session 6: regionalism: reaping the opportunities and ... 6 regionalism reaping the...asia-pacific...

REGIONAL WORKSHOP ONLEAST DEVELOPED COUNTRIES AND LEVERAGING TRADE AS

A MEANS OF IMPLEMENTATION FOR THE 2030 AGENDA

2-4 August 2017Thimphu, Bhutan

Session 6: Regionalism: reaping the opportunities and dealing with challenges

Rajan Sudesh RatnaEconomic Affairs Officer

Trade, Investment and Innovation Division

UN ESCAP, Bangkok

Email: [email protected]

mailto:[email protected]

BASIC GATT PRINCIPLES

• MFN (Most Favoured Nation Treatment)

• TRADE TO BE REGULATED BY CUSTOMS DUTY

ONLY

• DUTIES TO BE BOUND

• NATIONAL TREATMENT

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Non-discrimination: Basic principle

• The most basic principle in the GATT/WTOsystem is that there should be free and opencompetition in trade through non-discrimination between imports fromdifferent countries and between importedgoods and domestically produced goods.

• Legal manifestation through➢MFN

➢National Treatment

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Basic Principle: Mainly tariffs for import control

• Tariffs should be the only instrument forcontrolling trade.

• These tariffs should be bound.

• Exceptions

– QRs on BOP grounds

– Articles XX and XXI exceptions

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GATT RULES

• Permitted under Article XXIV of GATT 1994.

• Exception to MFN treatment within the Rulessubject to fulfillment of conditions:– items on which there is substantial trade to be

covered

– the phase out of duties should be within areasonable length of time

– it should not have trade distorting effect to non-RTA Parties.

• Enabling Clause Decision – flexibility.

Rajan Ratna 5

WTO RULES

• The text of Article XXIV became part of WTOAgreement.

• During Uruguay Round an understanding wasreached on duties & other regulations ofcommerce, reasonable length of time, andprocedure for RTA notification to WTO.

• Services: Article V of GATS allows forEconomic Integration.

Rajan Ratna 6

Types of trade agreements

Preferential Trade

Agreements

• Partial preferences to trading partners

Free Trade Area

• Elimination of all tariffs, quantitative restrictions and NTBs

Customs Unions

• Common level of trade barriers vis-à-vis non-members

Common Market

• Free movement of factors of productions

Economic Union

• Integration of national economic policies; currency union

“shallow” integration “deep” integration

Rajan Ratna 7

PTA Negotiations

• Limited items and limited tariff concessions

• Negotiations are held in different Rounds

• Positive list approach

• Request is made to other Parties to give Tariff Preferences on items of export interest

• Other Party then offers – items & MoP

• Negotiations are then held on expanding the items & MoP

• Issue – reciprocity or non-reciprocity8Rajan Ratna

FTA

• Negative/Sensitive/Exclusion List - SAT

• Decide on modality

– Time frame

– Tracks of liberalisation

– Trade/Tariff line coverage

• Offer

• Negotiate – position of items & TLP

• Technical assistance and cooperation

9Rajan Ratna

Rajan Ratna 10

Services in RTAs• Article V of GATS

– substantial sectoral coverage (12 sectors – 160subsectors);

– Elimination of existing discriminatory measures,and/or prohibition of new or more discriminatorymeasures either at the entry into force or on thebasis of reasonable time-frame.

• Flexibility for developing countries

• Facilitate trade between parties and to to raise theoverall level of barriers to trade in services within therespective sectors or sub-sectors compared to the levelapplicable prior to such an agreement.

Rajan Ratna 11

Doha Round - Rules negotiations

• RTA transparency part of Doha Roundnegotiations.

• A decision was taken on 14th December 2006on Transparency mechanism for RTAs whichwas adopted by the General Council. Itinvolved issues relating to:

– Early announcement

– Notification

– Procedures to enhance transparency, etc.

