Dr. Mahmoud R. Fath-Allah

Economist, League of Arab States

email:mahmoud.fathallah@las.int

Seminar on Non-Tariff Barriers among OIC African Member Countries

Non-Tariff Barriers to Trade

among the League of Arab States

Contents

• PAFTA: an overview.

• Some implementation issues.

• NTBs among PAFTA members.

• League of Arab States and its mandate in NTBs.

PAFTA Overview• PAFTA is Pan-Arab Free Trade Area. it is a Regional Trade

Agreement among members of the League of Arab States (LAS).

• PAFTA targeting deeper integration throughout Customs Union

and Common Market. (Now, work in progress to achieve Arab

Customs Union).

• PAFTA has 18 member countries:

Saudi Arabia, Kuwait, Emirates, Qatar, Bahrain, Oman, Yemen,

Iraq, Syria, Lebanon, Jordan, Palestine, Egypt, Sudan, Libya,

Tunisia, Morocco, Algeria.

• PAFTA has two LDCs members (Sudan, Yemen) benefit from

special and preferential treatments.

Arab Merchandise Exports

and its share in World Exports(2010-2013)

2010 2011 2012 2013

Arab Exports 927031 1241721 1390244 1369423

World Exports 15300000 18327000 18404000 18784000

Share in World Exports 6.06 6.78 7.55 7.29

Economy

Documents

to export

(number)

Time to

export

(days)

Cost to

export (US$

per

container)

Cost to

export

(deflated US$

per

container)

Document

s to

import

(number)

Time to

import

(days)

Cost to

import

(US$ per

container)

Cost to

import

(deflated

US$ per

container)

Algeria 8 17.0 1,270.0 1,270.0 9 26.0 1,330.0 1,330.0

Bahrain 6 11.0 810.0 810.0 8 15.0 870.0 870.0

Egypt, Arab Rep. 8 12.0 625.0 625.0 10 15.0 790.0 790.0

Jordan 5 12.0 825.0 825.0 7 15.0 1,235.0 1,235.0

Kuwait 7 15.0 1,085.0 1,085.0 10 20.0 1,250.0 1,250.0

Lebanon 4 22.0 1,080.0 1,080.0 7 30.0 1,365.0 1,365.0

Libya 7 23.0 1,140.0 1,140.0 9 37.0 1,255.0 1,255.0

Morocco 4 10.0 595.0 595.0 6 14.0 970.0 970.0

Oman 7 10.0 765.0 765.0 8 9.0 700.0 700.0

Qatar 5 15.0 927.0 927.0 7 16.0 1,050.0 1,050.0

Saudi Arabia 6 13.0 1,285.0 1,285.0 8 17.0 1,309.0 1,309.0

Syrian Arab Republic 8 18.0 1,995.0 1,995.0 9 24.0 2,410.0 2,410.0

Tunisia 4 16.0 805.0 805.0 6 20.0 910.0 910.0

United Arab Emirates 3 7.0 665.0 665.0 5 7.0 625.0 625.0

Yemen, Rep. 6 29.0 1,065.0 1,065.0 9 27.0 1,560.0 1,560.0

Trading across boarders for selected Arab countries (2014)

Source: (World Bank and IFC, 2015)

Main obstacles in PAFTA Implementation

• Limited Intra-Trade.

• Rules of Origins is not completely applied.

• Non-Tariff Barriers is not eliminated.

• No progress in PAFTA Services Trade Agreement since 2007.

PAFTA Member countries developed a work program to eliminate, or, at least,

significantly reduce NTBs.

the NTBs negotiating committee is mandated to classify the NTBs applied by each

member country, and then to start negotiations for their elimination.

NTBs in PAFTA

PAFTA countries face trade constrains related to NTBs, mainly of the following kind:

• Quantitative barriers,

including import licenses, import bans.

• Financial barriers,

which entail an increase in the costs of import operations, such as; exaggerated office

operations fees. Additional taxes - the so-called “service payments” - are still widely used

and take different names (consumption taxes- accompanying duties, fuel differential duties,

etc.)

• Administrative barriers,

including procedures carried out at the border that can cause increase in time and cost

Technical barriers:

• the application of packaging,

• sanitary and environmental standards.

In fact, some member countries insist that commodities should meet national standards, even if

the commodities already meet international specifications.

In addition, some member countries order quarantine restrictions that actually impede trade

(Jordan, Lebanon, Morocco and Egypt).

Studies estimates the magnitude and incidence of non tariff barriers for some Arab countries on

the basis of a survey of the private sector.

The results indicate that:

• the cost of compliance with all non-tariff-related measures averages 10 percent of the value

of goods shipped.

• Freight costs and customs clearance are the main sources of non-tariff trading costs taken

into account in his study.

• the average company spent ninety-five workdays per year resolving problems with customs

and other government authorities.

• On average, unofficial payments associated with customs clearance accounts for only 1

percent of the value of shipments, but one-fifth of survey respondents reported paying

between 2 and 17 percent.

• Excessive delays result from the lengthy inspection and clearance process, the number of

documents and signatures needed to process a trade transaction, and frequent problems with

customs and other government authorities.

• a number of Arab countries, such as Egypt and Jordan, have improved the performance of

customs and freight costs in recent years.

Results of some studies on NTMs

• studies estimated that tariff equivalent to NTBs equals 32% on manufactured products and

29% on agriculture products.

• this results agrees with the survey undertaken by General Union of Chambers of Commerce,

Industry, and Agriculture in Arab Countries (GUCCIAAC)

• the following are some findings of GUCCIAAC’s survey:

Results of some studies on NTMs

0.0%

17.5%

35.0%

52.5%

70.0%

All

Goo

ds

Agri

cultu

re G

oo

ds

Ma

nufa

cure

d G

oo

ds

Va

lue

Axis

Overall Trade Restrictiveness index based on Applied tariff

Bown, Chad P. (2014) Temporary Trade Barriers Database, The World Bank. Available at http://econ.worldbank.org/ttbd/, June.

0.0

1.3

2.5

3.8

5.0

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 2013

Egypt

0.0

0.3

0.6

0.9

1.2

1.5

2000 01 02 03 04 05 06 07 08 09 10 11 12 2013

Jordan

SG stock: imports subject to SG in effect

SG flow: imports subject to any newly initiated SG investigations only

0.0

0.2

0.3

0.5

0.6

2000 01 02 03 04 05 06 07 08 09 10 11 12 2013

Morocco

Import Coverage by All TTBs and Antidumping Only in Egypt, Morocco, and Jordan

LAS vision on NTBs

many ECOSOC resolutions defines NTBs as all procedures and constraints that

countries adopt to control their imports to protect specific domestic production

or restrict trade for environmental concerns. and mandated the Trade

Negotiation Committee to eliminate NTBs.

the importance of international technical assistance to Arab countries in

complying with WTO commitments and to enhance their trade competitiveness

and deeper integration

Thank You