In 2011, with support from The Asia Foundation and in partnership with a group of like-minded organisations, CUTS International implemented a project entitled Cost of Economic Non-Cooperation to Consumers in South Asia (COENCOSA). The study highlighted the gains that would accrue to consumers of five South Asian countries (viz. Bangladesh, India, Nepal, Pakistan and Sri Lanka) from enhanced regional trade integration. While total static gain would be more than US$ 2 billion per year, dynamic gains would be much higher.
CUTS International and its partners along with the representatives of The Asia Foundation met in Kathmandu on 4th February, 2012, to discuss the contour of future interventions for removing regional trade barriers in South Asia. It was decided that other than raising awareness on the results of the existing study, future activities would focus on specific customs-related and/or other procedural non-tariff barriers faced by some specific commodities which are traded between India and other countries of the South Asia region. It was also decided that the core of the future activities would be result- and action-oriented so as to ensure some tangible and incremental progress towards reducing the cost of doing trade within the region. One of the outcomes of the project is the initiation of a regional network of stakeholders dealing with procedural and other non-tariff barriers affecting regional in South Asia.
Furthermore, it was decided that similar issues would be identified across countries in order to make the project-related activities more effective. Accordingly, CUTS International and its partners decided to focus on customs-related and procedural non-tariff barriers which constitute a significant part of the cost of doing trade within the South Asian region.
To take forward the agenda of regional economic cooperation in South Asia, a project entitled Promoting Participatory Approaches for Removing Regional Trade Barriers in South Asia (COENCOSA Phase II) was initiated. The duration of this project is 10 months – June 2012 to March 2013.
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The broad objective of the project is to conduct a set of focused result- and action-oriented activities on selected issues so as to ensure tangible and incremental progress towards reducing cost of doing trade within the region.
In order to achieve the Goal and the Objective, the project will focus on customs-related and other procedural non-tariff barriers which constitute some significant part of the cost of doing trade within the region. According to some estimates, non-tariff barriers constitute more than 75 per cent of cost of doing trade within South Asia.
While some part of it is on account of customary NTBs as a result of compliance costs due to rules of origin requirements, sanitary and phyto-sanitary measures and technical barriers to trade requirements of doing trade, a large part is on account of trade procedures such as customs procedures, banking requirements, arbitration process, and other procedural NTBs.
In order to achieve some concrete results, the project will focus on the following two types of impact of procedural NTBs:
Impact on trade logistics (including transportation and documentation): expenditure in excess of those normally required in the delivery and clearance process, especially time delays at border clearance through difficult documentation procedures. Starting from a general lack of awareness about trade prospects because of limited market information, conduct of trade is made difficult because of a number of excessive procedures and difficult customs clearance process.
Impact on trade financing: there is lack of proper financial instruments to facilitate trade and reduce foreign exchange risks. Currently trade financing is mostly mediated by third country banks, resulting in unjustified user fees, etc. Interest charges as well as documentation costs of trade financing are also high because of lack of arbitration facilities.
Based on the above-stated Goal, Objective and Focus, the project will conduct the following activities (including following particular processes and methodology, as described below, in conducting them):
In partnership with a group of like-minded organisations (viz. Institute for Policy Advocacy & Governance, Bangladesh; South Asia Watch for Trade, Economics & Environment, Nepal; Sustainable Development Policy Institute, Pakistan; and Institute for Policy Studies of Sri Lanka) and other like-minded groups in respective countries, the project will focus on top five traded commodities between India and four other South Asian countries – viz. Bangladesh, Nepal, Pakistan and Sri Lanka. In other words, the focus will be on top five exports from India to each of these four countries and top five imports from each of these four countries to India.
Methodology: While these commodities will be selected as per latest trade data (as available at the UNCOMTRADE database and International Trade Centre database) and at HS 6-digit level, there may be some overlap. Keeping these commodities in mind, in consultation with its partners and also consulting the existing literature, CUTS will do a quick review on cost of doing trade in those commodities with a focus on particular procedural NTBs – this review will help in identifying factors relating to those particular procedural NTBs contributing to the cost of doing trade, and challenges and prospects of their removal and/or harmonisation.
