- Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Asia-Pacific Trade and Investment Report 2019
What to study?
For Prelims: Overview and key findings of the report.
For Mains: Challenges and concerns highlighted, and ways to address them.
Context: The Asia-Pacific Trade and Investment Report 2019 was published by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the United Nations Conference on Trade and Development (UNCTAD).
Key findings- Effects of NTMs:
- Non-tariff measures (NTMs) have increased in the past two decades and are affecting trade as well sustainable development goals (SDGs) in Asian countries.
- NTMs affect 58 per cent of the trade in Asia-Pacific.
- NTMs can have a direct impact on the performance of trading partners. They can also impact issues such as health, safety, environment, climate, public security and peace, which in turn, influence SDGs.
- Around half the Asia-Pacific’s economies have at least one NTM addressing water and energy efficiency and only 10 per cent have measures addressing illegal, unreported and unregulated (IUU) fishing and illegal timber trade.
- What’s the concern now?
The implementation of NTMs raises the cost of trade, especially in developing economies. The average cost of these measures alone amounts to 1.6 per cent of gross domestic product, roughly $1.4 trillion globally.
- The developed economies have a higher standard of NTMs which affects trade of developing economies. In case of Sri Lanka, the country would have needed to invest too much to follow EU standards on IUU.
- Thus, the cost of investment in NTMs can sometimes be higher than the cost of total trade. This makes NTMs burdensome.
- NTMs affected foreign direct investment negatively, which slowed countries’ economic activities.
But, why are they imposed?
NTMs assure protection of human health or the environment. They can even boost trade under certain conditions. While trade costs associated with NTMs are estimated to be more than double that of tariffs, NTMs often serve important public policy objectives linked to sustainable development.
There appears to be more scope for member states in the Asia-Pacific region to address these aspects of sustainable development through trade measures. But NTMs are quite complex and vary from country to country.
- Ensure that NTMs are designed and implemented effectively so that costs are minimised.
- Build capacity in developing economies to adapt, coordinate or harmonise the use of international standards.
- Increase cooperation with developed economies to work out regional mechanisms and develop common guidelines on sustainability impact assessment of NTMs.
- To address trade costs while maintaining the benefits of NTMs, countries need to further enhance cooperation at all levels.
- Regional initiatives should be actively pursued, such as NTM harmonisation and mutual recognition initiatives in regional trade agreements.
- Review current NTMs and ensure that new NTMs are systematically follows and monitored.
Sri Lanka earned a lot revenue by exporting seafood. But then, the European Union (EU) instituted an import ban on Sri Lankan seafood because of the country’s systematic failure to regulate IUU fishing. This was a type of NTM.
On the one hand, the ban helped in conservation of marine resources and encouraged sustainable fishing. At the same time though, fisherfolk in Sri Lanka became poor.
The ban led domestic prices to plummet, which in turn, translated into a decrease in fishing.
What are Non-tariff measures (NTMs)?
NTMs allude to technical measures such as sanitary (for protection of human and animal health), and phytosanitary (for protection of plant health), or SPS, and Technical Barriers to Trade (TBT), which are related to environmental and sustainable standards that are set to block or slow down trade instead of regular tariffs or duties.
Sources: Down to earth.