Rajan Ratna 12

Transparency mechanism

Early announcement:

• Best endeavor to inform the WTO Secretariat of participation in new RTA negotiations

• Parties to a signed RTA are to inform the Secretariat and provide basic info on the RTA

• Such information will be posted on the WTO website and be periodically updated

13

Early Announcement

RTA

Negotiations

RTA

Signature

WTO

website

Rajan Ratna

RTAs – other elements

• Anti Dumping

• Safeguard

– Global

– Bilateral

• Duty drawback

• Rules of Origin

• Export taxes/licenses

• Import licenses

Rajan Ratna 14

Comprehensive Agreements• Cover goods, services, investments etc.

• Commitments on IPRs

• Commitments on GP

• TF & Customs Cooperation

• Mutual Recognition Agreements– Goods – for NTBs

– Services – for MA

• Other Areas of cooperation – Tourism, Technology, R&D etc.

• Package – Single Undertaking or in staging.

Rajan Ratna 15

Rajan Ratna 16

Asia-Pacific RTAs• As of May 2017, there were 257 RTAs in Asia-

Pacific region which are either in force, signed orbeing negotiated.

• Globally 274 “physical” RTAs in force, and 170(66%) are from AP

• 15 - signed but not implemented

• 72 - under different stages of negotiations.

• 88.2% - cover FTAs, and FTAs and EIAs (havingequal share now).

• 10.6% of the PTAs in force are PSAs

• Only 1.2% of agreements are classified as customsunions.

Rajan Ratna 17

PTAs in force, by type and scope (as of 31 May 2017)

Source: ESCAP calculation based on APTIAD data

Rajan Ratna 18

Cumulative number of PTAs (notified and non-notified to WTO) put into force by Asia-Pacific economies, by geographical

region, 1971-May 2017)

•Asia-Pacific members of ESCAP are grouped into five sub-regions: East and North-East Asia (ENEA); North and Central Asia (NCA); South-East Asia

(SEA); South and South-West Asia (SSWA); and the Pacific.

•source: ESCAP calculation based on APTIAD data

Rajan Ratna 19

Cumulative number of PTAs (notified and non-notified to WTO) put into force by Asia-Pacific economies, by level of development of parties, 1971-

May 2017)

Source: ESCAP calculation based on APTIAD data

Rajan Ratna 20

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Brunei

Myanmar

Lao PDR

Bhutan

Korea, Rep.

Australia

Afghanistan

Georgia

Turkey

Singapore

Indonesia

Malaysia

Philippines

Nepal

New Zealand

Tajikistan

Thailand

Samoa

Fiji

Papua New Guinea

Nauru

Uzbekistan

Vietnam

Armenia

Kyrgyz Republic

Tonga

China

India

Cambodia

Pakistan

Hong Kong, China

Japan

Kazakhstan

Iran, Islamic Rep.

Macao

Russian Federation

Niue

Sri Lanka

Bangladesh

Turkmenistan

Maldives

Solomon Islands

Azerbaijan

Cook Islands

Vanuatu

Tuvalu

Kiribati

Mongolia

Micronesia, Fed. Sts.

Marshall Islands

Import

Export

Rajan Ratna 21

TPP

SAFTA/SATIS

EU

Jordan

US@

Bloc-to-bloc or bloc-to-country Country-to-country Under negotiation, awaiting ratification

Taiwan POC

Macao, China

Egypt

*Not all members shown / @Withdrawals: US (TPP); PNG (PACERPlus) / PTAs not represented: GSTP, D-8 PTA and PTN (in force) and TPS/OIC (under negotiation)

Georgia

Hong Kong, China

PICTA*

IsraelMauritius

Serbia

MERCOSURArgentina-Brazil–

Paraguay-Uruguay

Trans-Pacific SEP

CISFTA

ECO

PNG@Fiji

MSG*

Morocco

Mongolia

APTA

China

SACUBotswana

Lesotho

Namibia

South Africa

Swaziland

Ecuador

SPARTECA*/

PACER Plus*

Pakistan

Maldives

Afghanistan

BIMSTECIran, IR

Rep. Korea

Colombia

Canada

PeruMexicoChile

Australia New

Zealand

ASEAN

ECONOMIC

COMMUNITY

CEZ

Moldova

GUAM

Customs

Union

Armenia

Belarus

Azerbaijan

Panama

Costa RicaCentral America*

GCC*

Bahrain

Other

Turkey’s

PTAs:

