non-tariff barriers in cefta: analysis of technical and administrative barriers … ·...

Non-tariff barriers in

CEFTA: Analysis of

Technical and

Administrative Barriers to

Trade

Roundtable on Non-Tariff Barriers in the CEFTA area

Budapest, 8 October 2009

Background: classification of non-tariff barriers

Analysis of trade flows among CEFTA Parties and between CEFTA Parties and main trade partners

Identification of potential value chains

Preliminary conclusions

Content of the presentation

• There is no consensus on the classification of NTBs

• No list can be fully exhaustive

• Most widely accepted classification - Multi-Agency Support Team (MAST) classification (UNCTAD, OECD, World Bank, WTO, ITC, FAO, IMF):

oSPS; TBTs; Other technical measures; Price control measures; Quantity control measures; Para-tariff measures; Finance measures; Anti-competitive measures; Export related measures; Trade-related investment measures; Distribution restrictions; Restrictions on post-sales services; Subsidies; Government procurement restrictions; Intellectual property; Rules of origin

NTBs are difficult to identify and their effects on trade

flows cannot be easily quantified

OECD analysis focuses on TBTs, SPS and

administrative barriers to trade

1. Technical barriers to trade

• Institutional and legislative framework for adoption of technical standards and implementation of European and international standards

• State of certification arrangements (institutional framework for certification, number of laboratories, inspection bodies and conformity assessment bodies, presence of MRAs, number of companies certified)

2. Sanitary and phytosanitary measures

• Institutional and legislative framework and adoption of European and international SPS measures

3. Administrative barriers to trade

• Presence of licenses

• Accessibility of customs laws and regulations

Focus on NTBs that lie within the mandate of the TBTs and NTBs sub-committee, as well as other CEFTA structures, and validated through IRI research

Validated through results of questionnaires distributed to Hungarian institutions in the region

Did the situation change since the first comprehensive

review in 2004?

Ranking (by importance of

barrier)*EU Market

South-eastern European market

1Technical standards and

certificationCustoms Procedures

2Quality control and consumer

protectionBureaucratic registration

3 Customs barriersTechnical standards and

certification

4 ---Quality control and consumer

protection

Ranking of barriers faced by Western Balkans exporters, by market, 2004

Note: * In descending order by degree of importance. Items in the survey not related to TBTs, customs and

administrative procedures are omitted from this table (and indicated by ---)

Source : Adapted from OECD (2005), based on Western Balkans survey (2004)

• OECD studies show that among commodities trade in live animals and related products is mostly affected by NTBs (SPS and customs procedures)

• TBTs are most frequent in trade of machinery, electronics and pharmaceuticals

• All the above are important export items or potential sources of export diversification for CEFTA Parties

Analysis of trade flows could help identify what

product categories are most affected by NTBs

• As a general rule, standards, SPS measures and administrative procedures should generate trade by facilitating cross-border transactions

• If that is generally the case, when would standards and administrative procedures become a barrier to trade?

• Possible answer: discriminatory application and non-transparency of the measures

• Consistent and predictable application of uniform standards should facilitate the formation of value chains

• If this does not occur, the existence of NTBs could be one of the causes

• At the same time, a lack of competitiveness prevents countries from participating in sophisticated value chains

Do non-tariff measures represent an impediment to

trade at all?

Large current account deficits and low levels of

export propensity suggest the CEFTA Parties should

increase their trade performance

Source: EBRD Transition Report, World Bank Trade Indicators (2008)

Albania Bosnia and Herzegovina

Croatia FYR Macedonia

Rep. of Moldova

Montenegro Serbia

Current account/GDP (%), 2007

-9.1 -12.8 -7.5 -7.5 -15.2 -32.5 -13.7

Exports/GDP (%), 2007 28 39 48 55 46 51 29

• The main drivers of current account deficits in SEE economies are trade deficits

• Among “old” CEFTA countries, only Poland has an export propensity lower than 60%

A strong dependence on the European Union at the

regional level…

• CEFTA trade flows strongly oriented towards the EU - intra-regional trade plays a marginal role

• Intra-regional trade flows have increased, but only in the same proportion as total exports and imports

