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Addressing Non-Tariff Measures in ASEAN

Working paper by Pasadilla, Gloria/ARTNeT, 2013

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Intra-ASEAN trade has increased six-fold since 1993 but greater integration challenge looms in addressing non-tariff measures. The paper discusses the various ASEAN work programs on NTMs and assesses the incidence of Members’ NTMs on various products. Various ways of accelerating the reduction of non-tariff barriers are discussed, including dispute settlement mechanisms. The paper highlights the importance of a unilateral approach in addressing NTMs and the use of regulatory impact analysis to improve policy making.

















































ASIA-PACIFIC RESEARCH AND TRAINING NETWORK ON TRADE


Working Paper
NO. 130 | SEPTEMBER 2013






Addressing
Non-Tariff Measures
in ASEAN


Gloria O. Pasadilla


Addressing
Non-tariff Measure
in ASEAN


Gloria O. Pasadilla








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© ARTNeT 2013
















NO. 130 | SEPTEMBER 2013





Addressing Non-tariff Measures in ASEAN




Gloria O. Pasadilla*





























* The author is Senior Analyst at the Policy Support Unit (PSU), APEC Secretariat.
She was an ARTNeT Focal Point for the Philippine Institute for Development
Studies where she was Senior Fellow from 2004-2009. The author welcomes
comments and can be contacted at g.pasadilla@gmail.com.


WORKING PAPER
ASIA-PACIFIC RESEARCH AND TRAINING NETWORK ON TRADE


Please cite this paper as: Gloria O. Pasadilla, 2013, Addressing Non-tariff
Measures in ASEAN


ARTNeT Working Paper No. 130, September, 2013, Bangkok, ESCAP.


Available at www.artnetontrade.org.













Abstract: Intra-ASEAN trade has increased six-fold since 1993 but greater integration
challenge looms in addressing non-tariff measures. The paper discusses the various ASEAN
work programs on NTMs and assesses the incidence of Members’ NTMs on various
products. Various ways of accelerating the reduction of non-tariff barriers are discussed,
including dispute settlement mechanisms. The paper highlights the importance of a unilateral
approach in addressing NTMs and the use of regulatory impact analysis to improve policy
making.†




JEL Classification: F1




Key words: ASEAN, Trade, Non-tariff, Mutual Recognition, Conformity Assessment, SPS,
TBT



† The paper was written with the financial support from the Economic Research
Institute for ASEAN and East Asia (ERIA) and is being prepared as ERIA Discussion
Paper. The author acknowledges the technical support for publication from the
ARTNeT Secretariat/ESCAP.




1


Contents

Introduction ................................................................................................................................ 3
1. Growth in intra-regional trade ................................................................................................. 4
2. ASEAN programs on non-tariff measures .............................................................................. 7


2.1. ASEAN structure and NTMs ......................................................................................... 7
2.1.1. ASEAN Consultative Committee on Standards and Quality (ACCSQ) ............... 8
2.1.2. Key achievements of regulatory cooperation in standards and conformance ....11


2.2. Working Group on SPS ...............................................................................................14
2.3. Single Window Program ..............................................................................................14


3. Prioritizing efforts in NTMs ....................................................................................................16
3.1. Profile of NTMs around the world ................................................................................18
3.2. Incidence of NTMs in ASEAN......................................................................................21
3.3. Other evidence of NTM prevalence in ASEAN ............................................................28


3.3.1. Business surveys ..............................................................................................29
3.3.2. Global Trade Alert .............................................................................................30
3.3.3. Trade Policy Reviews ........................................................................................31


4. Ways to address NTMs in ASEAN ........................................................................................33
4.1. Different strokes for different blocks ............................................................................33


4.1.1. Improving transparency through improved notifications and trade portals .........34
4.1.2. Lowering NTBs by agreeing on reduction targets ..............................................35
4.1.3. ASEAN-wide Review of Commitments ..............................................................35


4.2. Improving dispute settlement mechanism ...................................................................36
4.2.1. Protocol on Enhanced Dispute Settlement Mechanism .....................................36


4.3. Improving the process, design and implementation of NTM ........................................39
Summary and Conclusions .......................................................................................................42
References ...............................................................................................................................44
Appendix 1: Brief description of NTM chapters..........................................................................46
Appendix 2: Indonesia: Non-tariff measures and affected products ...........................................48
Appendix 3: WTO cases where respondent is an ASEAN member country ..............................49
Appendix 4: Detailed data for figures 6 and 7 ............................................................................58







2


List of Tables

Table 1: Intra- and Extra- regional trade of ASEAN countries (average, 1993 – 2011)


Table 2: Working Groups and Committees under ACCSQ


Table 3: Mutual Recognition Agreements (MRAs) in ASEAN


Table 4: Summary of activities addressing TBTs in priority sectors


Table 5: Affected products by NTM


Table 6: Type of NTMs applied in ASEAN (percentage)


Table 7: Reported procedural obstacles in trade (% of cases)


Table 8: Specific trade concerns raised on Indonesia (since 2007)


Table 9: Timelines for WTO and ASEAN Dispute Settlement Process


List of Figures


Figure 1: Intra- and extra-ASEAN trade


Figure 2: Intra-ASEAN Trade: agriculture vs. non-agriculture


Figure 3: Progress on ASEAN Single Window


Figure 4: New UNCTAD classification of non-tariff measures


Figure 5: High correlation of tariff and NTM incidence on products


Figure 6: Affected intra-ASEAN trade value by NTM


Figure 7: Affected number by NTM at HS 4 digit level


Figure 8: Non-automatic licensing in ASEAN


Figure 9: NTMs used along with non-automatic licensing measure


Figure 10: Selected discriminatory trade measures (compiled by Global Trade Alert)


Boxes


Box 1: Harmonization in ASEAN agriculture products


Box 2: The EU dispute settlement system and its role in European economic integration




3


Introduction


Non-tariff measures had always accompanied trade but were little noticed. Not anymore. As
tariff rates went down, NTMs have grown in importance. The challenge of minimizing their
trade-impairing effect is now considered the next frontier in trade policy. This task is not easy.
The reason is that non-tariff measures nestle at the heart of countries’ claim for sovereignty,
of the individual country’s right to pursue ‘public goods’ like the protection of citizens from
health and environmental risks. Thus, non-tariff measures are unlikely to disappear - which
is not necessarily a bad thing. But their effects can be minimized and their number can still
be lowered to only the necessary measures that can achieve valid regulatory objectives.


In ASEAN, economic leaders are cognizant of the importance of addressing non-tariff
barriers in the region if it is to achieve its goal of regional integration by 2015. There have
been many steps – various regional agreements and protocols, from transparency
notification to mutual recognition agreements, that aim to limit the adverse effects of ASEAN
members’ diverse regulatory measures on intra-regional trade. Section 2 highlights these
various regional efforts, but are these efforts targeted to the NTMs that truly impact ASEAN
trade? Section 3 shows the incidence of NTMs on various products and the prevalence of
particular forms of NTMs across ASEAN countries. It confirms that ASEAN programs have
been targeted to the NTMs that have the greatest impact such as technical measures and
quantity restrictions. In section 4, the paper tackles various ways for ASEAN to address
NTMs but puts greater stress in unilateral approach at regulatory reform. Some reduction of
NTBs may be achieved through the help of outside prodding, i.e. through regional
agreements, but ultimately it rests in each country’s political will to carry out the necessary
reforms if they accept that doing so is for their own country’s interest.









4


1. Growth in intra-regional trade


Extra-ASEAN imports are on average four times greater than intra-regional trade but since
1993, intra-ASEAN imports grew faster than extra-ASEAN imports. Annual average growth
of intra-ASEAN imports since it embarked on the free trade agreement is 13%, while extra-
ASEAN’s growth over the same period is 10% (see Figure 1). One reason for this
simultaneous intra- and extra- ASEAN trade growth, which seems to dispute trade diversion
argument against the ASEAN FTA, is that as the region increasingly integrated, economic
growth ensued. This, in turn, helped fuel more demand for goods from both within and
outside ASEAN. Certainly, the speed of growth among the ASEAN countries varied. Of its
10 members, Singapore, perhaps, benefited the most from the regional integration to
become the ‘focal point’ of the region’s trade with the rest of the world. Perhaps, this owes
to a ‘first mover’ advantage. Singapore, because of the ease in governing a city-state, was
the first to make major regulatory reforms and investments in its trade infrastructure,
especially in its ports. Its economic success had a demonstration effect on its ASEAN
neighbors and spilled over to the entire region. As trade in Southeast Asia grew, it further
reinforced Singapore’s singular advantage in facilitating trade.




Figure 1: Intra- and extra-ASEAN trade




Source: Based on data from ASEAN Secretariat





5


Figure 2 shows that, in dollar terms, most of the intra-regional trade growth has come from
non-agriculture trade, at least in the earlier years of ASEAN FTA. In terms of growth rates,
however, intra-ASEAN trade in agriculture outpaced that of non-agriculture. Over two
decades beginning in 1993, intra-regional agriculture trade grew at an annual average
growth of 14% compared to non-agriculture’s growth of 13%. Perhaps this is due to the fact
that the ‘starting point’ of agriculture trade was very low due to the strong protection that
agriculture typically enjoys everywhere. Hence, regional trade liberalization helped spur
higher agriculture trade growth despite continuing trade limitations from vestiges of
protectionist regulations.




Figure 2: Intra-ASEAN trade: agriculture vs. non-agriculture




Source: ASEAN Secretariat trade data




Table 1 shows how much each individual ASEAN country depends on both extra-regional
and intra-regional trade. Except for Laos PDR and Myanmar whose intra-regional trade is far
larger than its trade outside the region, all ASEAN countries’ extra-regional trade have
values that are more than twice the size of its intra-regional trade (column 2, Table 1).
However, growth of intra-ASEAN imports has outpaced that of the extra-ASEAN imports in
each country except for Brunei Darussalam, Lao PDR, and Viet Nam. Figures in Table 1




6


show the increasing dependence of ASEAN member economies on each other for trade
since the region embarked on a regional free trade area.




Table 1: Intra- and Extra- regional trade of ASEAN countries (average, 1993 – 2011)


ASEAN Countries Extra- /Intra-regional Trade
Growth, Intra-
ASEAN Trade


Growth, Extra-
ASEAN Trade


Brunei Darussalam 1/ 2.5 10.7 13.6


Cambodia 2/ 3.5 27.9 16.0


Indonesia 23.4 15.9 10.7


Lao PDR 3/ 0.4 35.0 61.4


Malaysia 3.1 10.0 9.4


Myanmar 4/ 0.96 20.8 17.5


Philippines 5.4 14.6 7.6


Singapore 2.75 11.5 10


Thailand 4.5 15.2 10.4


Viet Nam 4.1 18.6 21.2


1/ 1994-2011 ; 2/ 2000-2011 ; 3/ 2003-2011 ; 4/ 1999-2011


Source: Author’s computation based on ASEAN Secretariat trade data.























7


2. ASEAN programs on non-tariff measures


Intra-ASEAN’s tariff reduction program has no doubt influenced growth in intra-ASEAN
trade shown above. But to accelerate further regional integration, the remaining
impediments in the form of non-tariff barriers (NTBs) need to be addressed. Thus, ASEAN
trade officials launched various region-wide initiatives to mitigate the effects of NTBs. This
subsection summarizes parallel efforts within ASEAN that are related to the containment of
NTBs.


But first, a definitional note is in order. Non-tariff measures (NTMs) are all policy measures
other than custom tariffs that alter the conditions of international trade, changing traded
quantities, prices, or both (UNCTAD, 2010). Not all NTMs are trade barriers or NTBs.
NTMs are a much wider set of measures while NTBs are a subset of NTMs that are
discriminatory and intended to protect or favor domestic producers. However, in practice, it
is not always easy to distinguish the two because some NTMs though on its face legitimate,
can be applied in such a way as to become obstacles for trade. That the definition of NTMs
is so broad also implies that the efforts to address their effect on trade need to rely on a
multi-pronged approach.


Under the NTB program, ASEAN adopted the WTO Agreement on Import Licensing
Procedures and developed national guidelines that are compatible with the WTO Licensing
Agreement. Another major task that ASEAN set out to do was the compilation, identification
and verification of NTBs by ASEAN member countries. This database of non-tariff measures
is now available at the ASEAN website. As part of the NTB work program, ASEAN member
countries have agreed to phase out a few of the NTMs that were identified as NTBs, but the
majority, though identified as possible NTBs, are defended by members as legitimate and
not as barrier to trade. This suggests that, to eliminate NTBs, ASEAN cannot only rely on
self-notification and voluntary removal of NTBs by member countries.


2.1. ASEAN structure and NTMs


Within the governance structure of ASEAN, work on NTBs is centered on the ITWG or the
Interim Working Group for the Common Effective Preferential Tariff (CEPT) and AFTA
(ITWG) which was later reconstituted as the Coordinating Committee for ATIGA(CCA).1



1 ASEAN Trade in Goods Agreement.




8


The ITWG/CCA supports the work of the Senior Economic Meeting (SEOM), which in turn
supports the work of the AFTA Council2; the AFTA Council, in turn, supports the work of the
ASEAN Economic Ministers (AEM) which is directly responsible to the ASEAN Summit, the
supreme policymaking body of ASEAN which is composed of heads of state. The ASEAN
Secretariat supports all three ASEAN bodies – the ITWG/CCA, SEOM, and AEM. The CCA
meetings are attended by representatives from ministries dealing with trade, usually
including trade ministries and customs. It was also in-charge of collecting and identifying
NTBs from the database of NTMs.


