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Module 2: Competitiveness Diagnostics
product development, production, and transport only to find their goods rejected at the border. Box 2.1 summarizes some of the important current issues and debates around market access. Figure 2.2 illustrates the main component factors that shape market access from a policy perspective. Each of these components is then discussed in the remainder of this section.
Tariffs
Tariffs are taxes levied on imports mainly with the dual objective of protecting domestically produced goods from foreign competition, and raising revenue to finance public expenditure. They can be expressed either ad valorem, that is, a fixed percentage of the declared import value, or as a specific tax, which is a fixed amount per specified quantity, size, or weight. Some tariffs can be expressed in both a
Module 2
Box 2.1. Key Issues and Debates—External Market Access Are LDCs taking advantage of market access? Although market access has long been a concern on the trade agenda for developing countries, and it remains so in key areas like agriculture, most LDCs now have preferential market access to industrial countries for an extensive range of manufactured products as well as many important commodities. But many developing countries struggle to take advantage of this market access. This not only is a function of nontariff measures (particularly around technical standards) but also more broadly reflects behind-the-border constraints in home markets that continue to render producers uncompetitive. South-South trade and market access: With the growing importance of South-South trade, market access among developing countries is becoming an increasing priority. Yet, tariff barriers among developing countries remain much higher than between industrial and developing countries. Moreover, evidence from the recent global crisis suggests that developing countries are quicker to raise barriers against each other. On the other hand, technical standards tend to be less of a barrier to South-South trade. Implementation of RTAs: Perhaps because of the failure of multilateralism in Doha, the number of regional preferential agreements is growing rapidly. More new RTA agreements were concluded in 2009 than in any previous year. But implementation of RTAs has been slow. In fact, only 313 of the 505 RTAs notified to the WTO as of November 2011 are actually in force. Source: Authors.
Figure 2.2. The Main Components of Market Access Difficulty accessing foreign markets
Tariff barrier
Most Favored Nation tariff
Direct Policy Barriers
Preferential tariff
Nontariff barrier
Antidumping (AD), Countervailing Duties (CVD)
Indirect Barriers
Emergency Safeguards (ES) Tariff peaks
Tariff escalation
Regional or Bilateral PTA
Autonomous (GSP, AGOA)
Admin and documentation; constraints posed by rules of origin
Sanitary and Phytosanitary (SPS)
Technical Barriers (TBT) Need multilateral (WTO) negotiations, or Bilateral and Regional PTAs Need domestic capacity building, and international disciplines Source: Authors.
Transport cost; search and information cost; language and cultural hurdle; use of different currencies; contract enforcement and other hurdles