17%

24%

60%

Rest of the World

CEFTA

EU 27

Composition of Total Regional Goods Exports, 2006

Source: OECD analysis based on UN Comtrade database

… with some variations across the Parties


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Albania Bosnia Herzegovina

Croatia Rep. of Moldova Serbia

Export destinations of selected Parties, 2006

RoW EU-27 CEFTA

Trade liberalisation has not yet shown significant

changes in regional market shares


1%

16%

41%

0%

29%

13% Albania

Bosnia Herzegovina

Croatia

Moldova

Serbia and Montenegro

FYR Macedonia

Regional market shares, 2004

1%

18%

33%

2%0%

34%

12%Albania

Bosnia Herzegovina

Croatia

Montenegro

Rep. of Moldova

Serbia

TFYR of Macedonia

Regional market shares, 2007

• As the agreement is still in relatively early stages, one cannot rule that shifts in the weight of individual Parties will occur

• Some changes in the market shares could be observed as Parties move beyond tariff reductions and tackle other trade obstacles, both at the border and behind the border

What is the scope for sophisticated

manufactured goods?

• Most Parties specialise in low value added industrial suppliers and consumer goods (e.g. garments, shoes)

• Few specialise in sophisticated manufacture goods (including transport equipment and capital goods)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Transport equipment

Industrial supplies

Goods not elsewhere specified

Fuels and lubricants

Food and beverages

Consumption goods

Capital goods

Structure of merchandise export, 2007


Analysis focuses on main trading partners


90%

10%

Albania

CEFTA/main partners as % of total share EU27

Trade with remaining EU 27

88%

12%

BiH

86%

14%

Croatia

70%

30%

Republic of Moldova

75%

25%

FYROM

78%

22%

Serbia

Analysis of trade with main trading partners shows

low levels of technological intensity

Source: OECD analysis based on UN Comtrade

Exporting country Importing country ItemClassification according to technological intensity

Croatia ItalyShips, boats and floating structures

Medium-low-technology

TFYR of Macedonia GermanyArticles of apparel and clothing accessories

Low-technology

Croatia AustriaElectrical machinery and equipment

Medium-high-technology

Croatia Italy Mineral fuels and oils Medium-low-technology

Croatia ItalyArticles of apparel and clothing accessories

Low-technology

Albania Italy Footwear Low-technology

Croatia GermanyMachinery and mechanical appliances

Medium-high-technology

Croatia Italy Wood and articles of wood Low-technology

TFYR of Macedonia Italy Iron and steel Medium-low-technology

Serbia Italy Iron and steel Medium-low-technology

Structure of intra-regional trade has remained virtually unchanged since

2004, with commodities and low value-added products dominating


Rank in 2007 Exporting Party Importing Party Commodity Rank in 2004Increase/decrease in ranking 2004-2007