Keeping in mind the factors contributing to particular procedural NTBs affecting cost of doing trade in specific commodities, CUTS International and its partners will identify a set of pertinent stakeholders (government bodies including customs, business associations including sectoral bodies such as freight forwarders associations, civil society organisations including consumer groups, media persons and trade experts/academics in the region working on this particular subject) who will be engaged in the project.
Methodology: From among the identified stakeholders, CUTS and its partners will identify at least four “policy champions’ (or “change agents”) in each of the five countries who will be closely engaged with the project. They will be from among government officials, private sector representatives, media representatives and women business leaders.
In order to enhance the outreach of the project, CUTS International and its partners will identify a young business reporter from each of the five project country. They would take part in all project-related activities, do regular reporting in popular media so as to raise mass awareness on issues relating to regional trade barriers in South Asia.
Methodology: From among their media contacts, CUTS International and its partners will identify a set of young journalists who could be interested to be engaged on this subject and the project. Media houses will be requested to nominate such journalists. The nominated journalists will be asked to write a 1000-word statement of purpose for their engagement. For each country, it is expected to receive 4-5 nominations. Taking into account the quality of statement of purpose and factors such as gender and language and reach of media houses, CUTS International and its partners will select a set of five young journalists. They will be given a fellowship and will be asked to provide a written commitment about their engagement during the entire duration of the project.
Following the identification of pertinent stakeholder groups, CUTS and its partners will conduct a series of awareness raising (including writing in popular media) cum networking cum advocacy activities in each of the five countries of the region to initiate a network of stakeholders who can be engaged in an incremental manner to reform (removal and/or harmonisation of) procedural NTBs resulting in high costs of doing regional trade in South Asia. They will help in initiating the process of setting a network of pertinent stakeholders who can be engaged in an incremental manner to reduce costs of doing trade in South Asia by addressing procedural NTBs.
Methodology: Each meeting will be of one-day duration. They will not be like academic seminars – they will be of the nature of public-private dialogues and will focus on what stakeholders think how to address specific procedural NTBs affecting their trade in the region. Following a broad presentation on issues on the table, there will be interactive discussion. Following interactive discussion among a multiple set of stakeholders, group exercises will be held to discuss specific in more detail. Each country meeting will end with a consensus-based resolution focusing on key opportunities and constraints on addressing some specific procedural NTBs. Some of these meetings will be held in provinces bordering India with other four South Asian countries – the purpose is to get sub-national actors engaged more with trade and trade-related issues.
Keeping in mind the location of pertinent stakeholders, a total of 13 country meetings will be conducted and they will be as follows:
Bangladesh: Chittagong, Dhaka, Khulna
India: Chandigarh, Chennai, Kolkata, Siliguri
Nepal: Biratnagar, Kathmandu
Pakistan: Islamabad, Karachi, Lahore
Sri Lanka: Colombo
Following the country meetings and more specific issues relating to cost of doing trade as a result of procedural NTBs, a small set of such NTBs will be identified – those which can be tackled first and in a relatively easy manner.
Methodology: CUTS and its partners will write brief, reader-friendly case studies on the impact of those specific procedural NTBs on trade in specific commodities and how they can be removed and/or harmonised in order to enhance intra-regional trade within South Asia.
Based on the results of country meetings and case studies on specific procedural NTBs on trade in specific commodities, country level advocacy meetings will be organised.
Methodology: Along with some representatives of business groups and/or exporters of some specific traded commodities (facing some specific procedural NTBs) CUTS and its partners will meet the relevant government officials (mainly from trade ministry and customs department) in respective countries and will place their case before them for the removal/harmonisation of those procedural NTBs.
