such taxes. In addition,
taxes on inter-state trade and conflicting regulations continue to hamper
the free flow of goods within India.

 India’s implementation of its antidumping regime has raised concerns in

key areas such as transparency and due process. India continued
aggressively to apply its antidumping law over the past year. From the
second half of 2003 through the first half of 2004, which is the most
recent 12-month period for which WTO statistics are available, India
imposed 38 final antidumping measures, more than any other WTO
Member, and ranked second in the number of initiations.
16
IV. NTBs Applied by South Asian Countries (contd…)
Pakistan Import  Pakistan’s trade policy in 2005 continued to ban the import of 30
policies items, mostly on religious, environmental, security, and health
grounds. Effective July 1, 2005, Pakistan further reduced duties on
imported automobiles to between 50% and 75% from the previous
range of 75% to 150%. The government exempted all domestically
produced pharmaceutical related inputs from its General Sales
Tax (GST). Imported pharmaceutical inputs subject to a 10%
customs duty are also exempt from payment of GST.

 In January 2000, the Pakistani government began implementing a

transactional valuation system, pursuant to which 99% of import
valuation is based on invoice value, in accordance with the WTO's
Customs Valuation Agreement. A number of traders in food and
nonfood consumer products, however, report experiencing
irregularities and deviations in the application of that system.

 A U.S. freight forwarding company reported in 2005 that Pakistan

imposed a new SRO requiring that the commercial invoice and the
packing list must be included within a container. This practice is
difficult in situations when shipments originate from a location
that is different from where the invoice and packing list are
created; when, for security, invoices are created after the
shipment departs; or when several companies are involved.
17
IV. NTBs Applied by South Asian Countries (contd…)

Pakistan Standards,  As of June 30, 2005, Pakistan Standards and Quality

Testing, Control Authority (PSQCA) had established over 21,000
Labeling, standards (including 15,500 ISO standards) for
and agriculture, food, chemicals, civil and mechanical
Certification engineering, electronics, weights and measures, and
textile products. However, no new standards were
approved in 2005.

 Testing facilities for agricultural goods are inadequate

and standards are inconsistently applied. Generally,
however, foreign exporters have not reported problems
due to the restrictive application of SPS or
environmental standards.

 Pakistan approved biosafety guidelines and rules in

April 2005, but the action plan to implement these
guidelines is still pending. At present Pakistan has
permitted the import of biotech soybeans. The delay in
the implementation of biosafety guidelines, however,
has impeded the introduction of other biotechnology
products.
18
IV. NTBs Applied by South Asian Countries (contd…)

Sri Import  Import tariffs and other import charges: Currently, there are 5 tariff
Lanka Policies bands of 0 percent, 2.5 percent, 6 percent, 15 percent, and 28 percent.
Textiles, pharmaceuticals, and medical equipment are free of duty.
Basic raw materials are generally assessed a 2.5 percent duty. Semi-
processed raw material tariffs are 6 percent, while intermediate product
tariffs are 15 percent. Most finished products are at 28 percent. There
are also a number of deviations from the five-band tariff policy
(Tobacco and cigarette). In addition, there are specific duties on certain
items, including footwear, ceramic products, and agricultural products.
Imports for export industries enter duty free.

 Export Development Board (EDB) Levy: In November 2004, the Sri

Lankan government introduced a new additional tax on a range of
imports identified as “non-essential.” The EDB levy is applied on C.I.F
value, and ranges from 10 percent to 20 percent.

 Import prices are increased by 7 percent (by adding an imputed profit

margin) when calculating the VAT and excise duty.