• Albania

• Bosnia-

Herzegovina

• FYROM

• Montenegro

• Palestine

• Syria**

• Tunisia

** Suspended

Other Turkey’s

negotiations or

PTAs awaiting

ratification:

• Cameroon

• Dem. Rep.

of Congo

• Faroe

Islands

• Ghana

• Kosovo

• Lebanon

• Libya

• Seychelles

EAEU

Russian Fed.Kazakhstan

Kyrgyzstan

Tajikistan

Uzbekistan

EFTA*

Switzerland

Norway

Iceland

RCEPTurkmenistan

CIS

1994

Japan

Ukraine

Negotiations

Japan-China-

Rep. Korea

Sri Lanka

BangladeshNepal

Bhutan

India

Turkey

Rajan Ratna 22

LDC trade share with FTA partners (2012-2015)

Rajan Ratna 23

Source: derived from Asia-Pacific Trade and Investment Agreements Database (APTIAD)

6 agreements in force

7 agreements in force2 agreements in force









0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00%

Myanmar

Lao PDR

Bhutan

Afghanistan

Nepal

Cambodia

Solomon Islands

Bangladesh

Vanuatu

Tuvalu

Kiribati

Total FTA export/Total import from world Total FTA import/Total import from world

Summary of ASEAN Tariff Reduction

24

Members PeriodTotal Number of Tariff

linesTariff= 0% in 2015 %

0%<Tariff<=5% in 2018

Tariff>5% in 2018

Without ATIGA Tariffs

Number of Tariff Lines in the Flexibility

7%

CLMV

Cambodia 2012 - 2018 9558 9406 98.4% 65 - 87 662

Lao PDR 2016 - 2018 9558 9206 96.3% 265 - 87 669

Myanmar 2016 - 2018 9558 9492 98.4% 15 - 51 645

Viet Nam 2015 - 2018 9558 9288 97.1% 56 16 198 668

ASEAN 6 PeriodTotal Number of

Tariff lines0% in 2015 %

0%<Tariff<=5% in 2015

Tariff>5% in 2015

MFN Rate

Brunei 2015 9916 9844 99.3% 1 72

Indonesia 2015 10012 9899 98.87% 2 15 96

Malaysia 2015 12337 12182 98.74% 60 13 82

Philippines 2015 9821 9685 98.61% 90 19 27

Singapore 2015 100%

Thailand 2015 9558 9544 99.85% 14

Average ASEAN 6 99.22%

Average CLMV 97.55%

Rajan Ratna

Exports and CoO Under SAFTA

Rajan Ratna 25

0

5000

10000

15000

20000

0

100

200

300

400

500

600

2006 2007 2008 2009 2010 2011 2012 2013

Ce

rtif

icat

es

of

Ori

gin

Exp

ort

val

ue

(M

illio

n U

S$)

Afghanistan (exports)

Bangladesh (exports)

Bhutan (exports)

India (exports)

Maldives (exports)

Nepal (exports)

Pakistan (exports)

Sri Lanka (exports)

Afghanistan (CoO)

Bangladesh (CoO)

Bhutan (CoO)

India (CoO)

Maldives (CoO)

Nepal (CoO)

Pakistan (CoO)

Sri Lanka (CoO)

Rajan Ratna 26

Imports share in NL items of BIMSTEC FTA with regard to total bilateral imports

Country 6-digital HS 8-digital HSimport from

Bhutan 2011

import from

India 2011

import from

Nepal 2011

import from

Myanmar 2010

import from

SriLanka 2011

import from

Thailand 2011

Bangladesh 1162 1712 95.2% 61.4% 58.3% 62.1% 76.1% 30.4%

Country 6-digital HS 8-digital HS

import from

Bangladesh

2012(mirror)

import from

India 2014

import from

Nepal 2013

import from

Myanmar

2010(mirror)

import from

SriLanka

2013(mirror)

import from

Thailand 2014

Bhutan 1149 1150 99.9% 77.0% 100.0% 0.0% 93.6% 3.5%

6-digital HS 8-digital HS

import from

Bangladesh

2014(mirror)

import from

Bhutan 2012

import from

Nepal 2013

import from

Myanmar

2014(mirror)

