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Preferential Agreements, NonTariff Barriers and Associated Market Access Issues

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Title: Preferential Agreements, NonTariff Barriers and Associated Market Access Issues


1
Preferential Agreements, Non-Tariff Barriers and
Associated Market Access Issues
  • Andrew Mold
  • UNECA, Addis Ababa, Ethiopia
  • Presentation at the Regional Meeting on EPAs,
  • 22-24 September, 2005, Mombasa, Kenya

2
Presentation outline
  • The Issue- What are we giving up?
  • Evaluation of preferential market access was it
    really so bad as they tell us?
  • Reasons why preferential schemes did not always
    meet expectations
  • New impediments to African exports NTBs

3
Preferential Market Access
  • Proliferation of preferences
  • 28 for LDCs
  • 9 of those from Quad countries
  • Why? Recognition of need for Special and
    Differential Treatment
  • But also advantages for preference-granting
    countriesa posteriori cost, non-binding,
    graduation, lower import bill, etc.

4
Ways to Evaluate Preferences
  • Share of preference-countries in imports
  • Product Specific- Analysis
  • Utility and Utilization Rates
  • Econometric estimation using gravity models
  • General equilibrium modelling

5
Share of ACP Countries in EU Imports
6
Share of EU preferential imports by region
(average 2001-2002)
7
Utilization and Utility Rates of Preferences for
LDCs
8
High Usage of Preferences by African Countries?
  • In general, preference use is indeed high!
  • OECD (2004) research shows that choice of scheme
    depends on
  • Size of the Transactions
  • Size of Margins
  • Rules of origin
  • Knowledge of schemes is also important

9
Use of EU Preferences
10
Why might preferences be less efficient now?
  • Preference margin erosion (av. tariffs 30 1970,
    now 3)
  • Proliferation of preferences (AGOA, EBA, GSP,
    GSP, Cotonou, etc.) has devalued existing
    preferences
  • Free trade agreements make some preferences
    obsolete
  • Decline in terms of trade (e.g. Ocampo y Parra,
    2003)

11
Overall protection in agriculture(Percent tariff
equivalent)
Type of
United
Canada

European

Japan

protection

States

Union

Tariffs

8.8

30.4

32.6

76.4

Subsidies

10.2

16.8

10.4

3.2

Total

19.9

52.3

46.4

82.1


12
The Problems with EBA
  • Rules of origin are stricter than Cotonou
  • Sugar, rice and bananas excluded until 2009
  • Actions still possible against import surges
  • Divides Africa against itself?

13
The Janus-Headed nature of New Barriers to
Trade.
  • - Safeguard measures (e.g. EU and US protect
    steel industries in 2002)
  • Anti-dumping Measures
  • Rules of Origin
  • Environmental and Labour Standards
  • Phytosanitary Measures

14
Frequency of non-tariff measures facing LDC
exports
15
(No Transcript)
16
Phytosanitary Regulations
  • For EU, no. of notifications ? 6X between 1998
    (202 cases) to 2002 (1520). Examples?
  • Kenyan Horticultural exports (worth US500)
    threatened by Minimal Residual Requirements
  • Aflatoxin regulation on nuts, cereals and dried
    fruits (estimated cost of US670 million).
  • In 2002, Zambia turns down food aid from US
    because of EU legislation on GM elements (99.9
    free).
  • Lake Victoria fish industry case of cholera

17
Increased costs of compliance
  • Ugandan honey industry estimated cost of US300
    million to conform with ISO standards
  • Ugandan coffee industry production costs will
    increase by 200 for av. firm.
  • The vast majority of food safety and health
    measures notified to WTO between 1995-2000 had no
    international standards at all.

18
Standard justification for these trends?
  • Increased regulatory policy can be seen as the
    result of higher standards of living worldwide,
    which have boosted consumers' demand for safe and
    high-quality products, and of growing problems of
    water, air and soil pollution which have
    encouraged modern societies to explore
    environmentally-friendly products (WTO, 2004).

19
Difficult to square with anecdotal evidence of
relaxation of standards
  • 8 French fruits and vegetables above legal
    levels of pesticides (Herman Kuper, 2003).
  • 1992-3, EWG study in US. 5.6 of fruits
    vegetables contaminated beyond legal levels. In
    13 of violations, said pesticides completely
    prohibited.
  • In 1997, UK government raised permitted level of
    glyphosate in soybeans by a factor of 200 times.
    (Glyphosate is active ingredient of Roundup,
    manufactured by Monsanto)

20
Fertilizer Use per Capita, 2003
21
Matrix of Anti-dumping Cases Involving African
countries, 1995-2004
22
Rules of Origin (ROO)
  • A major handicap for small, structurally
    un-diversified economies
  • Administrative costs of compliance between 2.0
    and 5.7 (Estevadeordal and Suominen, 2003)
  • Mattoo. Et. al. (2002), AGOA benefits would be 5X
    higher with less restrictive ROO
  • EBA tighter ROO than Cotonou.

23
Labour and Environmental Standards
  • Importance of guaranteeing labour and
    environmental standards, but..
  • Danger of legislative overkill
  • e.g. social audits in Kenya (processed foods
    from Del Monte) or South African citrus fruits
    having to meet EU requirements for service workers

24
Conclusions
  • With fall in tariffs, NTBs more important than
    ever
  • Africa especially vulnerable to New
    Protectionism
  • EPAs wont resolve these problems.and might make
    some more acute.
  • Initiatives to be welcomed (STDF for instance).
  • Importance of African countries being involved in
    setting standards
  • Positive side? Possibility of building a brand -
    Produce of Africa could be associated with
    ecological sound production. Problem?organic
    creditation service costs around 14,000 a year.
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