2.1.1. ASEAN Consultative Committee on Standards and Quality (ACCSQ)


Besides the CCA, expertise from other ASEAN bodies is necessary to help in the NTB work
programme. An important body is the ASEAN Consultative Committee on Standards and
Quality (ACCSQ) since one important area of non-tariff barriers reduction depends on the
harmonization of national standards with international standards and practices; development
and harmonization of technical regulations; as well as efficient, non-duplicative conformity
assessment procedures. The ACCSQ was tasked to undertake the harmonization process
and to implement mutual recognition agreement (MRAs) of laboratory test reports and
conformity certifications. It is supported by three working groups and eight product working
groups with their corresponding areas of responsibility as indicated in Table 2. The eight
product working groups work on the priority sectors for integration, namely: automotive
products, electronics, healthcare, rubber-based products, prepared food stuffs.


















2 The AFTA Council is composed of high ministry officials, usually up to deputy minister level, from each ASEAN
member country plus the ASEAN Secretary-General. They usually meet as needed but at least once a year.




9


Table 2: Working Groups and Committees under ACCSQ


Working Groups Assisting
ACCSQ Assigned Tasks/ Scope of Activities


WG1 – Working Group on
Standards and MRAs


i. Monitoring the implementation of the sectoral MRAs in
ASEAN.
ii. Establishment of an ASEAN Guide to MRAs.
iii. Harmonization of national standards to international
standards.
iv. Assistance in promoting GRP concept to regulators.
v. Confidence building among regulators in the use of
harmonized standards.
vi. Promotion of transparency of technical regulations.
vii. Exploring new areas for development of MRAs and
standards harmonization in ASEAN.
viii. Development of a mechanism for cooperation between
standards bodies and regulatory agencies; and
ix. Recommending to the ACCSQ, proposals, activities or
issues for ASEAN cooperation in relevant international and
regional organizations such as ISO, IEC, APEC and ASEM.


WG2 - Working Group on
Accreditation and Conformity


Assessment


i. Enhancing the capability of accreditation bodies in ASEAN
member countries to achieve regional/international recognition.
ii. (Enhancing the competence of conformity assessment bodies
in ASEAN member countries to facilitate the implementation of
mutual recognition of test reports and certifications.
iii. Assisting new member countries in accreditation and
conformity assessment.
iv. Monitoring the certification bodies within ASEAN.


WG 3 – Working Group on Legal
Metrology


i. To align legal metrology in ASEAN to support the objectives of
the ASEAN Free Trade Area (AFTA) and to ensure that the
modernization of legislation in legal metrology by ASEAN
Member Countries will not result in the introduction of new
technical barriers to trade.
ii. To establish ASEAN cooperation in the area of legal
metrology and to improve the national legal metrology systems,
through cooperation in technology, human resources and
management expertise.
iii. To hold discussions and promote ASEAN interest in legal
metrology with other national, regional and international
organizations


PRODUCT WORKING GROUPS (PWGs)


JSC EE MRA - Joint Sectoral
Committee for ASEAN Sectoral


MRA for Electrical and
Electronic Equipment


i. Listing, suspension, removal and verification of Testing
Laboratories and / or Certification Bodies in accordance with the
ASEAN EE MRA ;
ii. Providing a forum for discussion of issues that may arise
concerning the implementation of the ASEAN EE MRA ;
iii. Reviewing and proposing amendments to the scope and
coverage of the ASEAN EE MRA ;
iv. Considering ways to enhance the operation of the ASEAN
EE MRA, such as developing outreach programme for capacity
building;
v. Considering ways on Good Regulatory Practice on electrical
and electronic products


ACC – ASEAN Cosmetic
Committee


i. Coordinating, reviewing and monitoring the implementation of
the Agreement on ASEAN Harmonized Cosmetic Regulatory
Scheme, including the ASEAN mutual Recognition Arrangement
of Product Registration Approvals for Cosmetics and the
ASEAN Cosmetic Directive;




10


ii. Monitoring the implementation of the following technical
documents and reviewing and updating these documents when
necessary:

a) ASEAN Definition of Cosmetics and Illustrative List by
Category of Cosmetic Products;
b) ASEAN Cosmetic Ingredient Listings and ASEAN Handbook
of Cosmetic Ingredients;
c) ASEAN Cosmetic Labelling Requirements;
d) ASEAN Cosmetic Claims Guideline;
e) ASEAN Cosmetic Product Registration Requirements;
f) ASEAN Cosmetic Imports/ Export Requirements; and
g) ASEAN Guidelines for Cosmetic Good Manufacturing
Practice.


PPWG – Pharmaceutical
Product Working Group




i. Exchange of information on the existing pharmaceutical
requirements and regulations implemented by each ASEAN
member countries;
ii. Review and preparation of comparative study of the
requirements and regulations;
iii. Study of harmonized procedures and regulatory system
currently implemented in others regions on pharmaceutical
trade;
iv. Development of harmonization of technical procedures and
requirements, including appropriate MRAs (full harmonization
equivalence of conformance, equivalence of results and/or
acceptance of test procedures) applicable to the ASEAN
pharmaceutical industry, taking into account other regional and
international developments on pharmaceuticals


PFPWG – Prepared Foodstuff
Product Working Group


i. Exchange of information on standards, regulations,
procedures and mandatory requirements in Member Countries
related to prepared foodstuff;
ii. Review and analyze the comparative study of regulatory
regimes among Member Countries;
iii. Identify areas for possible harmonization and MRAs;
iv. Develop, implement and monitor the sectoral MRAs; and
v. Identify the technical infrastructure needs and build-up mutual
confidence in testing and conformity assessment


APWG – Automotive Product
Working Group


i. Exchange of information on standards, rules, regulations,
procedures and mandatory requirements in Member Countries
related to Automotives sector;
ii. Review and analyze the comparative study of regulatory
regimes among Member Countries;
iii. Identify areas for possible harmonization and MRAs, with the
focus on harmonization ASEAN automotives safety and
emission standards based on UN ECE regulations;
iv. Develop sectoral MRAs; and
v. Identify the technical infrastructure needs and build-up mutual
confidence in conformity assessment.


TMHSPWG – Traditional
Medicines and Health


Supplements Product Working
Group




i. Exchange, review and analyze information on the existing
regulatory framework/regime including standard definition,
terminologies, and technical infrastructure in Member Countries.
ii. Study the existing regulatory frameworks/regime of selected
countries and internationally accepted technical guidelines.
iii. Enhance the technical infrastructure including mutual
confidence in testing and conformity assessment.
iv. Identify areas for possible harmonization and MRAs.


MDPWG – Medical Device
Product Working Group


i. Developing a common submission dossier template for
product approval in ASEAN
ii. Exploring the feasibility of an abridged approval process for
medical devices which regulators of benchmarked countries or




11


recognized regulators have approved
iii. Exploring the feasibility of adopting a harmonized system of
placement of medical devices into the ASEAN markets, based
on a common product approval process
iv. Formalizing of a post-marketing alert system for defective or
unsafe medical devices.
v. All ASEAN countries to consider joining the Asian
Harmonization Working Party (AHWP) and work in parallel with
the Global Harmonization Task Force (GHTF) on technical
harmonization efforts


WBPWG – Wood-Based Product
Working Group


i. To promote transparency of Wood Based Products standards,
technical regulations and conformity assessment procedures
among Member Countries
ii.To identify areas for harmonization of technical regulations
and conformity assessment procedures.
iii.To harmonize technical regulations and conformity
assessment procedures in identified areas under no. (ii)


RBPWG – Rubber-Based
Product Working Group




i. To enhance cooperation in conformity assessment,
development and implementation of standards and technical
regulations for rubber based products among ASEAN Member
Countries.
ii. To strengthen and enhance networking and exchange of
information among ASEAN Member Countries pertaining to
standards, quality and regulations of rubber based products,
with the view to facilitate cooperative undertakings in this area.
iii. To identify standards for rubber-based products for ASEAN
to harmonize with international standards and quality.
iv. To enhance joint actions and approaches on international
issues and adopt common positions in relevant international
organisations, agreements and arrangements.
v. To identify fields of cooperation with related ASEAN Member
Countries and Third Party countries and organisations in order
to promote the development of standards for rubber based
products.
vi. To strengthen human resource development in the area of
standards and quality for rubber products.
vii. To share equal responsibility to the tasks and activities
agreed at meetings


MRAs = Mutual Recognition Agreements; GRP= Good Regulatory Practice; ISO=
International Standards Organization; IEC = International Electrotechnical Commission;
ASEM = Asia-Europe Meeting; UNECE = UN Economic Commission for Europe
Source: www.ASEAN.org


2.1.2. Key achievements of regulatory cooperation in standards and conformance


Since ASEAN embarked on the elimination of non-tariff barriers, four mutual recognition
agreements have been signed and are being implemented (see Table 3). The MRA for
electrical electronic equipment which provides for the acceptance of test reports and
certification was signed in 2000 and started to be implemented in 2004. The ASEAN MRA
on Good Manufacturing Practice (GMP) for pharmaceuticals was signed in 2009. The MRA
provides for inspection to be carried by local inspection bodies. The ASEAN cosmetic
directive harmonized technical requirements including definitions for cosmetics, allowable




12


ingredients, etc. started to be implemented in 2008. The ASEAN Harmonized Regulatory
Regime for Electrical and Electronic Equipment (AHEER) which harmonized technical
regulations and conformity assessment procedures was signed in 2005.




Table 3: Mutual Recognition Agreements (MRAs) in ASEAN


MRA Description Status


MRA for electrical
equipment


- Acceptance of test reports based on
APLAC MRA and IECEE Certification
Body (CB)Scheme;


- Acceptance of certification based on
PAC MRA and IECEE CB;


- Supports implementation of AHEER


Signed in 2000
and implemented
in 2004


ASEAN Harmonized
Regulatory Regime for
Electrical and Electronic
Equipment (AHEEER)


- Harmonized technical regulations based
on essential safety requirements for
electrical and electronic equipment
(EEE);


- Listed standards deemed to meet
essential requirements (based on IEC
standards);


- Harmonized conformity assessment
procedures (based on ISO/IEC guides
53, 67, & 28);


- Registration of EEE and designation of
conformity assessment bodies (CABs)




Signed in
December 2005;
ASEAN members
are in the
process of
transposing
national
legislation to
implement
AHEEER


ASEAN Harmonized
Cosmetic Regulatory
Scheme


- Harmonized technical requirements,
including definitions for cosmetics,
permitted ingredients and preservatives;


Implemented in
January 2008


Pharmaceutical Good
Manufacturing Practice
(GMP)


- Adopts GMP inspection of manufacturers
of medicinal products based on PIC/S;


- Inspection can be carried out by
competent local inspection bodies;


- Mutual recognition of inspection


Signed in 2009


APLAC = Asia Pacific Laboratory Accreditation Cooperation is a cooperation of accreditation
bodies in Asia Pacific that accredit laboratories, inspection bodies and reference material
producers;
IECEE = International Electrotechnical Commission (IEC) system for conformity testing and
certification of electrotechnical equipment and components;
PAC = Pacific Accreditation Cooperation;
PIC/S Scheme = Pharmaceutical Inspection Convention and Pharmaceutical Inspection
Cooperation Scheme. PIC is a cooperative arrangement between government health
authorities, a more formal counterpart of PIC Scheme. PIC whose main purpose is for the
mutual recognition of inspections, was established via treaty.
Source: Author’s compilation based on Bao (2011) and relevant website information.




13


Table 4: Summary of activities addressing TBTs in priority sectors


Sector Standards/Technical Requirements Technical Regulations Conformity Assessment
Automotive Harmonisation of national


standards and technical
requirements (mandatory and
voluntary) with UNECE Regulations
of the 1958 Agreement.


Development of a single regulatory
regime in ASEN for the automotive
scetor is not in the work programme
of the Automotive Product Working
Group.


ASEAN MRA for type Approval of
Automotive Products.


Cosmetics Harmonisation of technical
requirements for limits of cosmetic
ingredients.


ASEAN Cosmetic Harmonised
Regulatory Scheme (Schedule B -
ASEAN Cosmetic Derivative).


ASEAN Cosmetics Testing Laboratory
Network.


Electrical and electronic
equipments


Harmonisation of national
standards and technical
requirements (mandatory and
voluntary) with ICE standards.


ASEAN Harmonised Electrical and
Electronic Equipment Regulatory
Regime.


ASEAN Sectoral MRA for Electrical
and Electronic Equipment.


Medical devices Harmonisation of national
standards and technical
requirements with ISO standards
for medical devices


ASEAN Medical Device Directive
(draft stage).


Conformity Assessment and
evaluation of medical devices are
within the purview of the a national
level. No harmonised regional
approach for conformity assessment
of medical devices.


Pharmaceutical Adoption of the ASEAN Common
Technical Requirements and ASEAN
Common Technical Dossier for
product placement supported by
guidelines for its uniform
application in the region.


Development of a single regulatory
regime in ASEAN for the
pharmaceutical sector is not in the
work programme of the
Pharmaceutical Product Working
Group.


ASEAN Sectoral MRA for GMP
inspection of Manufacturers of
Medicinal Products.


Prepared food stuff Harmonisation of national
standards and technical
requirements for limits for
pesticide residues, fruits, animal
vaccines and products, food safety
requirements on food additives
and contaminants.