import from

SriLanka 2013

import from

Thailand 2014

India 1168 3443 49.8% 37.9% 34.8% 29.1% 44.6% 30.5%


import from

Bangladesh

2011

import from

Bhutan 2012

import from

India 2011

import from

Nepal 2011

import from

SriLanka 2011

import from

Thailand 2011

Myanmar 1155 604 98.6% 100.0% 48.8% 14.5% 3.6% 1.7%


import from

Bangladesh

2013 (mirror)

import from

Bhutan 2012

import from

India 2014

import from

Myanmar 2012

import from

SriLanka 2013

import from

Thailand 2014

Nepal 1162 - 94.3% 80.6% 61.8% 0.0% 0.4% 30.3%


import from

Bangladesh

2013 (mirror)

import from

Bhutan

2013(mirror)

import from

India 2014

import from

Myanmar

2013(mirror)

import from

Nepal

2013(mirror)

import from

Thailand 2014

Srilanka 1202 - 17.1% 93.6% 34.0% 6.7% 96.5% 20.8%


import from

Bangladesh

2013 (mirror)

import from

Bhutan 2012

import from

India 2014

import from

Myanmar

2013( mirror)

import from

Nepal 2013

import from

SriLanka 2013

Thailand 1162 721 32.5% 33.9% 24.2% 43.1% 27.9% 50.2%

• The Generalised System of Preferences (GSP) wasdevised during GATT negotiations in 1971 as atemporary waiver to MFN rules for tariff ondeveloping countries’ goods.

• In 1979 the ratification of the “Enabling Clause”permanently extended the GSP and allowed furthernon-reciprocal agreements.

• Various developed countries introducedcomprehensive preferential tariff schemes for allLDCs (e.g. the EU’s 2001 “Everything But Arms”),developing countries are following the suit underthe DFQF Schemes.

GSP and WTO Ministerial Decision

Rajan Ratna 27

• First global duty free quota free (DFQF) schemewas introduced with the 2005 HK WTOMinisterial Decision, covering at first only LDCscotton exports, and then further expanded up tothe Nairobi Ministerial (2015).

• All developed country members of the WTO arerequired to grant DFQF market access up to 97%of LDCs products under the scheme, whiledeveloping country members may voluntarilyjoin

DFQF Scheme for LDCs

Rajan Ratna 28

DFQF market access in terms of tariff lines covered and percentage of imports from Asia-Pacific least developed

countriesAustralia Canada

EUJapan

USA

India

China

Russia

Republic of Korea

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

DFQF % Tariff Lines % of imports from AP LDCs entering DFQF

Source: ESCAP Asia Pacific trade and Investment Report (2013), based Edo Martinez, Pedro, and Adam Heal.

(2013). Based on data downloaded from TRAINS and Comtrade by using WITS Online Tool (Effectively Applied

Rates).

Rajan Ratna 29

Trends in merchandise trade and trade balance of

LDCs in Asia and the Pacific

-40.00

-20.00

0.00

20.00

40.00

60.00

80.00

100.00

UN

ite

d S

tae

s D

olla

r (B

illio

n)

BoT

Export

Import

Source: ESCAP's calculation based on data from UNCOMTRADE available from WITS (in SITC

Revision 3 classification, mirror data; using 1-digit section clusters)

Rajan Ratna 30

Export structure of APLDCs, 2015Food, live animals

7.1%Beverages, tobacco

0.4%

Crude materials (except fuel, food)

6.4%

Mineral fuels, lubricants and related

materials8.5%

Animal/vegetable oils, fats, waxes

Chemicals and related products, n.e.s.

1%

Manufactured goods classified chiefly by

material8.7%

Machinery and transport equipment

3%

Miscellaneous manufactured articles

65%

Commodities and transactions, n.e.s.