 According to U.S. trade data, the total value of imports affected by the
EDB will be about $5 million out of a total of about $143 million annual
U.S. exports to Sri Lanka. The total effect on U.S. exports could be
much higher, while calculating U.S.-sourced products sent via other
trading hubs.
19
IV. NTBs Applied by South Asian Countries (contd…)
Sri Import  Sri Lanka requires import licenses for over 300 items at the 6-digit
Lanka Licensing level of the Harmonized System (HS) code, mostly for health,
environment, and national security reasons. Importers must pay a fee
equal to 0.1 percent fee of the import price to receive an import
license.
Customs  The Government of Sri Lanka implemented the WTO Customs
Barriers Valuation Agreement in January 2003 and follows the transaction value
method to determine the C.I.F. value. Customs is also in the process of
installing an Electronic Data Interchange (EDI) system to support an
automated cargo clearing facility. When implemented, this system
 should improve customs administration and facilitate trade.
Standards, There are 85 items that come under the Sri Lanka Standards Institution
Testing, (SLSI) mandatory import inspection scheme. These importers have to
Labeling, obtain a clearance certificate from the SLSI to sell their goods. SLSI
and accepts letters of conformity from foreign laboratories, but retains the
Certificatio discretion to take samples and perform tests.
n  The Ministry of Health has drawn up a draft law to regulate the import
of GM food. Some large foreign food exporters have expressed
concern about this proposed regulation, which is thought to be
excessive and could hinder exports of US brands to Sri Lanka.
 A new labeling and advertising regulation came into effect from April
01, 2004. New features of the latest regulations include the date of
manufacture, the name or INS number of the food additives, claims
that are allowed and disallowed, etc.
 Poultry and meat: There is a temporary ban on all poultry imports due
to fears of HPAI. Imports of beef from the United States are banned due
to fears of Bovine Spongiform Encephalopathy (BSE). 20
IV. NTBs Applied by South Asian Countries (contd…)
Bangla Import  Import licenses are not required for any imports into Bangladesh. However, in
desh Licensing addition to the standard LCA import procedure, a permit, clearance, prior
permission or approval may be required for a number of imported products.
Many of the clearance requirements for items on the restricted list are based on
health or safety grounds and therefore seem to be "automatic" in nature.

 Some categories of the restricted items can be imported only by the registered
industrial consumers, including export-oriented ready-made garments; hosiery
and specified textile industries operating under the bonded warehouse system;
the pharmaceutical (allopathic) industries; and foreign exchange hotels.

 Second-hand clothing is importable only by 3,000 commercial importers who are

selected by an open lottery of quotas, which are distributed among different
districts on the basis of population. The ceiling of Tk 50,000 is set for each
importer, who may purchase, on the basis of prior permission from the CCIE. All
consignments of second-hand clothing must also be accompanied by a
certificate from a chamber of commerce of the exporting country certifying that
the consignment does not contain any banned items.

 An import permit or clearance permit is required from the CCIE in the following
cases: (i) imports of books, magazines, journals, periodicals, and scientific and
laboratory equipment; (ii) imports of free samples, advertising materials, and gift
items above the prescribed ceiling; (iii) imports of drugs and medicines; and
(iv) imports of capital machinery for joint-venture industrial units.
21
IV. NTBs Applied by South Asian Countries (contd…)
Bangla Standards, Standards, testing, and certification
desh Testing,  There are 1,612 standards in Bangladesh of which about 8% are compulsory.
Labeling, and Testing and certification procedures for compulsory standards are the same
Certification for domestic and imported products. Bangladesh has notified the WTO of its
acceptance of the Code of Good Practice of the WTO Agreement on Technical
Barriers to Trade.
 At present, some 36 Bangladeshi standards are identical to ISO standards,
and another 15 are identical to IEC standards. Bangladesh has been a
member of the ISO since 1974, but is not yet a member of the International
Electrotechnical Commission (IEC). The internationally equivalent standards
in Bangladesh are mostly voluntary.
 The adoption of ISO 9000 and ISO 14000 certification is regarded as an
essential instrument for the Bangladeshi exporters to market their products in
foreign markets. So far, 25 companies have obtained ISO 9000 certificates
and two companies have obtained ISO 14000 certificates. Some 12 companies
have been awarded HACCP certificates.
 At present, there is no laboratory accreditation scheme in Bangladesh. While
there are no accredited Bangladeshi laboratories, there are some
multinational companies operating in Bangladesh whose certificates are
accepted in the country.
 Bangladesh does not as yet participate any bilateral or mutual recognition
agreements with its trading partners in the areas of standards, testing, and
certification. However, the Government is currently promoting such initiatives
with the SAARC countries; a MOU in the area of quality, standardization, and
testing is to be signed between the Bureau of India Standards and the BSTI.
22
IV. NTBs Applied by South Asian Countries (contd…)
Bangla Standards, Labeling and packaging
desh Testing,  All imports are required to carry a label indicating the country of origin.
Labeling, The label must also indicate quantity, weight, measure, trade
and description, component materials, and date of manufacture/expiry.
Certificatio Bangla or English is permissible for labeling.
n
 For imports of food and beverages, the dates of manufacture and of
expiry must be clearly printed. Marking of the ingredients and
composition of milk food is required in Bangla. In addition, imports of
milk food with fat content, and baby food must be in a tin container, and
import of non-fat dried milk must be in a bag or tin.
 For imports of pesticides and insecticides, labels must contain
information on the manufacture and ingredients, as well as warning,
antidote, and direction for use, in Bangla.

