Raihan, S., M. A. Khan and S. Quoreshi (2014), “NTMs in South Asia: Assessment and Analysis”, SAARC-TPN, Kathmandu

NTM

Abstract: This study provides an inventory of NTMs for each SAARC country at the 6-digit HS code level and also specifies country specific lists of products for which the country has export capacity but actual regional export is limited or non-existent, and identify the relevant NTMs on those products. Using the GTAP model, the report also presents a simulation of possible gains from reduction in transaction costs in bilateral trade in South Asia. A monitoring and reporting template for NTMs has been developed and a framework for monitoring and reporting of NTMs has been proposed using the template as a tool. Finally, the study comes up with a set of recommendations that addresses the policy making at the functional levels.

The official data received from the International Trade Centre (ITC), together with unstructured data from the consultants’ own sources have been combined to develop an inventory of NTMs for each country. The structure of the inventory that the study team has developed is much easier to comprehend for the lay users and professionals alike, e.g., business community, policy makers, professionals working at trade bodies, and general researchers. The unique features of this inventory are as follows: (1) It offers an easy-view 9-column structure visible in one single pane, without the need for panning to left and right; (2) in most cases, contains updated information; (3) when applicable, lists multiple NTMs against the same products, placed in the same row; (4) provides a wider list of NTMs for each country; and (5) uses the latest UNCTAD 2012 Classification for NTMs in coding.

Apart from the NTM inventory and coding in extensive spreadsheets, country-specific brief profiles of NTMs have been included in text form in this report for ease of readers ease in their understanding of the information. These country-specific texts on NTMs have been circulated, in advance, among the respective TPN partner organisations so that they can validate the information with the business community and policy makers in their respective countries as well as sensitise them about the country-specific NTMs.

The study compares the export capacity of the South Asian countries with the actual export in the context of trade among the South Asian countries. An array of products have been identified in which South Asian countries have a large export capacity in their trade with neighbouring countries, but actual export remains very low. The study team developed a methodology for Prioritisation of Products. The algorithm of the methodology for identifying a product had the following criteria: (1) Global Import of country maintaining NTMs >US$1 Million; (2) global export of other countries in SAARC > US$1 Million; (3) limited or no intra-SAARC trade by cross-examining the trade of that product in all the other SAARC countries; (4) possible NTM reason? Yes/No; (5) if yes, examine the NTMs, rationale, assess trade impact; and (6) if NTMs are possible reason for limited intra-region trade for the product, then that product was included in the List of Priority Products.

This study also attempts to highlight the gains from reduction in transaction costs in bilateral trade in South Asia. It takes the help of global computable general equilibrium (CGE) modelling, namely the GTAP model. This study undertakes a SAFTA scenario analysis where all South Asian countries reduce their bilateral tariffs on goods trade to zero and envisions a SAFTA scenario plus reduction in transaction costs in bilateral trade among the South Asian countries. Simulation results from a SAFTA scenario analysis suggest large welfare gains for both India and Pakistan and some welfare gains for Nepal and Sri Lanka. There would be some welfare loss for Bangladesh due to the possibility of a larger trade diversion effect rather than the trade creation effect. However, when the SAFTA scenario is run considering a scenario of reduction in transaction cost in bilateral trade, welfare gains for all South Asian countries would increase dramatically.

The template developed for monitoring and reporting of NTMs is a unique one. The research team found no prior examples of the use of such a template for monitoring and reporting on NTMs. This template can be used for any country for any particular trading partner, and for any product. In this study, it is used for the purpose of monitoring the three main categories of indicators, i.e., cost, number of procedural steps/documents, and time, which are compatible with the two widely acknowledged similar indices, namely, (i) the World Bank Group’s Cost of Doing Business, and (ii) World Economic Freedom Index.

The major recommendations made by the study include developing a lobby and advocacy agenda for reducing and eliminating NTMs; establishing a benchmark for NTMs to be carried out by NTM-Desks that are soon to be set up as the basis of advocacy agenda; harmonising TBT/SPS standards; creating a forum for regular interactions between the key government officials and trade bodies on NTM issues, particularly the procedural ones, and initiating a study in near future to review the Priority Products identified in the context of ‘SAFTA Sensitive List’ in order to achieve a deeper understanding of each country’s defensive and offensive trade and economic interests, a prerequisite for reaching regional economic integration.

Link: http://sanemnet.org/sanemafeefcontainer/uploads/2014/06/NTM_Ebook-.pdf