REGIONAL WORKSHOP ON USING EVIDENCE BASED TRADE POLICY FOR ACHIEVING THE SUSTAINABLE DEVELOPMENT GOALS IN LDCS AND LLDCS

Transcription

1 REGIONAL WORKSHOP ON USING EVIDENCE BASED TRADE POLICY FOR ACHIEVING THE SUSTAINABLE DEVELOPMENT GOALS IN LDCS AND LLDCS Session 5 In search of the meaningful market access: what are the policy options for LDCs 3-5 September 2018 Thimphu, Bhutan Rajan Sudesh Ratna Joseph George UN ESCAP, New Delhi ratna@un.org

2 Presentation Structure Discussion Points Market Access Profile Goods Exports and DFQF Services IPR/NTMs Policy options Rajan Ratna 2

3 Market Access: Discussions What comes to your mind when you think of market access? What are related issues for getting effective market access? Rajan Ratna 3

4 2030 ASD and LDC s Trade Promote a universal, rules-based, open, nondiscriminatory and equitable multilateral trading system under the World Trade Organization, including through the conclusion of negotiations under its Doha Development Agenda Significantly increase the exports of developing countries, in particular with a view to doubling the least developed countries (LDCs) share of global exports by Realize timely implementation of duty-free and quotafree market access on a lasting basis for all least developed countries, consistent with World Trade Organization decisions, including by ensuring that preferential rules of origin applicable to imports from least developed countries are transparent and simple, and contribute to facilitating market access Rajan Ratna 4

5 Is market access only linked to? Goods (tariff and non tariff in market only?) Services (regulations in markets only?) Only exports or imports too? OR also linked to the exporting country s policies? Supply chains? IPRs? NTMs? Investments? Reducing trade costs? Infrastructure? Rajan Ratna 5

6 Export composition? How important is the composition of items being exported? Raw material, intermediate products, consumer goods? Value chain? Product diversification? Market diversification? Rajan Ratna 6

7 Some facts Rajan Ratna 7

8 Export Dependency of LDCs Exports of Goods and Services (% of GDP) Least developed countries: UN classification World World Development indicators, WB Aggregate export from LDCs has grown from US$ 43 bn in 2000 (0.54% of WT) to US$ 216 bn (0.94% of WT) by 2017 CAGR of LDC exports (9.9%) has been slightly higher than that of world trade (6.5%) during Post-2008 crisis effect on trade appears to have been higher for LDC exports Concerns of higher vulnerability of LDC exports to external shocks broad-based? Preparedness? Rajan Ratna 8

9 Export Dependency of APLDCs Export of Goods and Services (% of GDP, 2016) & CAGR of Exports of Goods and Services ( ) Exp/GDP Ratio CAGR ( ) of Exp Exports of goods and services of APLDCs have been growing at an annual average rate of 13.7 % during Share of APLDCs in total exports of LDCs grown from 24.5 %(2002) to 37.6% (2016) Trade/GDP ratio has increased for countries with higher growth rates World Development indicators, WB Rajan Ratna 9

10 Merchandise Exports of APLDCs Share of Merchandise Exports in total Trade (2016) Volume and share of merchandise exports of APLDCs (2016) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Bangladesh, 35965, 53% Timor-Leste, 35, 0% Cambodia, 11950, 18% Small Island APLDCs, 62, 0% Bhutan, 590, 1% Nepal, 750, 1% Lao PDR, 3950, 6% Afghanistan, 780, 1% Myanmar, 13300, 20% Merchendise Exports Commercial Services Exports Services exports predominant for small island LDCs WTO Trade Statistics Transport connectivity plays a key role in trade prospects of APLDCs Rajan Ratna 10

11 Effective Market Access for LDCs Supply capacity - Product diversification, sophistication, value addition - Compliance with standards Trade and Transport facilitation - Physical connectivity - Procedural ease Preferential access in partner country market - Tariff preferences, DFQF - Other policy relaxations (non-tariff) Significant differences between APLDCs in terms of the mix of these three factors Rajan Ratna 11