1 Croatia Bosnia HerzegovinaMineral fuels, mineral oils and products of their distillation

1 0

2 Bosnia Herzegovina CroatiaAluminum and articles thereof

5 -3

3 TFYR of Macedonia SerbiaMineral fuels, mineral oils and products of their distillation

3 0

4 Bosnia Herzegovina SerbiaMineral fuels, mineral oils and products of their distillation

15 -11

5 Croatia SerbiaMineral fuels, mineral oils and products of their distillation

6 -1

6 TFYR of Macedonia Serbia Iron and steel 20 -14

7 Croatia Bosnia Herzegovina

Machinery and mechanical appliances; parts thereof

7 0

8 Serbia Bosnia Herzegovina Iron and steel 10 -2

9 Bosnia Herzegovina Serbia Iron and steel 69 -60

10 Bosnia Herzegovina CroatiaArticles of iron or steel

22 -12

AlbaniaBosnia

HerzegovinaCroatia

TFYR of Macedonia

Rep. of Moldova

Montenegro Serbia

Live Animals; Animal Products 0.86 0.68 1.03 0.56 0.38 0.54 0.90

Vegetable Products 1.25 0.45 0.59 1.89 6.08 0.86 3.08

Animal or Vegetable Fats and Oils Vegetable Waxes

0.05 1.65 0.74 0.60 9.23 0.03 3.30

Prepared Foodstuffs; Tobacco and Manufactured Tobacco Substitutes

0.82 1.21 2.42 3.20 7.23 2.09 2.98

Mineral Products 1.30 0.87 1.07 0.49 0.29 0.76 0.30

Products of The Chemical or Allied Industries 0.03 0.73 0.78 0.33 0.24 0.48 0.82

Plastics and Rubber; and Articles Thereof 0.18 0.50 0.97 0.32 0.58 0.06 2.06

Raw Hides and Skins, Leather, Furskins and Articles Thereof

2.62 2.88 2.01 0.56 3.54 0.88 0.75

Wood And Articles of Wood 1.29 8.75 4.97 0.36 0.40 2.59 2.32

Pulp of Wood or of Other Fibrous Cellulosic Material

1.20 1.21 1.24 0.25 0.59 0.39 1.54

Textiles And Textile Articles 6.25 1.17 1.21 5.26 4.66 0.14 1.40

Footwear, Headgear And Umbrellas, 25.50 8.28 2.45 4.08 4.54 0.30 3.36

Articles of Stone, Plaster, Cement, Asbestos, Mica or Similar Materials

0.92 1.11 2.47 1.90 3.32 0.15 1.71

Natural or Cultured Pearls, Precious or Semi-Precious Stones

0.14 0.01 0.23 0.20 0.01 0.02 0.07

Base Metals and Articles of Base Metal 2.24 3.14 1.00 4.66 0.88 7.93 3.03

Machinery and Electrical Equipment 0.14 0.45 0.70 0.11 0.40 0.12 0.50

Vehicles, Aircraft, Vessels and Associated Transport Equipment

0.03 0.29 1.42 0.22 0.09 0.07 0.41

Optical, Photographic, Cinematographic, Medical or Surgical Instruments

0.03 0.10 0.30 0.12 0.56 0.04 0.20

LegendNo comparative

Advantage

Comparative

Advantage

CEFTA Parties have overlapping revealed comparative advantages, in

product categories with low level of export sophistication

RCA’s Main Partners

Austria Bulgaria Germany Greece Hungary Italy Romania Slovenia

Live Animals; Animal Products 1.03 0.95 0.85 2.49 0.93 0.57 0.46 0.65

Vegetable Products 0.44 2.76 0.40 2.52 1.34 0.80 1.58 0.40

Animal or Vegetable Fats and Oils Vegetable Waxes

0.39 1.17 0.45 4.56 0.69 0.96 0.73 0.18

Prepared Foodstuffs; Tobacco and Manufactured Tobacco Substitutes

1.39 1.66 0.91 3.61 0.92 1.43 0.63 0.68

Mineral Products 0.26 1.26 0.20 0.95 0.23 0.35 0.68 0.24

Products of The Chemical or Allied Industries

0.80 0.79 1.32 1.17 0.63 0.85 0.49 1.47

Plastics and Rubber; and Articles Thereof 1.17 0.60 1.28 1.30 1.14 1.13 1.19 1.44

Raw Hides and Skins, Leather, Furskins and Articles Thereof

0.90 0.60 0.36 3.24 0.43 3.43 1.13 0.77

Wood And Articles of Wood 3.92 1.14 0.83 0.47 0.90 0.50 3.19 3.18

Pulp of Wood or of Other Fibrous Cellulosic Material

2.08 0.55 1.29 0.80 0.65 1.07 0.26 1.91

Textiles And Textile Articles 0.65 2.64 0.56 2.11 0.36 1.74 2.43 0.82

Footwear, Headgear And Umbrellas, 0.84 1.65 0.45 0.60 0.57 3.28 5.41 0.80

Articles of Stone, Plaster, Cement, Asbestos, Mica or Similar Materials

1.45 2.01 1.08 1.28 1.33 2.48 0.61 1.71

Natural or Cultured Pearls, Precious or Semi-Precious Stones

0.36 0.25 0.37 0.13 0.01 0.75 n/a 0.02

Base Metals and Articles of Base Metal 1.74 2.64 1.04 1.88 0.62 1.35 1.71 1.65

Machinery and Electrical Equipment 1.10 0.51 1.04 0.41 1.73 1.03 0.89 0.91

Vehicles, Aircraft, Vessels and Associated Transport Equipment

1.08 0.19 1.73 0.33 1.03 0.97 1.12 1.47

Optical, Photographic, Cinematographic, Medical or Surgical Instruments

0.72 0.40 1.22 0.30 0.77 0.71 0.28 0.65

LegendNo comparative

Advantage

Comparative

Advantage

Intra Industry Trade

IIT

Croatia-Italy

Croatia-CEFTA

Fuel wood, in logs, in billets, in twigs, in faggots or in similar forms

1.04 8.83

Wood charcoal (including shell or nut charcoal), whether or not agglomerate ...