Development of a single regulatory
regime in ASEAN for the
Pharmaceutical sector is not in the
work programme of the Prepared
Foodstuff Product Working Group.


ASEAN Food Testing Laboratory
Network.


Rubber-based products
(Reqirements in this sector


are voluntary)


Harmonisation of national
standards with ISO standards.


Development of a single regulatory
regime in ASEAN for the rubber-
bsed products sector is not in the
work programme of the Rubber-
based Product Working Group.


Exchange of information and
transparencey in available
accredited conformity assessment
bodies for rubber-based products.


Traditional medicines and
health supplements


Harmonisation of national
standards and technical
requirements with harmonised
requirements for product
placement and support supported
by guidelines for its uniform
application in the region.


ASEAN Regulatory Framework for
TMHS (draft stage).


Conformity Assessment and
evaluation of traditional medicine
and health supplements are within
the purview of the national level.
No harmonised regional approach
for conformity assessment of
traditional medicine and health
supplements .


Source: ERIA, unpublished report.




Other works of the different committees and working groups under the ACCSQ are
summarized in Table 4. A few technical regulations are yet to be adopted and are still in
draft stages such as those for medical devices, traditional medicines and health. Other
priority sectors do not contemplate a single regional regulatory regime (rubber, prepared
foodstuff. Likewise, for conformity assessment, no harmonized regional approach for




14


conformity assessments are envisioned for medical devices, traditional medicines and health
supplements.3


2.2. Working Group on SPS


Similar to the work being undertaken at the ACCSQ, the Working Group on Sanitary and
Phytosanitary (SPS) measures, a body under the Senior Officials of the ASEAN Ministers of
Agriculture and Forestry (SOM AMAF), has action plans on NTB elimination in crops,
livestock and fisheries. It involves compiling information on NTMs affecting agricultural
products and developing MRA of SPS standards to liberalize intra-ASEAN trade in
agriculture products. Box 1 details the progress in ASEAN agreement on various
harmonization of agricultural products standards based on international standards from
Codex, International Plant Protection Convention (IPPC) and World Organization for Animal
Health (OIE).


2.3. Single Window Program


Another major program related to addressing non-tariff barriers in ASEAN are all the trade
facilitation programs, particularly the ASEAN single window (ASW) concept. The ASW
requires the implementation of national single window (NSW) which means having a
functioning modern customs processes i.e., risk management, electronic filing, paperless
transactions, and having authorized economic operators (AEO).4 The ASW is expected to
be in operation by 2015, but the possibility of achieving this target largely depends on the
attainment of NSW. So far, the pace of progress across ASEAN is widely varied with
Singapore leading with 100% completion rate for both modernization of customs and
implementation of NSW, and the CMLV countries falling way behind (ERIA, 2012) (see
Figure 3).




3 ERIA has prepared a report on the individual ASEAN member’s progress in the implementation of standards
and conformance in the eight priority sectors. It shows how some countries are way advanced in the
implementation of standards but less on conformity assessment, for example in automotive sector, or how most
countries are advanced in all aspects: standards, conformity assessement, and technical regulations in certain
sectors like electronic and electrical equipment but lag behind in various implementation in other products like
cosmetics or prepared foodstuffs. See ERIA (unpublished report).
4 AEOs are economic actors – importers, exporters, freight forwarders, consolidators, brokers, carriers, port
operators – accredited by Customs, proven to have high quality internal processes that ensure the integrity of
information and employees, and have secured access in their premises to prevent tampering with goods for
international transport.




15


Figure 3: Progress on ASEAN Single Window




Source: ERIA (2012)



































16


3. Prioritizing efforts in NTMs


While ASEAN had made some progress in addressing non-tariff barriers in the region as
discussed in section 2, some comments can be made on the choice of priority products in
which NTBs needed to be addressed. Are the priority sectors those which NTBs are
prevalent in? Or, were they chosen merely because of their importance in intra-regional
trade? If the sectors are deemed important because of their high volume of trade, might it
not be because, precisely, these sectors are not those in which NTBs have been an
important factor?


No matter how little effect do NTBs have on the priority sectors, the exercise of
harmonization and simplification of conformity assessments through MRAs remain
significant. ASEAN cooperation effort in these areas should be considered good initial steps
for ASEAN countries to ‘learn the ropes’ as it moves in the future towards more ‘difficult’
sectors to integrate. From a political economy perspective, the regional effort at
harmonization and MRAs on sectors that are of interest to most ASEAN members made it
easy to overcome resistance against regional efforts aimed at domestic regulatory reforms.
It should be noted that ASEAN usually prefers a ‘non-intervention policy’ on ASEAN
countries’ internal affairs. Yet, the regulatory reforms that NTB elimination required are
already a considerable departure from this ‘let alone’ policy as each country acquiesces to
change domestic regulations for the sake of ASEAN integration objectives. Subsequently,
the ‘learning from experience’ that the NTB elimination in the priority sectors provides would
help ASEAN countries deal with more future undertakings of NTB removals in other ‘non-
priority’ sectors.



















17
















































Box 1: Harmonization in ASEAN agriculture products


ASEAN has agreed on the following harmonization:


Codex


ASEAN Task Force on Codex (ATFC) agreed on the harmonization of:


i) Codex General Standards for the Labelling of Prepackaged Foods,
ii) Codex General Standard for the Labeling of Food Additives;
iii) Codex General Guidelines on Claims
iv) Codex Guidelines on Nutrion Labelling.

International Plant Protection Convention (IPPC)

The ASEAN Working Group on Crops (ASWGC) agreed on the Harmonisation of
International Standards for Phytosanitary Measures (ISPMs) Standards Number:

No. 6 (1997) - Guidelines for surveillance
No. 7 (2011) - Phytosanitary Certification System
No. 10 (1999) - Requirements for the establishment of pest free places of production
and pest free production sites
No. 12 (2011) - Phytosanitary Certificates
No. 13 (2001) - Guidelines for the notification of non-compliance and emergency action
No. 15 (2002) - Guidelines for regulating wood packaging material in international trade
No. 17 (2002) - Pest reporting
No. 19 (2003) - Guidelines on lists of regulated pests
No. 20 (2004) - Guidelines for a phytosanitary import regulatory system
No. 23 (2005) - Guidelines for inspection
No. 24 (2005) - Guidelines for the determination and recognition of equivalence of
phytosanitary measures
No. 25 (2006) - Consignments in transit
No. 28 (2009) - Phytosanitary treatment for regulated pests
No. 31(2008) - Methodologies for sampling consignments

World Organization for Animal Health (OIE)

ASEAN Working Group on Livestock (ASWGL) agreed for harmonization of OIE
Guidelines for disease reporting (Section 1.1-1.5), import-export risk analysis (Section
3.1), surveillance section (Section 3.4)

Source: ASEAN Secretariat




18


Subsequent future work on NTBs in other sectors would need a better understanding of the
nature and types of NTMs that really affect regional trade. This section makes a preliminary
analysis of the incidence of NTM in ASEAN, but some caveats are in order. The section
seeks to assess the incidence of specific non-tariff measure in terms of tariff lines5 and value
of trade. This descriptive analysis does not assess how the NTM impact trade because the
paper makes no effort to estimate the value of trade without NTM to compare with the actual
trade with NTM, nor to compute for ad valorem equivalents (AVEs) of the NTMs which are
typically the method to assess the impact of a trade measure.6 The incidence of NTMs may
also falsely give the impression that some countries are more restrictive than others for the
simple reason that they have the virtue of being more transparent. Nevertheless, it is useful
to get an idea on the patterns of non-tariff measures.


3.1. Profile of NTMs around the world


Part of the difficulty in studying NTMs is the paucity of credible and accurate data as well as
its large scope. Generally, data on NTMs are either official data (i.e. provided by the
government) or culled from surveys of businesses affected by NTMs. One advantage of the
survey data is that it manages to capture the procedural obstacles, i.e. the implementation of
an otherwise legitimate measure, which is where non-tariff barriers actually lurk. The
downside is that private businesses usually misidentify some NTMs, e.g. reporting them as
customs procedures when the measures are actually behind-the-border measures that are
administered by another government agency or private actor (Ferrantino, 2010).


Broadly, NTM is defined as all policy-related trade costs incurred from production to final
consumer, excluding tariffs (Gourdon and Nicita, 2012). Some NTM measures are behind-
the-border (e.g. distribution restrictions, subsidy), some are applied at-the-border (e.g. quota
or prohibitions), others are even applied at the border of origin (e.g. pre-shipment inspection).
An international inter-agency collaboration spearheaded by UNCTAD, ITC and the World
Bank revised the classification of NTMs into import and export measures, and the import
measures into technical measures and non-technical ones (see Figure 4 and Appendix 1 ).7



5 Only up to four-digit HS level.
6 Ferrantino (2010) provides a succinct discussion of the challenges in various methodologies quantifying non-
tariff measures.
7 This classification into technical and non-technical measures is different from the old NTM classification of core
and non-core NTMs, where the core NTMs constitute quantity control measures, price control measures, finance
measures and monopolistic measures. The reason for the revision of NTM classification is to account better for
the changing nature of NTMs where the number of core measures have actually declined relative to what used to
be considered non-core. The existing ASEAN database of NTMs are not yet configured into the new UNCTAD
classification.




19


The technical measures are SPS, TBT, and pre-shipment inspection; while the non-technical
ones are price control, licenses/quotas/prohibition and other quantity control measures,
charges and para-tariff measures, competition policy measures, etc. Based on this
classification, Gourdon and Nicita (2012), analyzed collected data from 24 developing
countries plus the European Union and Japan. The main findings of their study are as
follows:


· Coverage ratios8 of NTMs are variable across sectors and vary anywhere between
10 % to 90% of tariff lines. Both developed and developing countries have significant
coverage ratios, hence NTMs are not the sole preserve of developed economies;


· Technical measures, especially TBT and SPS, are the most prevalent of all NTMs.
TBT affects 30% of international trade and SPS, 15%. SPS measures are mostly
applied on agriculture and food products where 60% of products are covered by SPS
regulations. Often, TBT and SPS measures are not protectionist in intent but they
disadvantage developing countries all the same because of the high cost of
compliance;


· Among the non-technical measures, the use of quotas has declined but the use of
non-automatic licenses have increased. The decline in the use of quotas is largely
attributed to the stringent WTO discipline on the use of the trade policy instrument.
Price control measures are rarely used and affect less than 5% of trade.



8 Percent of tariff lines that have NTMs.




20


Figure 4: New UNCTAD classification of non-tariff measures




What is most interesting in the Gourdon and Nicita (2011) study is that they find that, instead
of non-tariff measures being a substitute trade policy instrument to tariffs, the two appear to
be, in fact, complements. They point to evidence of very high correlation of tariff and non-
tariff product incidence on various products. Figure 5 shows such positive correlation of
products with high tariffs with the products with high incidence of non-tariff measures.
Gourdon and Nicita suggest that the evidence point to the possibility that high NTM
incidence and high tariffs are driven by the same political economy factors behind the trade
protection.




21


Figure 5: High correlation of tariff and NTM incidence on products




Source: Gourdon and Nicita (2012)


3.2. Incidence of NTMs in ASEAN


In ASEAN, the predominance of technical measures among the NTMs is also evident. Most
of the reported non-tariff measures in ASEAN are quantity control measures and technical
regulations (Figures 6 and 7). In Indonesia, quantity control measures are related to
prohibitions for sensitive products and non-automatic import licensing, while the technical
regulations refer more to SPS-related measures. In terms of affected import value, however,
Indonesia’s monopolistic measure, i.e. single channel imports through its state trading
administration,9 has the second largest value affected by non-tariff measure next to that by
quantity control measures. In Malaysia, import permits take on the biggest quantity control
measure, while SPS related measures are the majority of technical regulations. In the
Philippines and Thailand, technical regulations and quantity control measures are again the
NTMs which have the greatest number of affected tariff lines and value of imports. In the



9 This large import volume is likely due to many state-trading enterprises’ privilege of tariff-free importation. Thus,
even when the private sector is also allowed to import the commodity, many businesses usually course their
import demand through the state trading enterprise to avail of the import privilege. (Author’s note: I owe this
insight from one of the workshop participants).




22


Philippines, the technical regulations take mostly the form of testing and inspection
requirements, while in Thailand, technical regulations are mostly related to quality standards
and inspection and testing. As for value of ASEAN imports, automatic licensing has the
greatest impact in Thailand. Viet Nam’s quantity control measures take mostly the form of
prohibitions for sensitive products. In terms of affected value of ASEAN imports, internal
taxes and import charges impact trade the most followed by monopolistic measures and
quantity control measures.


What appears consistent across ASEAN countries is the prevalence of licensing, both
automatic and non-automatic. Automatic licensing is usually not associated with
protectionist intention because they are mainly for statistic purposes but non-automatic
licensing may be employed as trade protection. They are usually used along with other non-
tariff measures like quotas, tariff rate quotas, and other technical regulations. Figure 8
shows that Malaysia employs the greatest number of non-automatic licenses in ASEAN,
followed by Indonesia; majority of the non-automatic licenses are applied on non-agricultural
products.10 In Malaysia, Philippines, and Thailand, most of the products with non-automatic
licensing are likewise those with SPS/TBT measures, while in Indonesia, non-automatic
licensing appears to be associated with the use of quota (see Figure 9).