12 Trade Diversification Indicators for APLDCs Number of Products Exported (HS-6 digit) Annual Average (Average for APMICs 3200) Number of Export Markets Annual Average (APMICs ) WITS Trade Indicators WITS Trade Indicators Rajan Ratna 12

13 Trade Facilitation Indicators Time to Export (Days) for APLDCs Cost to Export (US$/20ft C) for APLDCs Average time to export: LDCs 32.5 days Middle income countries 22.8 High income countries 11.6 World Development indicators, WB Average cost to export: LDCs US$ Middle income countries US$ High income countries US$ World Development indicators, WB Rajan Ratna 13

14 Composition of Exports Bangladesh Major Products Textile/apparel 86% (+, 2 nd largest) Leather based 3% Agricultural/fisheries 5% Major Export Markets EU 58.4% North America 22.8% China 2.2% India 1.6% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Raw Materials Intermediate Goods Consumer Goods Capital Goods WITS, UNCOMTRADE & ITC Trade Maps Value addition high Market reach high Connectivity: - maritime linkages - land transport inefficiencies Rajan Ratna 14

15 Composition of Exports Afghanistan Major Products Edible fruits and nuts 43% (+) Iron ore, minerals 12% (+) Cotton, coffee 9% Major Export Markets Pakistan 47.5% India 38.5% Central Asia and Middle East 7.8% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Raw Materials Intermediate Goods Consumer Goods Capital Goods WITS, UNCOMTRADE & ITC Trade Maps Value addition low Market reach concentrated in neighborhood Connectivity: - land transport constraints Rajan Ratna 15

16 Composition of Exports Bhutan Major Products Iron ore based 54% (+) Mineral fuel/inorg. chemicals 21% (+) Major Export Markets India 93.7% Bangladesh 4.1% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Raw Materials Intermediate Goods Consumer Goods Capital Goods WITS, UNCOMTRADE & ITC Trade Maps Value addition moderate Market reach concentrated in neighborhood Connectivity: - land transport constraints, transit and transport facilitation with India in progress Rajan Ratna 16

17 Composition of Exports Nepal Major Products Coffee/tea/spices 10% (+) Carpets/fibers 16% (+) Apparel/textiles 11% ) Metal based 9% Oil, resins, misc. chemical based 9% Major Export Markets India 63.4% EU and Central Asia 15.3% North America 11.7% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Raw Materials Intermediate Goods Consumer Goods Capital Goods WITS, UNCOMTRADE & ITC Trade Maps Value addition high Market reach relatively high Connectivity: - land transport constraints, transit and transport facilitation with India in progress Rajan Ratna 17

18 Composition of Exports Cambodia Major Products Textile/apparel 68% (+) Leather based 11% (+) Electrical Mach. 3% ) Auto parts 3% Major Export Markets EU and Central Asia 40.9% North America 27.8% East Asia and Pacific 27.9% China 6.2% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Raw Materials Intermediate Goods Consumer Goods Capital Goods WITS, UNCOMTRADE & ITC Trade Maps Value addition high Market reach high Connectivity: - Maritime linkages - Land transport improvements, GMS corridors Rajan Ratna 18

19 Composition of Exports Myanmar Major Products Oil, mineral fuels 28% (+) Agro based 32% (-) Textile based - 12% (+) Major Export Markets East Asia and Pacific 81.4% China 40.8% Thailand 19.2% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Raw Materials Intermediate Goods Consumer Goods Capital Goods WITS, UNCOMTRADE & ITC Trade Maps Value addition Improving Market reach concentrated in neighborhood Connectivity: - Maritime linkages - Land transport improvements, GMS corridors - Muse-Ruili (Ruili Border Economic Cooperation Zone) Argo and machinery cluster - Mae Sot-Myawaddy textile cluster Rajan Ratna 19

20 Composition of Exports Lao PDR Major Products Copper (raw/ref.) 28% (+) Wood 11% (+) Chem. Fert. - 3% (-) Coffee 2% (-) Major Export Markets East Asia and Pacific 88.7% China 40.1% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Raw Materials Intermediate Goods Consumer Goods Capital Goods WITS, UNCOMTRADE & ITC Trade Maps Value addition low Market reach concentrated in neighborhood Connectivity: - Land transport improvements, GMS corridors - Boten Mohan Economic Cooperation Zone - Dansavanh BTZ Lao Bao SEZ Rajan Ratna 20