Sanitary and phytosanitary standards

 Sanitary certificates and radioactivity test certificates are required for
imports of food and edible products. A sanitary certificate issued by the
competent authority of the exporting country must indicate that the
specific product is free of injurious insects, pests, and diseases. The
Bangladesh Atomic Energy Commission conducts radioactivity tests on
samples upon the arrival of food items, and issues a clearance
certificate for release of the items by the customs authority. Foreign
certifications of radioactivity test are also accepted in Bangladesh. All
expenses incurred for the tests are borne by importers.
23
IV. NTBs Applied by South Asian Countries (contd…)

Bangla Other Anti-dumping, countervailing, and safeguard measures

desh barriers • An application for an investigation, whether for an anti-dumping or
countervailing measure, must be made in writing to the BTC by or on
behalf of a domestic industry. Provisional anti-dumping or countervailing
duties, not greater than the margin of dumping or of the subsidy rates, may
be imposed within 60 days of initiation and applied for a period of six
months, extendable by three months.

 Final measures may be taken for a period of five years from the date of
imposition; however, the Government may renew the duty for a further
period of five years, upon review, if it is believed that there would be
continued injury.

 Hitherto, there has been no investigation initiated on anti-dumping or

countervailing measures in Bangladesh. A number of local producers have
complained that trade liberalization in recent years has helped foreign
suppliers to sell their products in Bangladesh. However, lack of technical
expertise and financial resources both by the administration and
industries, as well as lack of authenticated data essential for submission of
application, have made difficult to initiate investigations.

 A provision on safeguards was introduced in 1997 by amendments to

Section 18 of the Customs Act, 1969. However, rules regarding imposition
of safeguard measures have not yet been made.
24
IV. NTBs Applied by South Asian Countries (contd…)
Maldives Registration,  Any entity or person, including non-nationals, may import goods
documentation, commercially for a registered business activity or outlet to sell
and customs imports, provided that it has a general import license from the
clearance Ministry of Trade and Industries.
 Since 25 May 2000, Customs has authorized registered users to
access the customs declaration processing software system for
processing forms online. This has enabled import (and export)
documents to be submitted through electronic data interchange
(EDI) or direct trader input (DTI). Some 85% of declarations from
substantial importers are submitted electronically, either using EDI
or floppy disc.
 The Maldives Customs Service inspects imports for clearance after
payment of duty. All single-item consignment goods and direct-
delivery cargo, such as river sand and cement, are released on a
risk-assessed basis. About 25% to 30% of consignments of reliable
parties judged on past importing history are physically inspected.
 There are no preshipment inspection (PSI) requirements. The
Maldives has commenced computerizing customs operations, and
UNCTAD's ASYCUDA++ implemented during 2002,
 The Maldives has post-entry audit arrangements and import
declarations are checked after release. Importers must pay the
duties in full on shipments subject to valuation disputes while
seeking court relief. No system of security guarantees exists.
25
IV. NTBs Applied by South Asian Countries (contd…)

Maldives Registration,  The Maldives became a member of the World

documentati Customs Organization in September 1995. While it is
on, and not a member of the ATA Carnet System, similar
customs procedures and privileges are followed. The Maldives
clearance is considering joining this system.