That any country employs non-automatic licensing on a large number of products, however,
is not as problematic and trade-impairing as non-transparency and inefficiency in the
handling of measures, including licensing measures. In the case of Malaysia, its licensing
procedures are deemed efficient and readily accessible online, thus causing relatively less
inconvenience to exporters and importers. In other countries, the application of the same
measures may be riddled with inconsistencies and entail an unnecessarily lengthy process.11

















10 That is HS25 and above.
11 See, for example, Table 7 below.




23


Figure 6: Affected intra-ASEAN trade value by NTM







24


Figure 7: Affected number by NTM at HS 4 digit level











25


Figure 8: Non-automatic licensing in ASEAN


0


100


200


300


400


500


600


Indonesia Malaysia Philippines Thailand


Non-Agricultural
Agricultural




Source: Author’s own computation




Figure 9: NTMs used along with non-automatic licensing measure




Source: Author’s own computation









26


The products that are mostly affected by non-tariff measures are shown in Table 5. Some
are agriculture products like coffee, tea, or sugar, edible and prepared fruits; while
manufactured goods range from vehicles and boats to plastics and textiles. Table 5 also
shows (in bold) that the priority sectors are actually among the top products that are affected
by NTM. In particular, technical regulations affect vechicles (auto) and electrical machinery
and equipment in Indonesia; in Thailand, pharmaceutical products; and in Viet Nam, both
cosmetic and pharmaceutical products. Prepared foodstuffs, such as coffee and tea and
dairy are also among the top affected sectors by technical regulations in Malaysia.


Based on Table 5, the choice of five out of the eight priority sectors where NTBs have to be
eliminated are warranted. For these, the MRAs and adoption of international standards
would greatly help in facilitating intraregional trade. The same cannot be easily said of the
other three priority sectors such as traditional medicine and health supplements, medical
devices, and rubber-based products, based on the criteria of affected import value alone.


That technical regulations and quantity control measures are the most prevalent of all NTMs
is a result that is similar to that found by Gourdon and Nicita (2012). That technical
regulations affect many agricultural products like sugar, dairy, live animals, etc. is likewise
the same conclusion that the two authors reached using global data. 12 Similarly, an
UNCTAD study on emerging NTMs in ASEAN shows the increasing importance of non-core
measures, particularly technical measures, relative to core measures. Basu, Kuwahara, and
Dumesnil (2012) analyzed NTM data from UNCTAD TRAINS database and found that while
in 1994, quantity control measures dominated the number of NTMs, its importance
significantly dropped from 57% to 43% in 2005. In contrast, technical measures rose from
39% to 49% (see Table 6).



12 They used data from 24 developing countries and 2 developed economies, Japan and EU.




27


Table 5: Affected products by NTM


Non-tariff Measures ASEAN Country Affected Products (with top import values)
Quantity Measure


Indonesia Minerals, sugar, nuclear boiler, electrical
machineries, vehicles, plastics, organic chemicals


Malaysia Sugar, cereals, fish and crustaceans, meat, dairy
products, oilseeds, animal/vegetable fats


Philippines Coffee, tea
Thailand Edible and prepared fruits, organic chemicals,


carpets and textiles, iron and steel, cereals
Viet Nam Ship and boats, electrical machinery, vehicles,


object of arts
Technical Regulations


Indonesia Vehicles, sugar, dairy, fertilizers, electrical
machinery and equipment


Malaysia Live animals, meat, fish and crustaceans, dairy,
coffee and tea


Philippines Copper, aluminum
Thailand Pharmaceutical products, organic chemicals,


coffee/tea/spices, beverages and spirits
Viet Nam Cosmetic, animal feed, pharmaceutical products,


fertilizer
Monopolistic measure


Indonesia Mineral fuels, oils, waxes and bituminous sub,
cereals, explosives, matches, pyrotechnic products


Malaysia Cereals, milling industry products, preps. Of
cereals, flour, starch or milk


Viet Nam Mineral fuels, oils, waxes and bituminous sub,
paper and paperboard, articles of paper pulp,
nuclear boilers


Automatic import
licensing


Indonesia Cereals, sugars and sugar confectionery, nuclear
boilers, machinery and mechanical appliances,
computers, electrical machinery and equipment


Malaysia Coffee, tea, mate and spices, milling industry
products


Thailand Mineral fuels, oils, waxes and bituminous sub,
articles of apparel and clothing accessories-not
knitted or crocheted


Viet Nam Electrical machinery and equip. and parts,
telecommunications equip., medical or surgical
instruments and accessories, nuclear boilers,
mechanical appliances, computers


Internal tax Indonesia Sugars and sugar confectionery, vehicles
Philippines Vehicles other than railway or tramway rolling


stock,
Viet Nam Mineral fuels, oils, waxes and bituminous sub,


tobacco and manuf. Tobacco substitutes




28


TQR Malaysia Edible vegetables
Philippines Sugars and sugar confectionery, coffee, tea, mate


and spices
Thailand Misc. Edible preparations, ed. Fruits and nuts, peel


of citrus/melons, oil seeds/misc. Grains/med.
Plants/straw


Viet Nam Sugars and sugar confectionery, tobacco and
manuf. Tobacco substitutes


Source: Author’s computation.




Table 6: Type of NTMs applied in ASEAN (percentage)


Description 1994 2005



Non-core


Automatic licensing measures 2.0 2.4
Monopolistic measures 1.5 2.7
Technical measures 39.2 49.0



Core


Price control measures 2.8
Finance measures 0.1
Quantity control measures 57.3 43.1


Source: Basu, Kuwahara, and Dumesnil (2012).


3.3. Other evidence of NTM prevalence in ASEAN


The ASEAN data on NTMs, because it is collected as applied per tariff line, is useful for
evaluating the type of products in which NTMs have major potential deterrent effect. In
principle, because of the ASEAN Secretariat’s effort to classify the NTM impact into red,
amber and green categories, 13 ASEAN member countries would have been helped to
eliminate many red-colored NTMs and thus reduce more number of NTBs. However, few
NTBs have so far been removed from the list because of one public good objective
justification and another.



13 The color classification of red, amber and green is patterned after the WTO color scheme for subsidies, where
red is a trade protectionist measure and must be removed.




29


3.3.1. Business surveys


Indeed, the limitation in the available NTM data is that the measure might be, on its face,
legitimate but the actual applications can be discriminatory and thus a trade barrier. This
type of information is very hard to get if official notification were to be the only source.
Business perceptions and actual experiences of the trade measures are important additional
information that can help identify non-tariff barriers. For example, an UNCTAD survey14 of
exporting and importing firms from the Philippines and Thailand found procedural obstacles
such as inefficiency or obstruction (e.g. excessive documentation and requirements), and
arbitrariness or inconsistency (usually owing from behavior of public officials) as the major
obstacles encountered by both importing and exporting firms (see Table 7). Other types of
obstacles that importing firms faced were unusually high charges, lack of transparency (or
inadequacy of information on laws and regulations). Legal issues (such as lack of
enforcement of rules) appear to be more of a problem for exporting firms than for importing
firms, while discriminatory behavior (e.g. favoring local suppliers) seem more of a concern
for importers. Survey results such as below point to the need and the urgency of ASEAN
programs such as the ASEAN Single Window where electronic filing can reduce
inefficiencies arising from duplicative papers and requirements. The Trade Repository that
is part of the Single Window program can also help mitigate the problems arising from non-
transparency.




Table 7: Reported procedural obstacles in trade (% of cases)


By importing firms By exporting firms
Philippines Thailand Philippines Thailand


Arbitrariness or inconsistency 33.3 27.4 12.7
Discriminatory behavior
favoring domestic producers


2.8 3.8


Inefficiency or obstruction 85.7 41.7 42.9 63.2
Non-transparency 6.8 4.4
Legal Issues 14.3 8.3 1.8 0.3
Unusually high charges/fess 16.7 16.9 13.5
Uncategorized 1.4 2.1
Source: Reorganized by author based on tables from UNCTAD (2009) and Basu, et.al (2012).



14 See UNCTAD (2009).




30


3.3.2. Global Trade Alert


Another source of information of non-tariff measures is the Global Trade Alert (GTA)
website which collects existing and new measures as well as measures that are being
considered that affect global trade since the global economic downturn (in 2009). GTA
categorizes measures as red (if it almost certainly discriminates against foreign interests),
amber (if the implemented measure may entail discrimination or a measure being
considered will almost certainly discriminate against foreign interests), or green (if the
measure is nondiscriminatory, or involves liberalization or transparency). Figure 8 shows
some selected measures related to NTM that are considered ‘red’ or discriminatory. It
shows that, since the global downturn, Indonesia had significantly increased the number of
potential NTBs based on GTA’s assessment. Use of trade defense measures like
countervailing duties, safeguards, and anti-dumping had increased for Indonesia (18
measures/ cases), Malaysia (4), Thailand (8), and the Philippines (5). Export restrictions
and import bans are also prominent in all countries except Philippines, while technical
measures (SPS and TBT) are found discriminatory only in Indonesia.




Figure 8: Selected discriminatory trade measures (compiled by Global Trade Alert)




Source: Author’s computation based on data collected by www.globaltradealert.org. Accessed June 4, 2013.





31


This type of information from an independent monitoring organization supplements the
reported official information to the ASEAN Secretariat and helps in the peer monitoring of
ASEAN Members’ compliance with regional integration programs.


3.3.3. Trade Policy Reviews


Another good source of information for non-tariff measures and potential non-tariff barriers
are the periodic trade policy reviews (TPR) of individual WTO countries.15 Trade policy
reviews include a section about the changes in trade policies and practices by measure.
Though not presented in an easily analyzable format, the report gives a rich discussion of
measures and affected products, their rationales, procedures on obtaining licenses and
permits, and the major government agencies responsible for the implementation of various
measures. For example, in the most recent WTO TPR report on Indonesia, some
information on non-tariff measures and affected products can be culled and are presented in
Appendix 2. The TPR also cites WTO members’ reported concerns about the complexity
and lack of transparency and trade-impairing effects of Indonesia’s import licensing
requirements, especially with respect to horticultural products, animal and animal products,
electronics, ready-made clothes, toys, footwear, food and beverages (WTO, 2013) (see
Table 8). Nine out of 11 specific trade concerns raised at the WTO took place from 2007 to
2012 which suggests an apparent surge of protectionist policies in recent years in Indonesia.


These types of information – i.e. concerns on trade-impairing measures - may not
necessarily be reflected in the official NTM data submitted by the individual ASEAN member
country. Thus, there is need to supplement analysis of NTMs in the ASEAN database by
data from various other sources.





15 Frequency of trade policy reviews depend on the share of the country to global trade. Some are reviewed
every three years, others every five or six years.




32


Table 8: Specific trade concerns raised on Indonesia (since 2007)


Measure Raised by Products affected


Import permit regulations


European Union, the
United States and
South Africa


Horticultural products


New requirement for hoses to be orange


EU Rubber hoses for LPG gas
stoves


Whether new regulation, intended to protect
consumers, should apply to certain intermediate
goods used in car anufacturing and consumer
electronic


South Korea Zinc coated steel sheet


Mandatory certification: concern about the
rationale for the measure and its
implementation, including conformity
assessment procedures


Japan, the Republic of
Korea, the European
Union, and Chinese
Taipei


Hot-rolled steel sheets and coils
and zincaluminium-coated steel
plates and electrolysis-tin-coated
thin steel sheets


Transparency in the development of a new
regulation and of a notification to the TBT
Committee before its entry into force


US Halal products


New requirement limiting the granting of
distribution licenses to emergency situations
only (later replaced by a labeling requirement)


US, EU Food, food supplements,
drugs, and cosmetics sourced
from or contained "un-halal"
substances and/or alcohol


Labelling requirement, including a requirement
for importers (and domestic producers) to
submit a
sample label to the Ministry of Trade in order to
obtain a certification of labelling in the
Indonesian language, prior to entry in
Indonesian customs area


European Union,
Australia, and the
United States


Certain imported goods


Draft modification to the technical regulation


Mexico and
South Africa


Food categories


Technical specification and mandatory
requirement: issues related to conformity
assessment procedures and transparency


US, EU Toys


Import restrictions Mexico, Australia, Brazil,
Canada, the Dominican
Republic, and the United
States


Pork products


New meat import conditions


EU Meat products


Import restrictions


Brazil Poultry meat, beef


Port closure United States Australia,
Canada, Chile, the EU,
Japan, the Republic of
Korea, New Zealand, and
South Africa




Source: Compiled by author from WTO (2013).






33


4. Ways to address NTMs in ASEAN


The discussion above has underlined the importance of focusing efforts at reducing NTMs
particularly on two major types: quantity control measures and technical measures. Most of
the quantity control measures used in ASEAN countries are non-automatic licensing, import
permit requirements, and import prohibitions, while for technical measures, the problems are
mostly related to conformity assessment procedures, testing and inspection.


ASEAN’s program that tackles harmonization of national standards with international
standards, mutual recognition agreement for conformity assessment, accreditation of testing
laboratories, etc. is right on target as far as addressing the issue of technical measure. In
time, this effort would yield improved efficiencies that can generate greater intra-regional
trade in the prioritized sectors. But there are still major gaps that require ASEAN’s attention,
particularly in the areas of notification and transparency as well as in the countries’
commitments to pare down the number of trade-impairing NTMs. This section discusses
some ways to address these issues.