21 Composition of Exports East Timor Major Products Petroleum 66% (-) Coffee 21% (+) Electrical mach. Eqp. - 7% (++) Major Export Markets East Asia and Pacific 53.4% Indonesia 34.7% EU and Central Asia 19.6% North America 13.83% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Raw Materials Intermediate Goods Consumer Goods Capital Goods WITS, UNCOMTRADE & ITC Trade Maps Value addition Improving Market reach relatively high Connectivity: - Maritime linkages - Land transport improvements with Indonesia Rajan Ratna 21

22 Supply potential is better realized with cost-effective transport connectivity options to reach potential target markets Connectivity works better when transport infrastructure is linked with industrial infrastructure Rajan Ratna 22

23 Market Share of Exports of APLDCs, 2017 All APLDCs Excluding Bangladesh and Cambodia US 2% RoW 24% US 12% RoW 27% EU (28) 9% Korea 1% India 3% Japan 5% China 12% EU (28) 43% Korea 2% Japan 5% China 37% Calculated based on ITC Trade Maps India 18% Calculated based on ITC Trade Maps Bangladesh and Cambodia account for close to 95% of APLDCs exports to EU and US China (37%) and India (19%) emerges as the largest markets for APLDC exports excluding Bangladesh and Cambodia Rajan Ratna 23

24 EU - Everything but Arms (EBA) enforced in % tariff lines coverage Select Preferential Schemes key to APLDCs US % tariff lines coverage (97.6% DFQF access for LDC beneficiaries under AGOA) - Excluded products include articles of leather, cotton, articles of apparel and clothing, other textiles and textile articles, footwear (highly sensitive for APLDCs) Japan - LDC product coverage extended from 86% to 97.9% of tariff lines in Effective until 31 March 2021 India - Duty Free Tariff Preference (DFTP) Scheme in % tariff lines coverage - Nepal and Bhutan yet to join DFTP (beneficiaries of tariff elimination under SAFTA) China - DFQF since % coverage for 24 LDCs countries (60% for Bangladesh) Rajan Ratna 24

25 CAGR (in %) of Exports of APLDCs to Key Markets ( ) US EU (28) China India Japan Calculated based on ITC Trade Maps High growth of APLDC exports to large markets within the region has contributed more to their export expansion Exports of APLDCs to EU has steadily grown, however the share of countries other than Bangladesh and Cambodia remains very low in volume. Terms of preferential access (product coverage, cumulation rules etc.) offered by large markets within the region have been more favorable for APLDC access, hence higher utilization rates Rajan Ratna 25

26 APLDCs as beneficiaries of DFQF Exports to India (US$ mill) Afghanistan Bangladesh ITC Trade Maps Rajan Ratna 26

27 APLDCs as beneficiaries of DFQF Exports to China (US$ mill) 1,800 1,600 1,400 1,200 1, ,000 5,000 4,000 3,000 2,000 1,000 0 Cambodia Lao PDR Myanmar ITC Trade Maps ITC Trade Maps Rajan Ratna 27

28 Share of export of goods and services of LDCs in GDP has been steadily growing and closely following the global trend since 1990s. T/GDP ratio of LDCs declined at a higher rate than global average post crisis, exposing higher vulnerability of LDC exports Market access challenges of APLDCs is a mix of both supply-side bottlenecks as well as policy barriers at export destination markets APLDCs exports continue to be concentrated in a limited number of products and markets, indicative of some supply side limitations but not lack of supply potential With the exception of Bangladesh and Cambodia, source of export growth has been predominantly large neighboring markets, notably to China and India. Improved connectivity, and linkages of transport and industrial infrastructure, has played an important role intra-regional exports of APLDCs, besides DFQF Connectivity-industrial linkages opens up opportunities to reduce trade costs, better realization of supply potential, expansion of export baskets, increase value addition, and improvement of DFQF utilization rates Rajan Ratna 28

