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III

TRADE RESTRICTIONS

1. GENERAL

Both tariff as well as non-tariff measures (NTMs) are applicable to international trade in NWFPs. They are applied by both importing and exporting countries for a variety of purposes. Tariffs, safety regulations and technical standards are the most common restrictions imposed by the developed countries on the import trade in NWFPs. Developing countries, which are the major suppliers to world markets, also impose measures which restrict or regulate export trade. The most common form is the use of export tariffs levied with the objective of raising revenue for the government./

2. TARIFF MEASURES

2.1. Import tariffs

Identification and analysis of tariff measures and their impact on the NWFP trade is relatively straight forward. In addition to the country custom schedules, information is also available in the UNCTAD computerized trade data base. Detailed results of the analysis of the EC, USA and Japan are given in Appendices II, III and IV, respectively, and a summary is given in Table 3.
 
 

Table 3. Summary of tariffs faced by NWFPs in EC, USA and Japanese markets
 
 
Market 
No. of NWFP- containing tariff lines 
No. of national lines of NWFPs falling under the tariff range (%) of 
   
1-5 
6-10 
11-15 
16-20 
>20 
EC/
91 
36 
24 
24 
USA/
98 
46 
33 
14 
Japan/
95 
44 
26 
16 

The concept of "protection" through imposition of import taxes to weaken the competitiveness of the imported products in domestic markets does not hold true in the case of the majority of the NWFPs, particularly in the markets of developed countries, since these products are not produced or collected in these latter countries. Collection and processing of NWFPs is quite labour intensive, and in developed countries labour is more expensive. Moreover, such jobs are often considered dirty, tedious and arduous. Consequently, developed countries tend to maintain low tariffs on NWFP imports, in order to ensure a sustained supply of these products to meet their domestic demands.

Generally the tariffs on NWFPs are quite low. For example, custom schedules of EC group NWFPs under 91 tariff lines. Of these 39.6% have no duty, 26.4% are levied a nominal duty of 1-5% (ad valorem), 26.4% face a tariff of 6-10%, 3.3% fall in the tariff range of 11-15%, and a few products (4.4%) like natural honey, truffles and spices face rates above 15%.

USA tariffs are even lower. Out of 98 NWFP-containing tariff lines, 47% are free of import duty, 33.7% face a nominal duty of up to 5% (ad valorem) and 14.3% are levied a duty of 6-10%. Only one product (luggage and handbags lined with bamboo) faces a duty of 12.50% and four tariff lines, containing various articles of natural cork, face a duty of 18%.

Similarly, in Japan out of 95 NWFP-containing tariff lines, 46.3% are duty-free and 27.4% are levied a nominal duty of up to 5%. Another 17% tariff lines face a duty from 6% to 10%. Only six tariff lines, containing products like nuts (walnuts, chestnuts, etc.), lac and some kinds of processed truffles face duties ranging between 17.5-20%. Three tariff lines containing products like natural honey, maple syrup and truffles (packed in air tight containers) face high tariffs of 30%, 35% and 25%, respectively. In addition to the import duty, consumption tax of 3% is levied on almost all products imported into Japan.

Tariffs on NWFPs imported into developing countries are, however, considerably higher. Tariffs for China and India, two of the main NWFP trading nations, are summarized in Appendices V and VI, respectively. MFN tariffs for these products range from 12% to as high as 65% (ad valorem) for China and from 30-60% for India. Here the tendencies of protectionism and/or revenue generation for the respective governments are quite obvious.

2.2. Export tariffs

Export tariffs (taxes) are also commonly levied on NWFPs exported from most developing countries. Their main objective is to secure revenue for the state. As examples: a 12% tax is levied on Brazil nuts exported from Brazil. LaFleur (1992) suggests that if these were removed, there would be an increase in price paid to the nut collectors, increase in total export prices, and enhanced environmental benefits intrinsic to nut gathering. Similarly, a high export tax of 40% is levied on gum arabic exported from Sudan. Such a high tax rate is counter-productive, by encouraging cross-border smuggling of the product, and by causing a reduction in price paid to the collectors. Overseas earnings are therefore reduced as a result (Iqbal, 1993).

3. NON-TARIFF MEASURES

Details of non-tariff measures (NTMs) faced by NWFPs entering EC, USA and Japanese markets are given in Appendices II, III and IV, respectively. Species protection controls (CITES) and health and safety regulations are the main categories of NTMs applicable to NWFPs in these markets.