4.1. Different strokes for different blocks


NTMs are complex instruments. They affect trade in many ways even without protectionist
objectives (Cadot and Malouche, 2012). To deal with NTMs require different approaches for
different types of measures. For example, if the NTM is about excessive customs charges,
an approach to improve trade is outright elimination or reduction of charges. If the NTM is
about a monopolistic measure, i.e. a state trading enterprise that is the only one allowed to
import commodities, an advice is to open windows of competition for the monopolist. For
technical measures like TBT and SPS, the steps are standards harmonization, conformity
assessment improvement and MRAs. For NTMs that are customs related, trade facilitation
programs that include infrastructure development and computerization are a help.


For a number of these solutions, there are no major political economy motives that would
reasonably block them. For example, customs modernization and many trade facilitation
programs have generated wide support from almost all stakeholders, particularly the
business community whether they be domestic producers, exporters, or importers. But other
approaches require a stronger commitment from the top to push through with the necessary
regulatory changes. In particular, for transparency and quantity control measures (especially,
non-automatic licensing), the following suggestions can be considered.




34


4.1.1. Improving transparency through improved notifications and trade portals


The ASEAN Trade in Goods Agreement (ATIGA) contains provisions on notification and
transparency. It requires notification to ASEAN Secretariat and SEOM of a measure at least
60 days before it is supposed to come into effect. However, the experience has been that
ASEAN members do not religiously follow this obligation so much so that other members
learn only about the measures of some ASEAN countries either after they take effect or from
the WTO notifications.16 A simple solution is to require that any notification to the WTO of
any changes in regulatory measures that have a trade effect should also be copied and
notified to ASEAN . This is doable but would still be limited by the natural perverse incentive
problem associated with voluntary reporting, i.e. to report means to open itself to criticisms
and objections, hence the presence of an incentive to remain ambiguous.


Other ways to improve transparency is to work with third parties, for example, the Global
Trade Alert (GTA) monitors trade-affecting measures and categorizes them as discriminatory
(red), possibly discriminatory (amber), or non-discriminatory (green). Knowledge of these
measures can augment the database of NTMs that ASEAN has already collected and
members have verified. Third party data sources of new measures can also alert the ASEAN
Secretariat and the Coordinating Committee for ATIGA (CCA) of a member’s non-reporting
of new measures.


Business surveys that collect exporters’ and importers’ experience of difficulties in trading
(like what UNCTAD , ITC and others have done) is also another way to improve the quality
of NTM information. But conducting periodic surveys is costly besides usually getting very
low turnout from business respondents. An alternative can be to develop an electronic
ASEAN trade portal where anybody (freight forwarders, shippers, exporters, importers, etc.)
can report a trade-impairing measure online.17 This is somehow similar to the ‘reverse
notification’ that the WTO has encouraged, whereby any WTO member can report other
countries’ measures if they found them out in the course of their companies doing business
there.



16 Baccheta, Richtering and Santana (2011) notes that the notification system has a basic problem of incentives.
Its voluntary nature allows countries to choose whether to notify or not. If they notify, they expose themselves to
objections and possible criticisms (of the measure). Lack of notification may reflect either restraint in the use of
NTMs (a good thing) or failure to communicate (a bad thing). Another problem with notification is that the trade
officials may, themselves, not be aware of all trade-affecting measures because regulations originate from
multiple agencies. Some agencies do not see the need to inform trade ministries about a measure, or they are
not aware of its trade impact and significance.
17 The EU depends on online reporting by EU exporters of market access barriers in any country. The European
Commission analyzes those reports to check for breach in international trade rules, if any. For a sample of how
the EU facilitates the reporting of trade barriers by businesses, see
http://madb.europa.eu/madb/complaint_register_form.htm




35


Notification information should be made available to businesses and should not remain only
under the purview of the ASEAN Secretariat and relevant government bodies. ASEAN
should accelerate the plan for a trade portal where all relevant trade information can be
accessed and where queries on trade measures can be made. The trade portal should be a
rich depository of trade data, government measures, and new developments (e.g. possible
introduction of new measures) that can impact intraregional trade.


4.1.2. Lowering NTBs by agreeing on reduction targets


One thing is to improve the ‘universe’ of known non-tariff measures, another is to arrive at
modalities to do something about them. In principle, the Coordinating Committee on ATIGA
(CCA) is supposed to determine the NTBs out of the known measures but the task of NTB
identification is not straightforward. But for some measures like quantity control measures or
monopolistic measures, where the effect on volume of intraregional trade is clearly negative,
ASEAN members are supposed to agree to remove them. Doubtless, political economy
factors prevent members from ‘moving first’ but if ASEAN can agree on specific targeted
reductions then it would lend support for the individual ASEAN member’s effort to counter
domestic oppositions to reforms. In particular, since our study found that non-automatic
licensing is among the most prevalent NTMs among the quantity control measures, an
agreement among ASEAN can be made about reducing X% of tariff lines with non-automatic
licensing measure every year until a maximum threshold (i.e. maximum number of tariff
lines) is achieved where non-automatic licensing is truly deemed necessary.


4.1.3. ASEAN-wide Review of Commitments


Trade policy review mechanism is another solution that can help minimize the protectionist
use of NTMs. Unlike in the WTO, ASEAN has no built-in system for trade policy review. But
third parties and academics, in fact, do the great service of assessing ASEAN Agreements’
implementation but these studies usually come in spurts. Institutionalizing such a system of
review will help ASEAN members take their commitments more seriously and within their
committed timeline. The ASEAN Secretariat can engage foreign institutional partners to get
resources to fund periodic (bi-annual or every three years or five yearly) review of country
commitments assuming insufficient operational funds. The review can focus on progress in
compliance by individual ASEAN countries, as well as potential new measures that can
impact regional trade. If found non-compliant, the reviewer’s report’s publication can




36


potentially have a similar effect to the ‘name and shame’ strategy in other regional blocs
such as the EU.


4.2. Improving dispute settlement mechanism


In those cases where the country’s evaluation of a measure differs from the affected
countries’ or affected businesses’ evaluation, resort to dispute settlement mechanism is
provided for in ATIGA.


4.2.1. Protocol on Enhanced Dispute Settlement Mechanism


The ASEAN Protocol on Dispute Settlement Mechanism, signed in 2004, is patterned after
the WTO’s dispute settlement mechanism. Any dispute starts with request for consultation,
and if that fails to resolve the conflict between Member Countries, the SEOM shall establish
a panel to recommend a resolution of the issue. The Protocol has also established an
appeal procedure similar to that in the WTO, as well as possible arbitration after the
panel/appellate body report has been adopted.


As in the WTO, the ASEAN Protocol has strict timelines, in fact, with even tighter deadlines
than in the WTO. For example, from the consultation phase to the panel body report
adoption, the whole process is envisioned to finish in approximately 7 months, compared to
WTO’s 12 months. With appeal, the process can take a maximum of approximately 11
months (compared to 15 months for the WTO) (see Table 9). Whether this timeline is
realistic is another story. Vergano (2009), for one, contends that to expect the panel to
complete its work within 60 to 70 days from its establishment is unrealistic. The panel
establishment and determining the composition of the panel alone can already take up to
thirty days, leaving the actual panel only 30 to 40 days left to complete its work and submit
its report. If expert advice is still needed, the process can also take another significant
chunk of time. Thus, it is highly likely that the panel process will not be able to deliver its
report according to the statutory timeframe thus diminishing the dispute settlement
mechanism’s credibility.









37


Table 9: Timelines for WTO and ASEAN Dispute Settlement Process


WTO ASEAN
Consultation, mediation, etc 60 days 60 days
Panel set up and panel
members appointed


45 days 45 days


Final report to Parties 6 months
Final report to WTO-DSB or
ASEAN-SEOM


3 weeks 70 days


Adoption of report by DSB or
SEOM


60 days 30 days


Total (if without Appeal) 1 year 205 days
Appeals Report 60 – 90 days 60 – 90 days
DSB or SEOM adopts report 30 days 30 days
TOTAL 1 year, 3 months 11 months
SEOM = Senior Economic Officials Meeting; DSB = Dispute Settlement Body
Source: WTO website; Author’s approximate calculation based on the ASEAN Protocol on Enhanced Dispute
Settlement Mechanism




The Protocol also contains provisions for an automatic adoption of Panel Body Report
(unless Parties appeal the decision) or Appellate Body Report, unless the SEOM agrees by
consensus not to adopt the report. The consensus requirement makes it very unlikely for
any Panel Body/Appellate Body decision not to be adopted by the SEOM. The SEOM, like
the WTO Dispute Settlement Body, also includes in its agenda the monitoring and
surveillance of the implementation of the Report recommendation until the issue has been
fully resolved.


The enhanced ASEAN dispute settlement protocol, on its face, provides some cause for
optimism, particularly in view of the ‘automaticity’ of the adoption of panel or appellate body
decisions. However, a few issues in the Protocol cause some concerns.


First, the Protocol provides freedom to Member States to choose the forum for resolving
trade conflicts between any two members. This means that ASEAN members may opt to
use the WTO dispute settlement mechanism if both parties are members and the issue
concerns a violation of both WTO rule ASEAN Agreement. Though using ASEAN dispute
settlement mechanism is perhaps relatively less costly compared to having the proceedings
done in Geneva under the WTO dispute settlement mechanism, the use of the latter may
provide greater ‘security’ in arriving at a better ‘reasoned’ result. This is because the WTO-




38


DSM has a long list of decided cases and has a larger pool of potential panelists that have
expertise in trade law. Hence, in cases where both ASEAN agreement and WTO law applies,
there is greater likelihood that member countries will opt for the WTO-DSM.


Significantly, the Protocol requires the Parties involved in the case to share in the cost of the
dispute settlement process. Unlike in the WTO where the costs of Panel and Appellate Body
proceedings are part of the WTO budget, in ASEAN, the Parties in a given case must
replenish the drawdowns from the ASEAN DSM Fund, a revolving fund that is separate from
the ASEAN Secretariat’s regular budget. The panel and appellate body decides on the
apportioning of the cost for settling the dispute among the Parties. This is potentially a
disincentive for Member Countries to use the ASEAN dispute settlement mechanism, and in
the long-run, it is an obstacle to have a rules-based economic community.18


More than the paying of the cost of the dispute settlement or the absence of case law in
ASEAN, the greatest factor that casts doubt on the use of ASEAN-DSM, however, is cultural.
ASEAN countries, by culture, are aversed to litigations and prefer informal processes, i.e.
consultations and bilateral negotiations. This is the reason that thus far, no reported trade
conflict among ASEAN has ever reached the formation of a panel body to decide its
outcome. In all cases in the past, trade issues were resolved through bilateral negotiations,
with senior trade officials (who know each other well) doing the direct negotiations (Siong,
2011). The system had worked in the past without resorting to formal legal processes. This,
however, can change over time as trade officials get to be newer, younger, and lacking the
same personal familiarity with one another that older ASEAN representatives developed
over the years.


Even at the WTO, only one dispute between two ASEAN countries have gone through the
dispute settlement process up to the Appellate Body,19 while others did not reach the panel
body phase. Appendix 3 shows various WTO cases where an ASEAN member was a



18 Other differences from the WTO mechanism include the following:


- In the WTO, the DSB is required to convene, if necessary, to be able to adopt a panel/appellate body
report within the statutory 30 days limit. In the ASEAN Protocol, the adoption of the report may be done
by circulation, whereby a non-reply is considered as acceptance of the decision


- The Protocol expressly provides that when the losing Party requests a longer period of time to comply
with the findings and recommendations of the adopted reports, the other Party must not unreasonably
deny such request.


- The ASEAN dispute settlement mechanism does not have provisions for ‘non-violation complaints’, i.e.
in cases of measures by Member Countries which do not conflict with provisions of the WTO covered
agreements but directly or indirectly impair or nullify another Member’s benefits under the agreement.
Non-violation complaints have a potential link with disputes affecting regulations or NTMs that are
compliant, on its face, but do have the effect of nullifying a country’s concession.


19 Thailand: Cigarette case (with the Philippines as complainant)




39


respondent. In all cases, except two, 20 the complainants have been all non-ASEAN
countries. The exceptions are the dispute between Singapore and Malaysia over the latter’s
prohibition of imports of polyethylene and polypropylene which ended up being bilaterally;
and the cigarette tax dispute between Thailand and the Philippines.


Compared to the EU dispute settlement mechanism, the ASEAN-DSM is ‘weak’ because of
the absence of ‘direct effect’ of regional agreements. The principle of direct effect in the EU
gives citizens the right to invoke EU agreements in national courts directly (see Box 2). In
contrast to the EU, ASEAN laws have no direct applicability nor direct effect on individual
ASEAN member countries. ASEAN countries still need to transpose ASEAN agreements
into national laws for them to be domestically applicable. Neither is there any direct effect of
ASEAN agreements on national courts in the sense that a national of any given ASEAN
country cannot invoke rights and obligations from ASEAN agreements in their own national
courts. The ASEAN agreements bind the individual member states at an inter-governmental
level, similar to how the WTO binds its members, and in the absence of national
implementation (transposition), ASEAN laws cannot be domestically invoked or enforced by
its citizens on national courts.


4.3. Improving the process, design and implementation of NTM


Regional efforts at harmonization and removal of NTBs take a long time, but a unilateral
approach to improve NTMs is realizable by each individual ASEAN member. This can be
done if each country is convinced that doing so is for their own benefit, for the improvement
of their own competitiveness rather than a concession to ASEAN.21 NTMs, after all, even the
non-protectionist types, if applied to consumer goods, increase the cost to consumers, and if
applied to intermediate goods, increase the cost to producers and thereby affect their
competitiveness. The challenge is to balance the reduction of business costs against the
preservation of ‘local public goods’ (Cadot and Malouche, 2011). This means not the
elimination altogether of NTMs because this may be undesirable especially if the NTMs
address a genuine public good, i.e. for protection against health and environmental hazards.