1.01 10.21

Wood in the rough, whether or not stripped of bark or sapwood, or roughly s ...

0.52 98.38

Wood sawn or chipped lengthwise, sliced or peeled

6.38 31.99

Sheets for veneering 7.96 79.92

Wood (including strips and friezes for parquet flooring, not assembled)

31.39 25.55

Particle board and similar board 50.00 0.75

Plywood, veneered panels and similar laminated wood.

97.51 70.50

Builders' joinery and carpentry of wood

97.08 48.78

Other articles of wood. 55.32 89.66

LegendGreater

IIT

IIT

Croatia-Italy

Croatia-CEFTA

Men's or boys' suits, ensembles, jackets, blazers, trousers, bib and brace ...

69.64 84.89

Women's or girls' suits, ensembles, jackets, blazers, dresses, skirts

62.20 94.75

Men's or boys' underpants, briefs, nightshirts, pyjamas, bathrobes

59.55 53.65

Women's or girls' slips, petticoats, briefs, panties, nightdresses

62.59 63.88

T-shirts, singlets and other vests, knitted or crocheted.

69.83 83.93

Jerseys, pullovers, cardigans, waist-coats and similar articles, knitted or ...

40.33 86.89

Babies' garments and clothing accessories, knitted or crocheted.

36.98 3.66

Track suits, ski suits and swimwear, knitted or crocheted.

16.17 19.73

Panty hose, tights, stockings, socks and other hosiery

53.47 72.31

Other made up clothing accessories, knitted or crocheted

62.83 15.19

IIT

Albania -Italy

Albania -CEFTA

Waterproof footwear with outer soles and uppers of rubber or of plastics

0.55 2.06

Other footwear with outer soles and uppers of rubber or plastics.

43.49 68.07

Footwear with outer soles of rubber, plastics, leather or composition leath ...

6.66 84.20

Other footwear.1.80 1.92

Parts of footwear50.42 40.67

IIT

Serbia -Italy

Serbia -CEFTA

Ferrous waste and scrap; remelting scrap ingots of iron or steel.

13.32 0.71

Semi-finished products of iron or non-alloy steel.

10.17 97.16

Flat-rolled products of iron or non-alloy steel

1.88 47.80


10.02 53.12


14.67 23.35

Flat-rolled products of iron or non-alloy steel, of a width of less than 60 ...

19.06 19.39

Flat-rolled products of iron or non-alloy steel, of a width of less than 60 ...

7.97 3.98

Angles, shapes and sections of iron or non-alloy steel.

0.31 68.46

Wire of iron or non-alloy steel.8.86 54.57

LegendGreater

IIT

Intra Industry Trade

CEFTA could lead to an increase in both intra-

regional and intra-industry trade, but also result in

more NTBs


• Increase in intra-regional trade as a consequence of the CEFTA Agreement could spur the production of value-added goods through the creation of vertically integrated value chains

• Increasing FDI inflows could also lead to rising intra-industry trade, as occurred in Central and Eastern Europe

• But if levels of intra-industry trade among CEFTA Parties do increase, TBTs will represent a more significant obstacle to trade in the region

Statistical analysis suggests that TBTs do not

seem to represent a significant barrier to trade


• However, there are some product categories among those that are currently traded that display a medium level of sophistication (e.g. machinery, electrical equipment)

• CEFTA Parties could prioritise elimination of NTBs in those product areas, as it would allow them to increase their participation in more sophisticated value chains

Trade policy should be complemented by clear

competitiveness policies


• CEFTA alone does not represent the solution for maximising the trade potential of the region

• Main objective of competitiveness policies: increase productivity across all sectors of the economy

• SMEs’ participation in networks within regional and global value chains should be promoted

• Elimination of NTBs, coupled with policies to promote SME competitiveness, could help promote these value chains

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