29 Tariff Profile LDC Countries WTO Status Tariff Total Agriculture Non-Agriculture Bound MFN Applied Bound MFN Applied Afghanistan Member Bound MFN Applied Bangladesh Member (2016) (2016) (2016) Bhutan Observer Cambodia Member (2017) (2017) (2017) Lao PDR Member (2017) (2017) (2017) Myanmar Member (2017) (2017) (2017) Nepal Member (2016) (2016) (2016) Timor-Leste Observer 2.5 (2016) 2.5 (2016) 2.5 (2016) Source: WTO Tariff Profile (accessed on ) Rajan Ratna 29

30 Services Contribution to economy Which sectors and modes are important? Promoting tourism Mutual recognition agreements Rajan Ratna 30

31 Services, Investments and ToT Market access Mode 1 Mode 2 (is it export market or domestic market?) Mode 3 Mode 4 MRAs Liberalizing sectors for investments attract FDIs Technical assistance and capacity building. Rajan Ratna 31

32 WTO LDCs Services Waiver 17 December 2011, Geneva: 8 th WTO Ministerial Conference declaration on Preferential treatment to services and services suppliers of least-developed countries. Article II:1 of the GATS may be waived to help LDCs increase their services exports. Members who want to grant preferential access to LDCs will notify WTO Services Council. LDCs will submit a collective request specifying sectors and modes to be affected by the waiver. Rajan Ratna 32

33 The LDCs collective request to the WTO 21 July 2014: LDC Group submits a request to obtain preferential treatment of their services exports. Request: waive Article XVI, Market Access and Article XVII, National Treatment Restrictions on LDC Services Suppliers. Sectors included: travel and tourism; banking and insurance; transport and logistics; education and training; IT and business outsourcing; artistic production. Other restrictions to be waived: visa and work permit; recognition of LDCs educational certificates Rajan Ratna 33

34 24 notifications: a growing list* Australia Brazil Canada Chile China European Union Hong Kong, China Iceland India Japan Liechtenstein Republic of Korea Mexico New Zealand Norway Panama Singapore South Africa Switzerland Taiwan Province of China Thailand Turkey United States Uruguay * - as on 29 August 2018 Rajan Ratna 34

35 Trade in services waiver: sectors addressed Transport Services: Australia; Brazil; Canada; Chile; China; EU; Hong Kong, China; Iceland; India; Japan; Republic of Korea; Mexico; New Zealand; Norway; Panama; South Africa; Switzerland; Taiwan, POC; US Travel Services: Australia; Brazil; Canada; Chile; China; EU; Hong Kong, China; Iceland; India; Japan; Republic of Korea; Liechtenstein; Mexico; Panama; South Africa Other Commercial services: Australia; Brazil; Canada; Chile; China; EU; Hong Kong, China; Iceland; India; Japan; Republic of Korea; Liechtenstein; Mexico; New Zealand; Norway; Panama; Singapore; South Africa; Switzerland; Taiwan, POC; Turkey; US; Uruguay Source: Derived by ESCAP from WTO Council for Trade in Services, S/C/N Notifications (accessed on ) Rajan Ratna 35

36 Entry modes addressed for the sectors offered LIBERALISATION MODE 1 MODE 2 MODE 3 MODE 4 Australia; Canada; Australia; Chile; HK, Canada; Chile; Chile; HK, China; China; Iceland; India; Iceland; Mexico; New Iceland; Japan; Republic of Korea; Japan; Republic of Korea; Liechtenstein; Zealand; Norway; Singapore; South Liechtenstein; Mexico; New Zealand; Africa; Switzerland; Mexico; New Zealand; Norway; Norway; Singapore; South Africa; Panama; Taiwan, POC; Turkey; South Africa; Switzerland; Panama; Uruguay Fully liberalised Switzerland; Taiwan, POC; Panama; Taiwan, POC; Turkey; USA Thailand; Turkey; USA; Uruguay Partially liberalised EU; India; Uruguay EU Australia; China; Brazil; HK, China; India; Japan; Republic of Korea; Liechtenstein; USA Canada; Chile; Iceland; India; Republic of Korea; Mexico; New Zealand; Norway; Turkey; USA Source: Derived by ESCAP from WTO Council for Trade in Services, S/C/N Notifications (accessed on ) Rajan Ratna 36