0%



Rajan Ratna 31

Import structure of APLDCs, 2015Food, live animals

10%Beverages, tobacco

2%

Crude materials (except fuel, food),4%

Mineral fuels, lubricants and related

materials8%


2%


10%

Manufactured goods classified chiefly by material, 27%

Miscellaneous manufactured items,

19%

Misc. manufactured articles6%


3%



Rajan Ratna 32

Intra-APLDC export, 2015

15.3%

17.4%

1.9%5.7%

Animal/vegetable oils, fats, waxes, 0.1%

29.4%

9.0%

Machinery, transport equipment, 9.4%

Miscellaneous manufactured articles, 9.5%

Commodities and transactions, n.e.s., 2.4%

Food, live animals

Beverages, tobacco

Crude materials (except fuel, food)

Mineral fuels, lubricants and relatedmaterials



Manufactured goods classified chiefly bymaterial

Machinery and transport equipment

Miscellaneous manufactured articles




Rajan Ratna 33

Destinations of exports from APLDCs 2015

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

China

India

United States

EU27 Members

ESCAP Area excluding India andChina

Rest of the world

Source: ESCAP's calculation based on data from UNCOMTRADE available from WITS

Rajan Ratna 34

Origins of imports to APLDCs 2015

Source: ESCAP's calculation based on data from UNCOMTRADE available from WITS

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

China

India

United States

EU27 Members

ESCAP Area excluding India and China

Rest of the world

Rajan Ratna 35

Preferential rules of origin• Preferential rules of origin for LDCs were first

proposed in Annex F of the Hong Kong WTOMinisterial Declaration, 2005.

• The Bali Ministerial Decision, 2013 was the firststep in the implementation of preferential rulesof origin (RoO) for LDCs, and the decision wasthen expanded by the Nairobi MinisterialDecision, 2015.

• The Bali and Nairobi Decisions set outmultilaterally agreed guidelines to aid LDCsproducts in qualifying for preferential marketaccess

Rajan Ratna 36

Preferential rules of origin: the rules• Developed WTO members shall, and developing

members can when they are able to, apply transparentand simple preferential rules of origins to imports fromLDCs.

• Products under preferential rules of origin can becomposed of non-LDCs originating materials up to 75%of the final value.

• Preference-granting members can develop individualpreferential rules of origins, and then notify theCommittee on Rules of Origin (CRO) that annuallyreviews the implementation status.

• WTO harmonisation work programme on non-preferential RoO.

Rajan Ratna 37

Concerns

▪ Too many overlapping bilateral RTAs

▪ Is too low VA desirable? GVCs or RVCs?

▪ Preference erosion for LDCs

▪ Impacts on third parties not understood and low- income

economies often excluded from “21st century” deals

▪ Weak capacity to utilize research in policymaking, weak

negotiation and implementing capacity

▪ Under-utilization of preferences

▪ PTAs not going sufficiently into WTO+ and WTO-beyond

areas

▪ No post-adjustment programmes

▪ Harmonisation, CAPs, regional standards?

Rajan Ratna 38

Policy Options• Negative List : Protection to industry• Rules of Origin :

– Circumvention/Deflection

• Trade Defence Measures : in cases of surge inimports

• Multiplicity of RTA partners – need forconsistency

• Trade creation vis-à-vis Trade diversion• Services Negotiations• WTO plus obligations• Autonomous liberalisation

39Rajan Ratna

Selected sourcesESCAP:• Asia-Pacific Trade and Investment Report www.unescap.org/tid/ti_report2016/home.asp•APTIAD Briefing Note 8 (August 2016) http://www.unescap.org/sites/default/files/APTIAD-brief-August2016.pdf• Asia-Pacific Trade and Investment Preferential Agreements Database – APTIAD: www.unescap.org/tid/uptiad

OTHERS SOURCES:•WTO, World Trade Report 2011 https://www.wto.org/english/res_e/publications_e/wtr11_e.htm

• WTO RTA databasehttps://www.wto.org/english/tratop_e/region_e/region_e.htm

Rajan Ratna 40

http://www.unescap.org/tid/ti_report2016/home.asp

http://www.unescap.org/sites/default/files/APTIAD-brief-August2016.pdf

http://www.unescap.org/tid/uptiad

https://www.wto.org/english/res_e/publications_e/wtr11_e.htm

https://www.wto.org/english/tratop_e/region_e/region_e.htm

Thank YouRajan Ratna 41

session 6: regionalism: reaping the opportunities and ... 6 regionalism reaping the...asia-pacific...

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