Title: Preferential Agreements, NonTariff Barriers and Associated Market Access Issues
1Preferential 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
2Presentation 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
3Preferential 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.
4Ways to Evaluate Preferences
- Share of preference-countries in imports
- Product Specific- Analysis
- Utility and Utilization Rates
- Econometric estimation using gravity models
- General equilibrium modelling
5Share of ACP Countries in EU Imports
6Share of EU preferential imports by region
(average 2001-2002)
7Utilization and Utility Rates of Preferences for
LDCs
8High 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
9Use of EU Preferences
10Why 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)
11Overall 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
12The 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?
13The 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
14Frequency of non-tariff measures facing LDC
exports
15(No Transcript)
16Phytosanitary 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
17Increased 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.
18Standard 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).
19Difficult 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)
20Fertilizer Use per Capita, 2003
21Matrix of Anti-dumping Cases Involving African
countries, 1995-2004
22Rules 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.
23Labour 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
24Conclusions
- 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.