20 Thailand vs. Philippines; Malaysia vs. Singapore
21 Hoekman (2011) makes a similar argument for autonomous, unilateral reforms in services regulation. He
encourages going beyond the narrow focus on market access, while taking regulatory constraints and reforms
seriously. To achieve this requires a more robust governance framework at the national level that accounts for
the effects of prevailing policies and the likely impacts of alternative types of reforms. See also Sauve, Pasadilla
and Mikic (2011).




40


It means rather the improvement of NTMs through “better design, smarter enforcement and,
ultimately through a robust governance framework.”22


Improving the design of regulations requires looking into:23 1) the market failure (or source of
the problem) that justifies government regulation; 2) whether the measure addresses the
market failure adequately and with the least cost; and 3) comparison of the costs and
benefits of the measure. In other words, this requires that use of regulatory impact analysis
(RIA) in policymaking should underpin discussions of whether to introduce new non-tariff
measures and maintain existing ones. Its use helps ensure that policies are coherent,
efficient and effective. The use of RIA in NTM discussions points to the need for individual
ASEAN countries to build and improve analytical capacities. 24 Financial commitment to
support analytical work is necessary to support an evidence-based approach to regulatory
reform. Capacity building efforts towards this end is a wise use of technical assistance
money.


While RIA can help inform the policy discussions, at the bottom of a unilateral approach to
regulatory reform is a strong top-down political will to act on the results of the analysis,
overcoming the expected conflicts between ministries and agencies as well as pressures
from economic operators protecting their own self-interest.























22 Ibid., Cadot and Malouche (2012)
23 See Cadot, Malouche and Saez (2012)
24 Viet Nam has recently adopted regulatory impact assessment in its policy-making. No other ASEAN country,
besides Viet Nam, is known to have adopted RIA as part of policy-making.




41



Box 2: The EU dispute settlement system and its role in European economic
integration

Unlike the WTO which relies on panel body and appellate body for decisions on trade
disputes, the EU relies on standard court system. The European treaty created the
European Court of Justice (ECJ) to decide cases related to EC laws. Over time, the role
of the ECJ became pivotal for the increased European integration.

Several factors make the ECJ a supranational institution that is effective in enforcing EC
laws. First is the principle of direct effect which gives citizens of EC member countries
rights to invoke EC laws in cases before national court. The principle of direct effect
allows individual litigants in EU countries to use EC laws to force their own governments
to remove national restrictions and to comply with EC law . Through the principle of
direct effect, citizens have become partners of the ECJ (and the European Commission)
to enforce EC laws. Second is the principle of supranationality which claims that, in case
of conflict, European Community law is prior to national law. The principle obliges
national courts to disapply a national law if it goes against an EC law according to the
ECJ interpretation.

Interestingly, these principles were not stated as such in the European Treaties but were
formulated by the ECJ in its case decisions. Once the ECJ principles have been stated,
European leaders who wanted to preserve their sovereignty were unable to remove
them, partly owing to the different interests by member states and the complex voting
requirement for them to undo what has been considered as judicial over-reach by the
ECJ.

Since the decisions of the ECJ have been mostly pro-interstate commerce, it had a very
strong influence in the increased economic integration in the EU. Most of its influence
come through the preliminary reference system whereby national judges can pose
questions to the ECJ regarding the meaning and application of EC Law in a given case.
The ECJ answers these questions with preliminary rulings which the national judge may
use to adjudicate in the case before him. The ECJ also rules on infringement cases but
majority of the case laws had grown out of the preliminary reference system. Empirical
evidence exist that the growing number of preliminary rulings is highly correlated with
growth in inter-regional trade within the EU (see, for example, Gabel and Carrubba,
2009).

One interesting ECJ case that is related to non-tariff measures is the Cassis de Dijon
case. The case involves a French liquor company that was prohibited by the German
government to market Cassis de Dijon fruit liquor with alcohol level of about 15-20% in
Germany on the ground that fruit liquors in Germany should contain a minimum alcohol
level of 32%. Germany invoked consumer protection, i.e. consumers would buy fruit
liquor thinking they get higher alcohol when, in fact, they do not. ECJ used the principle
of proportionality to rule against the German measure deciding that it went beyond what
was necessary to achieve a valid aim. In the Cassis case, protecting consumers was
justified but the measure was disproportionate and made intra-community trade
unnecessarily difficult. Less burdensome solutions like labeling could achieve the same
end of consumer protection.




42


Summary and Conclusions


Intra-regional trade has increased six-fold since ASEAN member countries embarked on
regional economic integration in 1993. Much progress, particularly in tariff reductions, has
been achieved over 20 years, but a greater challenge is coming to the fore in eliminating
non-tariff barriers that still greatly affect trade. Here, too, ASEAN is taking the right direction
in its Trade Facilitation Work Programme which includes reducing the trade-impairing effects
of NTMs. It is addressing NTMs through harmonization of ASEAN Members’ standards with
international ones, where possible, signing mutual recognition agreements to make
conformity assessments procedures simpler and to facilitate trade flows overall.


The incidence of NTMs in ASEAN follows the global shift from the use of core NTMs, namely
quantity restrictions, price control and finance measures, or monopolistic measures, to
greater utilization of technical measures such as TBT and SPS. Still, ASEAN makes use of
a good number of quantity restrictions but predominantly non-automatic licensing. Much of
the ASEAN effort on NTMs has addressed the technical measures through MRAs and
adoption of international standards, but much remains to be done with quantity restriction
measures, especially reduction in the use of non-automatic licensing.


Greater transparency of NTMs that are implemented in different ASEAN markets is another
important task. But because of the individual countries’ perverse incentive to remain
ambiguous, other sources of information need to be used to supplement the available
information from the ASEAN database. Third party sources, business surveys, reverse
notification from other members about measures encountered in another country in ASEAN
should be drawn upon to have a more complete picture of real incidence of NTMs. ASEAN
should accelerate the development of a ‘one-stop-shop’ , or trade portal, for all relevant trade
information to help businesses access the trade measures in the different ASEAN countries.
Periodic reviews of how individual member countries are complying with their ASEAN
commitments and applying NTMs would be another helpful solution to improve measure
applications and transparency.


The enhanced protocol on dispute settlement mechanism supports the transformation of
ASEAN into a more rules-based economic community. Patterned after the WTO dispute
settlement mechanism, it remains to be seen if the ASEAN-DSM will be used given
ASEAN’s preference for more informal procedures of consultation and bilateral negotiations.
The dispute settlement process in ASEAN comes up short compared to the EU’s system




43


whereby regional economic agreements have direct effects in domestic court’s decisions in
the individual EU countries.


Despite avowed objective to eliminate NTBs, the pace of its agreed reduction in ASEAN has
been slow. Part of the reason is the difficulty of assessing whether an NTM is truly an NTB.
Several countries had changed many of what the ASEAN Secretariat proposed as NTBs into
‘green’ NTMs by invoking a ‘legitimate’ rationale. This type of reaction is perhaps endemic in
the process, thus unless individual ASEAN member countries themselves have the political
will to remove NTBs and to make NTMs that impose the least cost on trade, NTB reduction
will remain hostage to a mercantilist-inspired negotiation processes. One important
approach that can inform policy discussions on NTMs and provide the necessary support for
regulatory reforms is the use of regulatory impact analysis (RIA). But this requires strong
analytical capabilities and strong financial commitment to support analytical work.


In the work on NTMs, major capacity building assistance is necessary. To inform policy
discussions through analytical work requires building capabilities in national governments.
Implementing standards harmonization and mutual recognition agreements in conformity
assessments require training of more technical experts to carry out inspection, testing, or
accreditation, and to effectively participate in standards setting. Success in streamlining
NTMs might, in the final analysis, rely on the capacity building activities and support that
national governments undertake.

























44


References


ASEAN. 2009. ASEAN Trade in Goods Agreement. Downloadable:
http://www.asean.org/communities/aseaneconomiccommunity/category/asean
trade-in-goods-agreement


Baccheta, M., J. Richtering, and R. Santana. 2012. “ How Much Light do WTO Notifications
Shed on NTMs?” In O. Cadot and M. Malouche, eds, Non-tariff Measures: a Fresh
Look at Trade Policy’s New Frontier. Washington, D.C.: Center for Economic Policy
Research and World Bank.


Bao, H. 2011. “Experiences of ASEAN Consultative Committee on Standards and Quality
(ACCSQ)”. Presentation at the WTO Workshop on Regulatory Cooperation, Geneva,
November 8-9.


Basu, S., H. Kuwahara, and F. Dumesnil. 2012. “Evolution of Non-tariff Measures: Emerging
Cases from Selected Developing Countries.” Policy Issues in International Trade and
Commodities Study Series No. 52. Geneva: UNCTAD.


Cadot, O. and M. Malouche. 2012. “Overview”. In O. Cadot and M. Malouche, eds, Non-
tariff Measures: a Fresh Look at Trade Policy’s New Frontier. Washington, D.C.:
Center for Economic Policy Research and World Bank. Downloadable:
http://www.cepr.org/pubs/books/cepr/NTM_measures.pdf


Cadot, O., M. Malouche, and S. Saez,. 2012. Streamlining Non-tariff Measures: A Toolkit for
Policy Makers. Washington, D.C.: World Bank Group


ERIA. 2012. Mid Term Report of the Implementation of the AEC Blueprint: Executive
Summary. October. Downloadable:
http://www.eria.org/MidTerm%20Review%20of%20the%20Implementation%2
0of%20AEC%20Blue%20Print-Executive%20Summary.pdf


ERIA. Draft Final Report on AEC Scorecard, Phase 2. Jakarta: Unpublished report.


Ferrantino, M. 2010. “Methodological Approaches to the Quantification of Non-tariff
Measures.” In M. Mikic, ed. Non-tariff Protectionism and Crisis Recovery. Bangkok:
Asia-Pacific Research and Training Network on Trade and UN Economic and Social
Commission for the Asia and the Pacific


Gourdon, J. and A. Nicita. 2012. “NTMs: Interpreting the New Data”. In O. Cadot and M.
Malouche, eds, Non-tariff Measures: a Fresh Look at Trade Policy’s New Frontier.
Washington, D.C.: Center for Economic Policy Research and World Bank.


Gabel, M. and C. Carrubba, 2009. “The European Court of Justice as an Engine of
Economic Integration: Reconsidering evidence that the ECJ has expanded economic
exchange in Europe.” Downloadable: http://ssrn.com/abstract=1444500


Hoekman, B. 2011. “ Harnessing Services Trade Reform for Inclusive Growth: Lessons from
the 1980s vs the 2000s.” In P. Sauve, G. Pasadilla and M. Mikic, eds., Service Sector




45


Reforms: Asia-Pacific Perspectives. Bangkok: ADB Institute and Asia-Pacific
Research and Training Network on Trade.


Sauve, P., G. Pasadilla, and M. Mikic, eds. 2011. Service Sector Reforms: Asia- Pacific
Perspectives. Bangkok: ADB Institute and Asia-Pacific Research and Training
Network on Trade.


Siong, D. 2011. “Trade Dispute Settlement within ASEAN.” In L. Young, ed. ASEAN Matters:
Reflecting on the Association of Southeast Asian Nations. Singapore: World
Scientific.


UNCTAD. 2009. Non-tariff Measures: Evidence from Selected Developing Countries and
Future Research Agenda. Geneva: UNCTAD.


UNCTAD. 2010. “Non-tariff Measures: Evidence from Selected Developing Countries and
Future Research Agenda.” Developing Countries in International Trade Studies.
Geneva: UNCTAD.


UNCTAD. 2012. Classification of Non-tariff Measures. February. Downloadable:
http://unctad.org/en/PublicationsLibrary/ditctab20122_en.pdf


Vergano, P. 2009. “The ASEAN Dispute Settlement Mechanism and its Role in a Rule-
Based Community: Overview and Critical Comparison.” Paper submitted to the Asian
International Economic Law Network (AIELN) Inaugural Conference, 30 June 2009.
Downloadable: http://aieln1.web.fc2.com/Vergano_panel4.pdf


WTO. 2013. Trade Policy Review: Indonesia. Geneva: WTO.






















46


Appendix 1: Brief description of NTM chapters


Chapter A, on sanitary and phytosanitary measures, refers to measures affecting areas
such as restriction for substances, restrictions for non eligible countries’ hygienic
requirements, or other measures for preventing dissemination of diseases, and others.
Chapter A also includes all conformity assessment measures related to food safety, such as
certification, testing and inspection, and quarantine.

Chapter B, on technical measures, refers to measures such as labelling, marking,
packaging, restrictions to avoid contamination or other measures protecting the environment,
standards on technical specifications, and quality requirements.

Chapter C classifies the measures related to pre-shipment inspections and other custom
formalities.

Chapter D, contingent trade protection measures, i.e., measures implemented to counteract
particular adverse effects of imports in the market of the importing country, including
measures aimed at unfair foreign trade practices. They include antidumping, countervailing,
and safeguard measures



Chapter E, licensing, quotas and other quantity control measures including tariff rate quotas.
Chapter E also covers licenses and import prohibitions that are not SPS or TBT related.