37 25 Services imports and exports of APLDCs (US$ Billion) BoT Exports Imports Source: ESCAP s calculations based on data from WTO statistical database (accessed on ) Rajan Ratna 37

38 Patterns of LDCs services exports: services exports by component 2. Travel 53% 3. Other commercial services 23% 1.Transport 23% 4. Goods-related services 1% Source: ESCAP s calculations based on data from WTO statistical database (accessed on ) Rajan Ratna 38

39 3.6 Other business services 37% Other commercial services exports by subcomponent 3.7 Personal. cultural. and recreational services 3% 3.1 Telecommunicatio ns. computer. and information services 39% 3.5 Charges for the use of intellectual property n.i.e. 3.4 Financial 3.3 Insurance and 1% services 6% pension services 4% 3.2 Construction 10% Source: ESCAP s calculations based on data from WTO statistical database (accessed on ) Rajan Ratna 39

40 Patterns of Asia-Pacific LDCs commercial services exports Source: ESCAP s calculations based on data from WTO statistical database (accessed on ) Rajan Ratna 40

41 IPRs LDC Countries Patent Applications Residents Non- Residents Trademark Applications Residents Non- Residents Residents Industrial Design Applications Non- Residents Afghanistan Bangladesh (2016) ,580 3,795 1, Bhutan (2013) Cambodia (2015) Lao PDR , Myanmar (2012) 4,422 4,068 Nepal (2016) ,215 1, Source: WTO Trade Profile (accessed on ) Rajan Ratna 41

42 Branding: Made in Organic IPR Geographical indications Trademark Patents Rajan Ratna 42

43 Non-tariff measures and trade costs SPS and TBT issues are very important, especially participation in SPS and TBT Committee and raising STC. Rajan Ratna 43

44 Average ad valorem trade cost of APLDCs with world Country (or earlier when not available) Afghanistan Bangladesh Bhutan Cambodia Kiribati Lao PDR Myanmar 569 N/A Nepal Timor Leste Vanuatu Source: derived from ESCAP-World Bank Trade Cost Database available from ARTNeT (only data from 10 APLDCs is included as data for Solomon Islands, Tuvalu is not available) Rajan Ratna 44

45 Average ad-valorem trade costs for APLDCs with major partners 380% 360% 340% 320% 300% 280% 260% EU27 India China Korea, R. of Japan USA APLDCs 240% 220% Source: derived from ESCAP-World Bank Trade Cost Database available from ARTNeT (only data from 8 APLDCs is included as data for Afghanistan, Myanmar, Tuvalu, and Vanuatu is not available) Rajan Ratna 45

46 APLDCs ad-valorem costs of trade with EU 27 and United States % % % % % EU 2007 EU 2014 US 2007 US % % 0.00% Bangladesh Bhutan Cambodia Timor Leste Kiribati Lao PDR Nepal Source: derived from ESCAP-World Bank Trade Cost Database available from ARTNeT (data is from the most recent year available when data is missing) Rajan Ratna 46

47 Number of documents required for trade, Documents to import Documents to export 2 0 Source: World Development Indicators (last updated ), data for Myanmar and Tuvalu is not available Rajan Ratna 47

48 Different options and approaches WTO: Doha Round LDCs DFQF PRoO Services waiver RTAs Where you are parties Where you are not (preference erosion) Autonomous: GVCs, RVCs Technical assistance & MRAs etc. Rajan Ratna 48

49 Policies required Goods: More than tariffs NTMs and trade costs are issues. Measures for market/product diversification: investments & technology. Niche products organic, herbal etc. value added Liberalise tariffs and other barriers autonomously Act as per SPS and TBT agreements STC in WTO or join disputes as third parties Harmonisation and MRAs (case of ASEAN) Technical assistance demand Rajan Ratna 49

50 Policies required (2) Services: Domestic regulations and regulators Liberalise sectors which promote inflow of tourism (mode 2 and 3 both) Measures for inflow of investments Seek MRAs Connectivity open air policy? Other measures: Reduce documentations and cost of trade Paperless trade IPR: GIs Market development: Branding, image building Trade fairs Incentives Rajan Ratna 50

51 Thank you Rajan Ratna 51