 The Maldives and other SAARC members have

approved the Customs Action Plan to harmonize the
application and simplification of customs procedures
and practices. This is to be achieved through the
progressive implementation of the Kyoto Convention
on Customs Procedures and developing a
coordinated and cooperative approach to customs,
including adoption of standardized forms and
simplified procedures.

 According to the authorities, the new customs

legislation due to be passed in 2003 will be consistent
with the Kyoto Convention.

26
IV. NTBs Applied by South Asian Countries (contd…)
Maldives Standards Standards, testing, and certification
and other  There are no known Maldivian standards, and no formal
technical mechanism exists on standards. Australian, United Kingdom,
requirements and United States standards are sometimes required.

 The Maldives, along with other SAARC members, has agreed to

a Regional Action Plan on Standards, Quality Control and
Measurement aimed at identifying trade in products adversely
affected by variations in national standards, and their
harmonization, including the prospects of developing regional
standards.

 Efforts also include the promotion of mutual acceptability and

recognition of certification schemes and accredited testing.
Initial focus is on agricultural and food products, building
materials and household electrical appliances.

Sanitary and phytosanitary (SPS) requirements

 Imports of live animals, birds and plants require a
phytosanitary or sanitary certificate. The Maldives is not a
member of the FAO's Codex Alimentarius, OIE, or IPPC.

Marking, labelling, and packaging

 The Maldives has no special marking, labelling, or packaging
requirements.
27
V. NTBs Facing by South Asian Countries within Region
India Communication  Whenever there are disturbances at the Indo-Pak border, the mobile
Problems connections are not operational.
Trade Logistics • While road routes for trade between India and Pakistan are non-existent, rail
and air connectivity between the two countries has been erratic.
Different  Indian entrepreneurs facing NTBs of their products like electronic items, jute
products goods, machinery, plastic goods, textile and chemical items in Bangladesh.

Rice  There are about 600 varieties of rice are grown in India. These include both
basmati and non- basmati rice. Sri Lanka, accepts up to 100% broken rice
(non-basmati).
Transformers  In Sri Lanka, exporters require the KEMA4 certificate (ISO standards) even
though the product certified by several reputed third-party inspection
agencies like Crown Agents, ISO 9001:2000, Lloyds, Bureau Veritas, S.G.S.
Robert, W. Hunt Company, BSI Inspectorate, Griffith UK, OMIC Japan,
Tubescope Vecto GmbH Germany etc. Even though obtaining this certificate
is not very complex or expensive, it demands lot of time and effort, which is
an irritant to exporters.
Cosmetics  Sri Lanka specifies registration in their country even if the Indian exporter
has registration in India. This registration is specific to Sri Lanka and is not a
mandatory procedure for exports to other countries. Hence, this aggravates
the agony of the exporter especially while exporting to Sri Lanka
Mango pulp  In case of mango pulp export to Sri Lanka, Indian exporters are required to
obtain a Health certificate from the Ministry of Health of Sri Lanka. This test
is conducted in order to specify the exact contents of the product. This test
is conducted over a period of 2 days and costs about Rs.5000- Rs.7000 per
consignment. 28
V. NTBs Facing by South Asian Countries within Region
India Textile  Although most importing countries accept the quality certification from ISO and
products Bureau Veritas, Sri Lanka asks for certification from its own agencies like Sri
Lanka Standards Institution. This is a problem for Indian exporters as they have
to get this certificate and incur the cost and the time even though they have an
ISO certificate from a recognised agency in India.

Sanitary  Sri Lanka does not accept products packed in straws. They demand that such
ware products be packed in 5-ply corrugated boxes. India does not manufacture
enough 5-ply corrugated boxes to meet the existing demand. The prices are too
high compared to the other countries. This actually increases the costs of the
packaging and affects the product pricing in the international market.