Chapter F, on charges, taxes and other para-tariff measures, refers to taxes other than
custom tariffs. Chapter F also groups additional charges such as stamp taxes, license fees,
statistical taxes, and also decreed customs valuation.

Chapter G, on finance measures, refers to measures restricting the payment of imports, for
example when the access and cost of foreign exchange is regulated. It also includes
measures imposing restrictions on the terms of payment.

Chapter H, on anticompetitive measures, refers mainly to monopolistic measures, such as
state trading, sole importing agencies, or compulsory national insurance or transport.

Chapter I, on trade-related investment measures, groups the measures that restrict
investment by requesting local content and thus restricting import, or requesting that
investment should be related to export in order to balance imports.

Chapter J, on distribution restrictions, refers to restrictive measures related to the internal
distribution of imported products. These measures would hinder trade from taking place
because there would be difficulty in distributing the products once entering the country.

Chapter K, on the restriction on post-sales services, refers to difficulties in allowing technical
staff to enter the importing country to install or repair technological goods imported.




47


Chapter L contains measures that relate to the subsidies that affect trade.

Chapter M, on government procurement restriction measures, refers to the restrictions
bidders may find when trying to sell their products to a foreign government.

Chapter N, on intellectual property measures, refers to the problems arising from intellectual
property rights.

Chapter O, on rules of origin, groups the measures that restrict the origin of products so that
they could benefit from reduced tariffs according to certain rules often set in multiple
simultaneous agreements with different countries.

Chapter P, on export measures, groups the measures a country applies to its exports. It
includes export taxes, export quotas or export prohibitions, etc.


Source: UNCTAD (2012)





































48


Appendix 2: Indonesia: Non-tariff measures and affected products


Measures Affected Products
Port of entry restrictions:
Licensing procedures and pre-
shipment inspection


(a) food and beverages, toys, electronics, footwear
and garments; (b) horticultural products; (c) pearls;
(d) ozone depleting substances; (e) salt; (f)
alcoholic beverages; and (g) hazardous materials


Pre-shipment inspection (a) sugar; (b) rice; (c) salt; (d) precursors; (e)optical
discs (empty and filled), and machines and
materials used to produce them; (f) textiles and
textile products; (g) ozone-depleting substances; (h)
nitro cellulose; (i) hazardous
materials; (j) colour multifunctional machines, colour
photocopying and printing machines; (k) non-
hazardous and toxic waste; l) used capital goods;
(m) certain imports
of electronics, ready-to-wear clothes, children's
toys, footwear, and food and beverages; (n)
ceramics; (o) sheet glass; (p) pearls; and (q)
horticulture products; (r) iron and steel; (s) tires;


Import prohibition Certain shrimp species


Quantitative restrictions rice, sugar, animals and animal products, salt,
alcoholic beverages and certain ozone depleting
substances


Import Licensing/ Permits (some are
required on a per shipment basis)


rice, sugar, animals and animal products, salt, as
well as certain textiles and textile products;
LPG and LPG gas containers; used capital goods;
oil and gas; cloves; sodium tripolpy phosphate;
horticultural products, and fertilizer

-2,060 tariff lines affected (1/5 of total tariffs)


New requirements for import licensing horticultural products (2012); pearls (2012); animal
and animal products (2011); used capital goods
(2011); sodium tripolpyphospate (2011); fertilizer
(2011) oil and gas (2009); nonhazardous and non-
toxic waste (2009); LPG and LPG gas containers
(2008); certain food, beverages, medicine,
cosmetics, clothing and footwear (2008); electronic
goods and children's toys (2008); and colour
multifunctional machines and colour photocopying
and printing machines (2007).


Source: Compiled by author from WTO (2013).




49


Appendix 3: WTO cases where respondent is an ASEAN member country



DS
NO.


COUNTR
Y


DISPUTE
SETTLEMEN
T CASES


COMPLAINAN
T/S


AGREEMENTS
CITED


ISSUE PANEL
REPORT
CIRCULATE
D


PANEL REPORT FINDINGS



DS54,
55, 59,
64



Indonesia



Autos



· European


Communities
· Japan
· United States
(October 1996)





· TRIMs Art. 2.1
· GATT Arts. I:1


and III:2
· ASCM Arts. 5(c), 6,


27.9 and 28




Measure at issue: (i) "The 1993 Programme"
that provided import duty reductions or
exemptions on imports of automotive parts
based on the local content percent; and (ii) "The
1996 National Car Programme" that provided
various benefits such as luxury tax exemption or
import duty exemption to qualifying (local
content and etc.) cars or Indonesian car
companies.




Product at issue: Imported motor vehicles
and parts and components thereof.



2 July 1998




· TRIMs Agreement Art. 2.1 (local content requirement): The Panel found the
1993 Programme to be in violation of Art. 2.1 because (i) the measure was a
"trade-related investment" measure; and (ii) the measure, as a local content
requirement, fell within para. 1 of the Illustrative List of TRIMs in the Annex
to the TRIMs Agreement, which sets out trade-related investment measures
that are inconsistent with national treatment obligation under GATT Art. III:4.




· GATT Art. III:2, first and second sentences (national treatment - taxes and
charges): The Panel found that the sales tax benefits under the measures
violated both Art. III:2, first and second sentences. The Panel noted that
under the Indonesian car programmes, an imported motor vehicle would be
taxed at a higher rate than a like domestic vehicle in violation of Art. III:2,
first sentence, and also, any imported vehicle would not be taxed similarly to
a directly competitive or substitutable domestic car due to these Indonesian
car programmes whose purpose was to promote a national industry.




· GATT Art. I:1 (most-favoured-nation treatment): The Panel found the
measures to be in violation of Art. I:1 because the "advantages" (duty and
sales tax exemptions) accorded to Korean imports were not accorded
"unconditionally" to "like" products from other Members.




· ASCM Art. 5(c) (serious prejudice): The Panel found that the duty and sales
tax exemptions under the 1996 National Car Programme were "specific




50


subsidies" which had caused "serious prejudice" (through significant price
undercutting under Art. 6.3(c)) to like imports of EC (but not US) imports
under Art. 5(c)






DS455



Indonesia



Importation of
horticultural
products,
animals and
animal
products



United States
(January 2013)



· GATT 1994:


Art. X:3(a), XI:1
· Agriculture: Art. 4.2
· Import Licensing:


Art. 1.2, 3.2, 3.3



Indonesia subjects the importation of horticultural
products, animals and animal products into
Indonesia to non-automatic import licenses and
quotas, thereby restricting imports of goods.

These licensing regimes have significant
trade-restrictive effects on imports and are used
to implement what appear to be WTO-
inconsistent measures. The multi-step licensing
process is more administratively burdensome
than absolutely necessary to administer the
measure. The issuance of RIPH and RPP
recommendations, a critical part of the licensing
process, appears to be delayed or refused by the
Indonesian authorities on non-transparent
grounds. The Indonesian licensing measures do
not inform traders of the basis for granting
licenses. The licensing regimes do not appear to
be administered in a uniform, impartial and
reasonable manner, because the measures are
applied inconsistently and unpredictably.



Panel established, but not yet composed



DS1



Malaysia



Prohibition of
Imports of
Polyethylene
and
Polypropylen
e



Singapore
(January 1995)



· GATT 1994:


Art. X, XI,XVIII
· Import Licensing:


Art. 3




Product at Issue: Polyethylene and
Polypropylene importation (plastic resins) from
Singapore




Measure at Issue: Restrictive trade policies
regarding the import of plastic resins




As the Government of Malaysia is aware, the
Government of Singapore has, since 1991,
expressed its deep concern over the Malaysian



Settled or terminated (withdrawn, mutually agreed solution)
(29 March 1995)




51


Government's restrictive trade policies regarding
the import of plastic resins. These policies are of
particular concern since, up until the recent
imposition of the import prohibitions.
Singaporean producers exported a significant
volume of plastic resins to Malaysia.
Unfortunately, these approaches have not
resulted in a removal of the Malaysian
Government's trade restrictions. Instead, the
Malaysian Government has formalised its
restrictive policies through the recent imposition
of import prohibitions on PE and PP in violation
of its obligations under GATT 1994 and the
Agreement Establishing the WTO.





DS74,
DS102



Philippine
s



Measures
Affecting Pork
and Poultry



United States
(April 1997 and
October 1997)



· Agriculture: Art. 4
· GATT 1994:


Art. III, X, XI
· Import Licensing:


Art. 1, 3
· Trade-Related


Investment
Measures (TRIMs):
Art. 2, 5




The US contends that the Philippines’
implementation of these tariff-rate quotas, in
particular the delays in permitting access to the
in-quota quantities and the licensing system
used to administer access to the in-quota
quantities, appears to be inconsistent with the
obligations of the Philippines under Articles III, X,
and XI of GATT 1994, Article 4 of the Agreement
on Agriculture, Articles 1 and 3 of the Agreement
on Import Licensing Procedures, and Articles 2
and 5 of TRIMs. The US further contends that
these measures appear to nullify or impair
benefits accruing to it directly or indirectly under
cited agreements.





Settled or terminated (withdrawn, mutually agreed solution)
(13 March 1998)



DS195



Philippine
s



Measures
Affecting
Trade and
Investment in
the Motor
Vehicle
Sector



United states
(May 2000)



· GATT 1994:


Art. III:4, III:5, XI:1
· Subsidies and


Countervailing
Measures:
Art. 3.1(b)


· Trade-Related
Investment




Product at Issue: motor vehicles and parts and
components thereof.




Measure at Issue: Philippines’ Motor Vehicle



Panel established, but not yet composed




52


Measures (TRIMs):
Art. 2.1, 2.2, 5.2, 5.
5


Development Program (“MVDP”), including the
Car Development Program, the Commercial
Vehicle Development Program, and the
Motorcycle Development Program




The United States asserted that:


· the MVDP provided that motor vehicle
manufacturers located in the Philippines who
meet certain requirements are entitled to
import parts, components and finished
vehicles at a preferential tariff rate;


· Foreign manufacturers’ import licenses for
parts, components and finished vehicles are
conditioned on compliance with these
requirements. Among the requirements
referred to by the United States are the
requirement that manufacturers use parts and
components produced in the Philippines and
that they earn a percentage of the foreign
exchange needed to import those parts and
components by exporting finished vehicles;
and


· The United States considered that these
measures are inconsistent with the
obligations of the Philippines under Articles
III:4, III:5 and XI:1 of the GATT 1994, Articles
2.1 and 2.2 of the TRIMS Agreement, and
Article 3.1(b) of the SCM Agreement.




DS215



Philippine
s



Dumping
Measures
Regarding
Polypropylen
e Resins from
Korea



Republic of
Korea
(December
2000)



· Anti-dumping


(Article VI of GATT
1994):
Art. 2, 3, 5, 6, 7, 9,
12, Annex II


· GATT 1994: Art. VI




Measure at issue: Preliminary and Final
Determinations of the Tariff Commission of the
Philippines on Polypropylene Resins from Korea




Korea considered that errors were made by the




In consultations




53


Philippines in those determinations which
resulted in erroneous findings and defective
conclusions with regard to, among others, like
product, dumping, injury, and causality, as well
as the imposition, calculation and collection of
anti-dumping margins which are incompatible
with the obligations of the Philippines under the
provisions of the Anti-Dumping Agreement, in
particular, but not necessarily limited to, Articles
2, 3, 5, 6 (including Annex II), 7, 9, and 12, and
Article VI of GATT 1994.









DS396,
DS403



Philippine
s



Taxes on
Distilled
Spirits



· European


Communities
(July 2009)


· United States
(January
2010)



· GATT 1994:


Art. III:1, III:2



Measure at issue: Philippines' current Excise Tax
regime on distilled spirits

Product at Issue: imported spirits

A low flat tax is applied by the Philippines to
spirits made from certain designated raw
materials, while significantly higher tax rates are
applied to spirits made from non-designated
materials.

In the Philippines, all domestic distilled spirits
(mostly gins, brandies, rums, vodkas, whiskies
and tequila-type spirits) are made from one of
the designated raw materials, cane sugar,
whereas the vast majority of imported spirits are
made from non-designated materials (e.g.
cereals or grapes).
Consequently, all domestic spirits are subject to
the low flat tax, while the vast majority of
imported spirits are subject to one of the higher
tax rates.
The United States considers that the Philippines'
taxes on distilled spirits discriminate against
imported distilled spirits by taxing them at a
substantially higher rate than domestic spirits.



· The Panel found that because imported spirits are taxed less favourably


than domestic spirits, the Philippine measure, while facially neutral, is
nevertheless discriminatory and thus violates the obligations under the first
sentence of Article III:2 of the GATT 1994.


· The Panel found that, through its excise tax, the Philippines subjects
imported distilled spirits made from non-designated raw materials to internal
taxes in excess of those applied to “like” domestic distilled spirits made from
the designated raw materials, thus acting in a manner inconsistent with
Article III:2, first sentence, of the GATT 1994.


· The Panel also found that the Philippines has acted inconsistently with
Article III:2, second sentence, of the GATT 1994 by applying dissimilar taxes
on imported distilled spirits and on “directly competitive or substitutable”
domestic distilled spirits, so as to afford protection to Philippine production of
distilled spirits.


