govt support & barriers

8/3/2019 Govt Support & Barriers

1/19

Government Support &Barriers to Trade


2/19

Scheme of Presentation

Introduction

Globalization and its Impacts

Government Support & Limitations Role of Commercial Diplomacy in Trade

Development

Barriers to Trade & Impact

WTOs stance on Trade Barriers

How to Manage Barriers

Conclusion


3/19

Introduction

Effective policies required to manage economy

Trade is one major factor of economic stability

Multiple policies & agencies engaged

Coordination, consistency & managementstrengthen economic plans

Strengthened supply base ensures growth

Efficient commercial diplomacy ensures levelplaying market place for goods & services


4/19

Introduction

Each nation thrives for maximum gains Trade game gets ruthless in times Nations apply measures to restrict inward trade

as well as attempt to discriminate In a situation where efforts are being made to

reduce tariff structure, D.Cs tend to apply NTBs Non resolution of trade issues in Doha Round

led to exploitation of Art-XXIV Market access is the big issue Self interest of Developing Countries Internal competitiveness is bigger issue for them


5/19

Globalization & Impact

Cold war converted into Economic War

Each nation to fully prepared for challenges

Protectionist regimes required to open trade

Transparency, non discrimination & nationaltreatment requirements under WTO

Nations required to build capacity to compete Theory of Comparative Advantage to dominate

Progress & prosperity main objectives


6/19

Globalization & Impact

Interest clash of trading blocs D.Cs aim at dominating world economic scene Doha round of talks not moving forward

Proliferation of FTAs & Regional Agreementsmake trade more complex Article XIV of GATT Non Tariff Barriers discriminate trade Issue of movement of natural persons &

technology transfer Developing nations not united on trade agenda Most developing countries are not equipped with

trade toolsinapt trade & industrial policies


7/19

Government Support & Limitations

Post WTO, the governments used to support itstrade, industry & agriculture with subsidies &

drawbacks WTO intend to create level playing field and

therefore subsidies needed to lower to thepermissible levels

Varying levels of commitments by Developed,Developing & Least Developed economies


8/19

Government Support & Limitations

Specific subsidies are subject to disciplines setout in S&CM Agreement of WTO

Prohibited Subsidies

Domestic goods subsidized

to disadvantage imported goods

Actionable SubsidiesCausal effects, injury todomestic industry of another member of WTO

Non Actionable Subsidies

Industrial research,pre-competitive activity, support to disadvantageousregions, assistance for compliance


9/19

Domestic Support in Agriculture

Specific subsidies are subject to disciplines setout in S&CM Agreement of WTO

Red Box

Forbidden Subsidies

Amber BoxExisting subsidies to be reduced

gradually over a defined period of time

Green BoxPermitted subsidies


10/19

What is Being Provided by GoP?

Trade facilitation through Trade Policy

Industrial Policy needs fine tuning

Institutional base for business support

TDAP

SMEDA

NEVTECH

Engineering Development Board Agriculture & Horticulture Board

UNIDO supported Cluster Development Program

Department of Commerce - GoP


11/19

Role of (Commercial) Diplomacy An effective Institutional Arrangement for

commercial lobbying & bringing gains

Trade Diplomacy of Pakistan is not very

impressive Need to open new Missions in areas of trade potential

Existing Missions to be equipped properly

Postings of professionally trained officers required for

effectiveness Foreign Missions need to hire Trade Development

Officers in core product areas

Support of Trade in setting up action plan should be

sought by the government


12/19

What is Missing?

Consistency & harmonization

Commitment

Investors confidence Law & order

Country image branding

Infrastructure Ability to negotiate & get favorable deals


13/19

Barriers to Trade & Impact


14/19

Trade Barriers

Tariff Barriers Imposition of Tariff for protection/Income

Non Tariff BarriersQuotas

Voluntary Export Restraints

Subsidies on Exports & Drawbacks

Import Licensing Requirement

Technical & Compliance Requirements


15/19

Agreement on SPS

This agreement concerns the application ofsanitary and phytosanitary measures in otherwords food safety and animal and plant health

regulations. The agreement recognises thatgovernments have the right to take sanitary andphytosanitary measures but that they should beapplied only to the extent necessary to protecthuman, animal or plant life or health and shouldnot arbitrarily or unjustifiably discriminatebetween Members where identical or similarconditions prevail.


16/19

Agreement on SPS

In order to harmonize sanitary and phytosanitarymeasures on as wide a basis as possible, Membersare encouraged to base their measures oninternational standards, guidelines and

recommendations where they exist. However,Members may maintain or introduce measureswhich result in higher standards if there is scientificjustification or as a consequence of consistent riskdecisions based on an appropriate risk assessment.

The Agreement spells out procedures and criteriafor the assessment of risk and the determination ofappropriate levels of sanitary or phytosanitaryprotection.


17/19

Agreement on TBT

It seeks to ensure that technical negotiations andstandards, as well as testing and certificationprocedures, do not create unnecessary obstacles totrade. However, it recognizes that countries have the

right to establish protection, at levels they considerappropriate, for example for human, animal or plant lifeor health or the environment, and should not beprevented from taking measures necessary to ensurethose levels of protection are met. The agreement

therefore encourages countries to use internationalstandards where these are appropriate, but it does notrequire them to change their levels of protection as aresult of standardization.


18/19

Conclusion

Government support can be created througheffective lobbying

Careful analysis of pros & cons prior to FTAs

Entrepreneur to hold thorough knowledge ofdomestic policies & international requirements

Harmonization of policies and implementation

Effective country branding through diplomatic &commercial channels direly required

Commitment on part of entrepreneur would paveway to specialization & effectiveness


19/19

Thank You

govt support & barriers

Documents