Others  Regarding the first category of barriers in Sri Lanka majority of the firms faced
barriers related to product standards. In the second category of barriers
majority of the firms felt there were barriers related to banks and to competition.
 Majority of the firms exporting to Sri Lanka disagreed that there was any kind of
discrimination against them vis-à-vis other competitors.
 Majority of the firms exporting to Sri Lanka stated that they incurred expenses
between 0 and 5% of total sales revenue to meet standards.

Other  Many buyers in Sri Lanka demand under invoicing in order to save themselves
barriers from import duties. This causes exporters undue harassment. Also Indian
banks like the State Bank of India do not confirm the LC issued by Banks of
Thailand and most banks of Vietnam. Due to non-confirmation of the LCs the
exporters are not able to take orders. On the other hand, some of the private
banks like Citibank, HSBC do confirm the Letter of Credit.
29
V. NTBs Facing by South Asian Countries within Region

Pakistan Lack of  Lack of banking facilities of each other’s bank is mentioned

Adequate as a barrier to trade with India
Banking  Some Indian banks do not recognize L/Cs from all Pakistani
Relations banks. Moreover payments through Asian currency union are
delayed.
Communication • Whenever there are disturbances at the Indo-Pak border, the
Problems mobile connections are not operational.

Trade Logistics • While road routes for trade between India and Pakistan are
non-existent, rail and air connectivity between the two
countries has been erratic.
Stringent • Pakistani consignment are subject to more stringent
checking checking and detailed security checks in India (e.g. Pakistani
Molasses is allowed in 1 ton packs only because of security
reasons)
Closure of land • Closure of land routes (Wagha, Khokrapar, and Ganda Singh
routes Wala (near Kasur) is also seriously hampering trade with
India
Port • There is higher port congestions, higher port and demurrage
congestions charges, more paper work, and generally more issues of
trade and transport facilitation in Pakistan

30
V. NTBs Facing by South Asian Countries within Region
Bangla Major  India has imposed non-tariff restrictions on Bangladesh export items which
desh products include biscuits, jam, jelly, fruit juice, soft beverage, vegetables, Jamdani
saree, jute, jute goods, and cement. India also imposed anti-dumping duty on
dry cell battery exports.

Dye  In India, it is being tested for dyes in Lucknow instead of Kolkata.

Cement  India recently refused to allow cement export to its north-eastern states taking
quality certification as a pretext. India has instructed its Customs officials to
bar cement import from Bangladesh to Tripura state citing ground that these
exports have no quality certification of Bureau of Indian Standards (BIS).
Bangladeshi cement manufacturers have quality certification from appropriate
government agencies such as Bangladesh Standard and Testing Institute
(BSTI).
 It is not practical in any way that each and every Bangladeshi exporters will
seek quality certificate from BIS to avail of export facility to Indian market.
Potato  India refused export of potatoes to Tripura last year citing health ground.
Mizoram's attempts to buy some other merchandise have also failed in like
situations.
RMG  The Indian government had also raised duty on garment import from
Bangladesh, which affected Bangladesh’s export.
BIS  In order to obtain the BIS certificate, Bangladeshi companies in the first should
Certificate apply, then the BIS inspectors will come to Bangladesh at the company's cost,
make inspection, evaluate manufacturing process and quality of products, and
take data back to India for further evaluation.
 The final issue of quality certificate, if they do it at all, will take several months
if not some years.
31
V. NTBs Facing by South Asian Countries within Region

Bangladesh Pharmaceutical Registration from Pakistan is very tough as they

products restricted import of Bangladeshi pharmaceuticals by
law to that country.

Jute yarn The BTC study (2003) noted that packaging

requirements, phyto-sanitary measures, special
certificate of origin, customs valuation, pre-
shipment inspection requirements are restricting the
export of jute yarn to India, Canada and other
countries.

Problems at Exporters face problems while exporting goods also

customs point to India. For example, lack of truck parking space,
unavailability of customs officials in time etc.

Visa Visas can be obtained only for specific cities prior to

Restrictions entry into Pakistan.