Country-level consultation meetings with apex business chambers (Federation of Bangladesh Chambers of Commerce & Industry, Federation of Indian Chambers of Commerce & Industry, Federation of Nepalese Chambers of Commerce & Industry, Federation of Pakistan Chambers of Commerce & Industry, Federation of Sri Lankan Chambers of Commerce & Industry) will be organised to initiate a regional network to exchange regular information on “procedural NTBs and other related issues affecting intra-regional trade in South Asia” between and among the relevant stakeholders and to discuss and debate prospects, challenges and possible solutions to issues hindering intra-regional trade in South Asia. Other related issues will be those mentioned in Article 8 of the South Asian Free Trade Agreement. This Article listed a set of flanking measures (policies and practices) which are to be addressed in order to take forward trade liberalisation agenda in South Asia as per Article 7 of the South Asian Free Trade Agreement. Apex business chambers will be requested to invite their members (including sectoral associations) to these meetings.
Methodology: Taking into account inputs from various activities of this project and otherwise, and in consultation with its partners, CUTS International will prepare a concept note for initiating this regional network. This concept note will be structured as “what, why and how”. It will be customised as per country-specific needs and priorities. This concept note will be discussed at these country-level consultations and will be revised accordingly so as to generate a better political buy-in from among business chambers on the necessity of this regional network including how to make it more effective.
Main results of the project will be presented at a multi-stakeholder regional meeting on “procedural NTBs and other related issues affecting intra-regional trade in South Asia” to be held in New Delhi in March 2013. Among others, at least four important stakeholders from each country will be invited to this meet. They will represent government, private sector, media and from among women business leaders. Possible immediate activities of the proposed multi-stakeholder network will be discussed at this meeting. Specific issues on some specific procedural NTBs and their impact on costs of doing trade in some specific commodities will be discussed to prepare a forward-looking advocacy agenda for their removal and/or harmonisation.
Methodology: This regional meeting will consolidate the purpose of initiating a regional network on “procedural NTBs and other related issues affecting intra-regional trade in South Asia”. The objective of this network will be to exchange information on specific procedural NTBs on specific traded commodities within South Asia and to discuss/debate on how to remove/harmonise them so as to reduce the cost of doing trade. Over time, CUTS and its partners will get relevant government officials, business representatives and media representatives engaged with this network so as to achieve tangible results in regard to removal/harmonisation of specific procedural NTBs on specific traded commodities.
Specific outputs of the above-stated activities are listed below:
A note on procedural NTBs affecting cost of doing trade in South Asia (July 2012 to August 2012)
Country-wise list of pertinent stakeholders vis-à-vis procedural NTBs (July 2012 to August 2012)
Report of country meetings (August 2012 to November 2012)
Media articles by CUTS International and its partners (August 2012 to March 2013)
Media articles by journalist fellows (August 2012 to March 2013)
Case studies on NTBs (August 2012 to December 2012)
Country-level advocacy meetings (October 2012 to January 2013)
Country-level consultations with business chambers (November 2012 to February 2013)
Report of the regional meeting (March 2013)
Strategy paper of the proposed network (March 2013)
South Asia Watch on Trade, Economics and Environment, Kathmandu, Nepal
Smartinvestor, August 15, 2013
Business organizations should have a bigger role in South Asian Trade reforms: CUTS
May 24, 2013, Kolkata
Removal of non-tariff barriers to promote regional trade stressed
Financial Express, Dhaka, Bangladesh, April 18, 2013
India blamed for low intra-regional trade
Republica, Nepal, April 13, 2013
SAARC nations to work together to remove non-tariff barriers
Financial Express, Bangladesh, April 13, 2013
Lack of information about non-tariff barriers creating problems in SAARC trade: Government
Press Trust of India, April 11, 2013
Neighbourhood retail
The Hindu, April 11, 2013
Civil society to shape public policy outcomes: CUTS
April 12, 2013, New Delhi
Stakeholder Participation a must for trade reforms in South Asia : CUTS
April 11, 2013, New Delhi
Sharp Focus on Trade Opportunities in the Neighborhood Needed
March 19, 2013, New Delhi
Book Review: CUTS International, Reforming Non-tariff Barriers
Case for a Participatory Approach in South Asia
By Indra Nath Mukherji
South Asia Economic Journal March 2014 15: 126-130
Reforming Non-Tariff Barriers
Case for a Participatory Approach in South Asia
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