· On appeal, the Appellate Body upheld the Panel's finding that each type of
imported distilled spirit at issue — gin, brandy, rum, vodka, whisky, and
tequila — made from non-designated raw materials, is “like” the same type
of distilled spirit made from designated raw materials. As a consequence,
the Appellate Body upheld the Panel's finding that the Philippines has acted
inconsistently with Article III:2, first sentence, of the GATT 1994 by imposing
on each type of imported distilled spirit internal taxes in excess of those
applied to the same type of like domestic distilled spirit. The Appellate Body
reversed the Panel's finding that allimported distilled spirits made from
non-designated raw materials are, irrespective of their type,
“like” all domestic distilled spirits made from designated raw
materials. However, the Appellate Body upheld the Panel's findings
that all imported and domestic distilled spirits at issue are “directly
competitive or substitutable” within the meaning of Article III:2, second




54


sentence, of the GATT 1994. The Appellate Body also upheld the Panel's
finding that dissimilar taxation of imported distilled spirits, and of directly
competitive or substitutable domestic distilled spirits, is applied “so as to
afford protection” to Philippine production of distilled spirits. As a
consequence, the Appellate Body upheld the Panel's finding that the
Philippines has acted inconsistently with Article III:2, second sentence, of the
GATT 1994 by applying dissimilar internal taxes to imported distilled spirits
and to directly competitive or substitutable domestic distilled spirits, so as to
afford protection to domestic production.


· The Panel's finding that all imported and domestic distilled spirits are
“directly competitive or substitutable products” applied also to the European
Union's claim. As a consequence, it concluded that the finding, that the
Philippines acted inconsistently with Article III:2, second sentence, of the
GATT 1994 by subjecting imported distilled spirits to dissimilar taxation,
applied to both the European Union and the United States.


· At the DSB meeting on 28 January 2013, the Philippines reported that “An
Act Restructuring the Excise Tax on Alcohol and Tobacco Products” was
passed by Congress on 11 December 2012, and approved by the President
on 19 December 2012.





DS122



Thailand



H-Beams



Poland
(April 1998)



· Anti-dumping


(Article VI of GATT
1994): Art. 2, 3, 5, 6


· GATT 1994: Art. VI




Measure at issue: Thailand's definitive anti-
dumping determination.




Product at issue: H-beams from Poland.




Poland asserted that provisional anti-dumping
duties were imposed by Thailand on 27
December 1996, and a final anti-dumping duty of
27.78% of CIF value for these products,
produced or exported by any Polish producer or
exporter, was imposed on 26 May 1997. Poland
further asserted that Thailand refused two
requests by Poland for disclosure of findings.
Poland contended that these actions by Thailand
violate Articles 2, 3, 5 and 6 of the Anti-Dumping
Agreement.



28
September
2000




· ADA Art. 5 (initiation of investigation): The Panel rejected Poland's
claim that the Thai authorities' initiation of the investigation could not
be justified due to the insufficiency of evidence originally contained in
the application. The Panel considered that the application need not
contain analysis, but only information. The Panel also rejected
Poland's claim that Thailand violated Art. 5.5 by failing to provide a
written notification of the filing of application for initiation of
investigation. The Panel considered that a formal meeting could
satisfy the requirement.


· ADA Art. 2.2 (dumping determination - constructed normal value): As
the Panel found that, (i) for the purpose of calculating a dumping
margin under Art. 2.2, Thailand used the narrowest product category
that included the like product; and (ii) that no separate reasonability
test was required in choosing a profit figure for constructed normal
value, the Panel concluded that Thailand had not violated Art. 2.2.


· ADA Art. 3.4 (injury determination - injury factors): As the Appellate
Body upheld the Panel's interpretation of Art. 3.4 that an investigating
authority should consider all the injury factors listed in Art. 3. standard
of review 4, the Appellate Body upheld the Panel's finding that




55


Thailand acted inconsistently with Art. 3.4.


· ADA Arts. 3.1 (injury determination) and 17.6 (standard of review):
(Thailand only appealed the Panel's legal interpretations of Arts. 3.1
and 17.6, and not the Panel's substantive findings of a violation of
certain Art. 3 provisions.) The Appellate Body reversed the Panel's
interpretations that Art. 3.1 requires an anti-dumping authority to base
its determination only upon evidence that was disclosed to interested
parties during the investigation. Similarly, it also reversed the Panel's
interpretation that, under Art. 17.6, panels are required to examine
only an investigating authority's injury analysis based on the
documents shared with the interested parties. The Appellate Body
found that the scope of the evidence that can be examined under Art.
3.1 depends on the "nature" of the evidence, not on whether the
evidence is confidential or not. A panel should consider all facts, both
confidential and non-confidential, in its assessment of the
establishment and evaluation of the facts by investigating authorities
under Art. 17.6.





DS370



Thailand



Customs
Valuation of
Certain
Products from
the European
Communities



European
Communities
(January 2008)



· GATT 1994:


Art. I, II, III, VII, X, X
I


· Customs valuation
(Article VII of GATT
1994): Art. 1.1, 1.2,
5, 11, 12, 16, 22


· Agreement
Establishing the
World Trade
Organization:
Art. XVI:4





Product at Issue: Alcoholic beverages and other
products from the European Communities

Measure at Issue: Thai customs’ valuation of
alcoholic beverages and other products from the
European Communities

The European Communities disputes the
application by the Thai customs authorities of an
“assessed value”, which it considers to be
arbitrary, to replace the declared transaction
value of alcoholic beverages and other products
from the European Communities. This assessed
value is calculated by deducting (i) a standard
margin of profit and general expenses and (ii)
the customs duty and internal taxes paid from (iii)
the wholesale price of those goods in the Thai
market, regardless of the transaction price
provided by the importer. According to the
European Communities, broad standard margins
of profit and general expenses have been fixed
by the Thai customs authorities on the basis of
sources that have never been explained or
disclosed.




In consultations




56





DS371



Thailand



Customs and
Fiscal
Measures on
Cigarettes
from the
Philippines



Philippines
(February 2008)



· GATT 1994:


Art. II:3, III:2, III:4, V
II:1,VII:2, VII:5, X:1,
X:3, X:3(a), II:1(b)


· Customs valuation
(Article VII of GATT
1994):
Art. 1.1, 1.2, 1.2(a),
1.2(b), 2, 3,4, 5, 6,
7, 10, 13, 16






· Measure at issue: Thailand's customs and tax
measures.


• Product at issue: Cigarettes imported from the
Philippines.


On 7 February 2008, the Philippines
requested consultations with Thailand
concerning a number of Thai fiscal and customs
measures affecting cigarettes from the
Philippines. Such measures include Thailand's
customs valuation practices, excise tax, health
tax, TV tax, VAT regime, retail licensing
requirements and import guarantees imposed
upon cigarette importers. The Philippines claims
that Thailand administers these measures in a
partial and unreasonable manner and thereby
violates Article X:3(a) of the GATT 1994.


In addition, the Philippines makes separate
claims in respect of various customs valuation
measures affecting imports of cigarettes. The
Philippines claims that as a result of these
measures, Thailand acts inconsistently with
various provisions of the Customs Valuation
Agreement and the interpretative notes to these
provisions, as well as paragraphs 1 and 2 of the



15 Novembe
r 2010




· CVA Art. 1.1 and 1.2(a) (valuation in a related-party transaction): In
determining the acceptability of the transaction value declared by the
importer in a related-party transaction, customs authorities must (i) examine
the circumstances of the sale in the light of the information provided by the
importer or otherwise; (ii) communicate to the importer the grounds for
preliminarily considering that the relationship influenced the price; and (iii)
give the importer a reasonable opportunity to respond so that the importer
can submit further information. The Panel found that Thai Customs acted
inconsistently with Arts. 1.1 and 1.2(a) in rejecting the transaction value of
the imported cigarettes because it failed to properly examine the
circumstances of the transaction between the importer and the seller.




· CVA Art. 16 (customs' explanation of valuation decision): Under Art. 16,
when requested, the customs authority must provide a written explanation
that is sufficient to make clear and give details of how the customs value of
the importer's goods was determined. The Panel concluded that the basis
for rejecting the transaction value as provided in Thai Customs' letter to the
importer (i.e. "it cannot be proven whether the relationship has an influence
on the determination of customs values or not") was inadequate to explain
the reason for rejecting the transaction value within the meaning of Art. 16.



· GATT Art. III:2 (national treatment - taxes and charges): Thailand's measure




57


General Introductory Commentary; and various
provisions of Articles II and VII of the GATT
1994. According to the Philippines, Thailand
does not use transaction value as the primary
basis for customs valuation as required and fails
to conform to the sequence of valuation methods
mandated by the Customs Valuation Agreement,
rather it uses a valuation method with no basis in
the Agreement.


The Philippines also claims that Thailand's ad
valorem excise tax, health tax and TV tax, on
both imported and domestic cigarettes, are
inconsistent with Article III:2, first and second
sentence and Article X:1 of the GATT 1994
which requires the publication of trade laws and
regulations of general application.


The Philippines also claims that Thailand's VAT
regime is inconsistent with Articles III:2, first and
second sentence, III:4 and X:1 of the GATT
1994.


In addition, the Philippines claims that Thailand's
dual license requirement that requires that
tobacco and/or cigarette retailers hold separate
licenses to sell domestic and imported cigarettes
is inconsistent with Article III:4 of the GATT
1994, because it provides less favourable
treatment for imported products than for like
domestic products.




subjected resellers of imported cigarettes to VAT when they do not satisfy
conditions for obtaining input tax credits necessary to achieve zero VAT
liability; resellers of like domestic cigarettes are never subject to VAT liability
by reason of a complete exemption from VAT. The fact that resellers of
imported cigarettes may take action to achieve zero VAT liability under
Thailand's measure does not preclude a finding of inconsistency. The
Appellate Body upheld the Panel's finding that Thailand acted inconsistently
with Art. III:2, first sentence.



· GATT Art. III:4 (national treatment - domestic laws and regulations): The


analysis must be grounded in close scrutiny of the "fundamental thrust and
effect of the measure itself". Such examination normally requires an
identification of the implications of the measure for the conditions of
competition between imported and like domestic products in the
marketplace; this may be discerned from the design, structure, and expected
operation of the measure and need not be based on empirical evidence as
to the actual effects. When imported and like domestic products are subject
to a single regulatory regime with the only difference being that imported
products must comply with additional requirements, this would provide a
significant indication that imported products are treated less favourably. The
Appellate Body upheld the Panel's finding that Thailand treats imported
cigarettes less favourably than like domestic cigarettes by imposing
additional administrative requirements only on resellers of imported
cigarettes.



· GATT Art. X:3 (b) (trade regulations - prompt review of administration action


on customs matters (guarantee decisions)): "Prompt review and correction"
under Art. X:3(b) requires review and correction performed in a quick and
effective manner and without delay. The nature of the specific administrative
action at issue also informs the meaning of "prompt". For review of a
customs guarantee to be timely and effective, it must be possible to
challenge the guarantee during the time it serves as a security. Thai law
delays review of guarantee decisions because they can only be challenged
once a notice of assessment of final duty liability is issued. The Appellate
Body found that this system does not ensure prompt review of administrative
action and upheld the Panel's finding that Thailand acted inconsistently with
Art. X:3(b).




58


Appendix 4. Detailed Data for Figures 6 and 7


Indonesia
NTM NTM Description # Of


Tariff
Lines
(HS4)


ASEAN Import
Value in 2006
(million US $)


2300 Internal tax 62 900
5100 Automatic import licensing 131 955
6000 Quantity Measure 736 20,431


6300 Quanti ty Control Measure-Prohibi tions 348 4,090
6100 Import l i cens ing 247 14,200


7110 Monopolistic Measures 30 10,400
8000 Technical Regulation 364 2,643


8100 Technica l regulation_SPS 168 1,250


Malaysia


NTM NTM Description


# Of
Tariff
Lines
(HS4)


ASEAN Import
Value in 2006
(million US $)


1400 TRQ 1 111
5000 Automatic Import Licensing 19 225
6000 Quantity Measure 590 56,353


6100 Import Licensing_import permit 492 55,500
6170 non-automatic l icensing_sensitive product 63 324


7100 Monopolistic Measures 5 261
8100 Technical Regulations 282 52,800


Philippines
NTM NTM Description # Of


Tariff
Lines
(HS4)


ASEAN Import
Value in 2006
(million US $)


1400 TQR 17 46
2300 Administrative charges for inspection


10 747


6000 Quantity Measure 49 24
6100 Import permit 39 24


8000 Technical Regulation 233 3,393
8100 Technica l Measure_Testing, inspection, sampl ing, testing and requirements 228 3,392


Thailand
NTM NTM Description # Of


Tariff
Lines
(HS4)


ASEAN Import
Value in 2006
(million US $)


1400 TRQ 11 76
5100 Automatic License 31 12,297
6000 Quantity Measures 53 529


6370 Prohibi tion_sens i tive product 16 155
6170 Import Licence_sens i tive products 11 176


8000 Technical Regulation 85 439
8110 Technica l regulation -qual i ty and s tandards 35 134
8150 Technica l regulation_Testing, inspection, quarantine reqt 35 131


Viet Nam
NTM NTM Description # Of


Tariff
Lines
(HS4)


Import Value
in 2006


(million US $)


1400 TRQ 4 63
2300 Internal Taxes 15 4,240
5100 Automatic License 82 719
6000 Quantity Measures 223 1,428


6370 Prohibition_sensitive product 222 1,390
7100 Monopolistic Measures 18 4,190
8000 Technical Regulations 107 654


Source: Author's Computation


Appendix 4: Detailed data for figures 6 and 7























































59




















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Economic and Social Commission


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