32
V. NTBs Facing by South Asian Countries within Region

Country Products NTBs

Nepal Tea  There is a 100 per cent incidence of NTMs in exports of all types of
green and black tea to India and Pakistan. For Bangladesh and Sri
Lanka, the incidence is zero per cent.
Honey  There is a 100 per cent incidence of NTMs in exports of natural
honey to India and Pakistan. However, in the case of other
countries, the incidence is zero per cent.
Floriculture  There is a 100 per cent incidence of NTMs in exports of cut
flowers, fresh and other to India. However, in the case of other
countries, the incidence is zero per cent.
Medicinal  There is a 100 per cent incidence of NTMs in exports of Liquorice
Plant roots to Pakistan. However, the incidence is zero per cent in the
case of other countries.
 There is a 100 per cent incidence of NTMs in exports of Ginseng
roots to Pakistan followed by China (25 per cent). However, the
incidence is zero per cent in the case of other countries. And, for
exports of other medicinal plants (121190) to India and Pakistan,
there is a 100 per cent incidence of NTMs. However, the incidence
is zero per cent in other countries.
Vegetable  There is a 100 per cent incidence of NTMs in exports of vegetable
Seed seeds to Pakistan. However, the incidence is zero per cent in the
Export case of other countries.
33
V. NTBs Facing by South Asian Countries within Region

Sri Vanaspati • At present, under the Free Trade Agreement (FTA)

Lanka between Sri Lanka and India, vanaspati can be imported
from Sri Lanka at zero import duty, and without any quota
restriction.
• As an offshoot of the FTA, about 2.7 lakh tonnes of
vanaspati have entered into the country from Sri Lanka
between September 2005 and March 2006.
• Government of India is planning to impose restrictions.
• One of them may be relating to insertion of a clause under
the FTA allowing imposition of a tariff-related quota (TRQ)
on its import from Sri Lanka.
• While the other may be inclusion of vanaspati, originating
from that country, under the heading of HS-1516 , one of
the product specification categories under the Indian
Customs law.

34
V. NTBs Facing by South Asian Countries within Region
Table: Selected Bangladeshi Products Facing NTBs in Indian Market, 1997
HS Code Product Name NTMs
30310 Salmon, Pacific, frozen, whole 100
30339 Flatfish except halibut, plaice or sole, frozen, whole 100
30376 Eels, frozen, whole 100
30379 Fish nes, frozen, whole 100
30410 Fish fillet or meat, fresh or chilled, not liver, roe 100
30420 Fish fillets, frozen 100
30520 Livers and roes, dried, smoked, salted or in brine 100
30549 Smoked fish & fillets other than herrings or salmon 100
30614 Crabs, frozen 100
30619 Crustaceans nes, frozen 100
50510 Feathers and down used for stuffing 100
50610 Ossein and bones treated with acid 100
60499 Foliage,branches, for bouquets, etc. - except fresh 100
70390 Leeks & other alliaceous vegetables, fresh or chilled 100
70910 Globe artichokes, fresh or chilled 100
70990 Vegetables, fresh or chilled nes 100
90230 Tea, black (fermented or partly) in packages < 3 kg 100
90240 Tea, black (fermented or partly) in packages > 3 kg 100
Source: Deb (2006), "Rules of Origin and Non-Tariff Barriers in Agricultural Trade: Perspectives from Bangladesh and 35
VI. Removal of NTBs: Experience of AFTA

• With the effective realisation of AFTA, ASEAN Member

Countries are now placing more emphasis on the
elimination of NTBs to trade, particularly with regard to
those that are associated with standards, technical
regulations, and conformity assessment procedures.

• AFTA has taken different measures in order to remove

NTBs i.e. process of verification and cross-notification;
updating the working definition of Non-Tariff Measures
(NTMs) and NTBs in ASEAN; the setting-up of a
database on all NTMs maintained by Member Countries;
and the eventual elimination of unnecessary and
unjustifiable NTBs.

36
VI. Removal of NTBs: Experience of AFTA (contd…)

• In 2004, 82 standards on safety and electromagnetic compatibility

(EMC) were completed with another 24 standards for electrical and
electronic equipment set for harmonisation before 2007.

• Currently, a survey is being conducted to identify more standards for

harmonisation to support the integration of the eleven priority sectors.

• Member Countries have indicated their acceptance of test reports

and/or product certifications under the ASEAN Sectoral Mutual
Recognition Arrangement for Electrical and Electronic Equipment
(ASEAN EE MRA).
• A regulated product that has been tested by a designated testing
laboratory or certified by a designated certification body can
enter and be marketed in the importing Member Country without
being subject to further testing and certification.

• Four testing laboratories and one certification body have been

designated to provide testing and certification services under the
ASEAN EE MRA. Another five testing laboratories are undergoing
verification processes for technical competence.

37
VI. Removal of NTBs: Experience of AFTA (contd…)

• ASEAN Member Countries have also agreed to work towards

the harmonisation of regulatory regimes in the electrical and
electronics sector by 2010.

• ASEAN Member Countries made considerable progress in

implementing the Agreement on the ASEAN Harmonised
Cosmetic Regulatory Scheme.

• This agreement includes an MRA and the ASEAN Cosmetic

Directive, which lays down the requirements for cosmetic
products marketed in ASEAN. Seven Member Countries have
indicated their readiness to implement the Directive on or
before 2008.

• To support Member Countries to implement the Scheme, a

series of technical documents, guidelines and training modules
have been developed, especially in the areas of good
manufacturing practice and post marketing surveillance.
38
VI. Removal of NTBs: Experience of AFTA (contd…)

• ASEAN continued efforts to harmonise regulations in order to

facilitate trade in pharmaceuticals.
• All Member Countries have indicated their readiness to
implement the ASEAN Common Technical Dossiers (ACTD) and
the ASEAN Common Technical Requirements (ACTR) on or
before 31 December 2008.
• The ACTD is part of the marketing authorisation application
dossier that is common to all ASEAN Member Countries
while the ACTR is the set of written materials intended to
guide applicants to prepare application dossiers in a way
that is consistent with the expectations of all ASEAN Drug
Regulatory Authorities.
• In addition, a series of guidelines for the implementation of the
ACTR has been developed. ASEAN is also pursuing the
harmonisation of labelling requirements for pharmaceuticals and
is considering an MRA on Good Manufacturing Practice
Inspection.
39
VI. Removal of NTBs: Experience of AFTA (contd…)
• Concerning prepared foodstuffs, four areas were identified for the
harmonisation of technical requirements. These are food labelling; the
import export certification and registration procedure; food
fortification and GMO; and Hazard Analysis and Critical Control Point
(HACCP) and Good Manufacturing Practices (GMP) Inspection and
Certification. This harmonisation of technical requirements will pave
the way for future MRAs.

• An ASEAN Common Requirements for Prepared-Packaged Products

was developed with the objective of eliminating technical barriers to
trade associated with legal metrology regulations. A majority of
Member Countries have indicated their readiness to implement the
harmonised requirements by December 2008.

• Overall, substantive work was taken to facilitate the integration of the

eleven priority sectors. This includes the adoption of action plans on
standards, technical regulations and conformity assessments for
medical devices, automotives, wood-based and rubber-based products,
and traditional medicines and health supplements. A number of areas
have been identified for the harmonisation of technical requirements
and regulations in these sectors. (ASEAN Annual Report, 2005)
40
VII. Concluding Remarks: How to Remove NTBs?

• The first step to eliminate NTBs is to make documentation of

all the NTBs currently applied by South Asian countries
against each other.
• A committee can be set up for documentation and
updating the NTBs.
• Find out the “real’ NTBs practised in intra-regional trade.
• In order to develop competitiveness, immediately harmonize
the regulatory regimes of major export products.
• Working on signing a Mutual Recognition Agreement for
specific categories of products.
• Under one certification body, accredited testing
laboratories of different South Asian countries will work
on product certification.

• In case of development of testing process, standardization

system, labeling system etc., sufficient technical and financial
support need to be assured for LDCs. 41
 Thank You
For
Your Attention

42