3.1. Species protection controls (CITES)

The Convention on International Trade in Endangered Species (CITES) regulates trade in plants and animals. Over 110 countries are now signatories to CITES, but little progress has been made in enforcing its requirements in respect of plants. CITES has three lists or Appendices. Appendix I lists species, subspecies or populations in which trade is prohibited. Appendix II lists all those in which trade is regulated by requiring an export permit issued by the competent government authority in the exporting country. The permit must only be issued if the specimen was legally obtained and export will not be detrimental to the survival of the species. Regulated trade is allowed in these species. Appendix III contains species subject to regulation in individual countries, thus it covers species which are subject to trade controls from certain countries only.

A few countries ban import or export of wild plants, and Australia has developed a comprehensive system of export controls for all its native wild plants. Some individual countries protect certain species by controlling their export; examples are Harpagophytum procumbens, a medicinal plant in Botswana, many wild orchids from Costa Rica, the medicinal plant Rauofoliaserpentina and wild orchids from India.

3.2. Health and safety regulations

Regulatory requirements of many countries are being continually tightened and becoming more demanding. There are increasing regulations concerning, in particular, contamination of edible products, medicinal plants (botanicals) and their derivatives by pesticide residues, and insistence on a high level of active ingredients and purity. The governments of most industrialized countries insist that plant product be inspected before it is allowed into the country, because many botanicals can be contaminated with micro-organisms or bring unwanted forms of animal life into the country. Exporting countries are sometimes required to furnish phyto-sanitary certificates. Imports of edible fungi (morels, truffles, etc.), for example, are subject to phyto-sanitary regulations as elaborated in the CODEX worldwide standards for dried edible fungi (CODEX STAN 39-1981).

Similarly, spices imported into the major markets must face with phyto-sanitary regulations, and checks to detect microbiological contamination (particularly that of pesticide residues) are carried out. Some fumigants are banned in Europe, as a result there is a need to develop suitable processes for removing bacteria from spices, and from other wild edible products. Suitable post-harvest handling, storage and packaging methods are also required (Husain, 1992).

Various residues left on plant material (all foreign matter such as grit, sand or other residues) must be removed. Many industrialized countries refuse admission for consignments of plants that show signs of pesticide residues. For example, Germany has regulations concerning the maximum allowable residue level in or on phytogenic foodstuffs. Similarly, it is mandatory that all plant material be free from microbial contamination.

Although considerable trade distortion is caused as a result of these regulations, they are not unreasonable controls since their enforcement is essential for health and safety reasons. Thus all suppliers of NWFPs must realize that their products, both the samples used for market promotion and the bulk consignment, must conform to the requirements of the country to which they are delivered. Complaints concerning the quality of NWFPs received from developing countries are frequent and in many cases the product received does not correspond to samples on the basis of which the purchase contract was made (ITC 1982).

3.3. Quality and technical standards

3.3.1. Botanicals

The regulations and requirements regarding identification, medicinal qualities, characteristics and storage for medicinal plants and their derivatives are well defined in national pharmacopoeias and formulary standards. The EC has unified its national standards into European Pharmacopoeia while specifications for Japan and USA are listed in Pharmacopoeia of Japan and the United States Pharmacopoeia, respectively. WWF has also drawn up certain principles relating to large international trade in medicinal plants.

In general fumigation is not mandatory for botanicals from developing countries, although many of the products will be fumigated on arrival at their country of destination.

3.3.2. Edible Products

Like most other food products, quality is the most important factor for successfully exporting edible NWFPs and the laws of importing countries must be adhered to. National food legislation is probably the major obstacle for many potential exporters of edible NWFPs. Most major markets, for example, set legislative requirements for foreign as well as domestic honey. These requirements are stringent and often difficult for developing countries to meet (ITC 1986).

All food items imported into UK are subject to the Food and Drug Act, administered by the Ministry of Agriculture, Fisheries and Food. The Act includes both general food hygiene regulations and food labelling and other regulations. The Combined Edible Nut Trade Association (CENTA) has compiled and published rules and regulations affecting the trade in edible nuts undertaken by its members (Gunnerod, 1994). For most kinds of nuts internationally recognized standards are used. These are usually produced by the largest producing countries. For example, for Brazil nuts, Brazilian standards are used.

Quality considerations are of primary importance in the trade of culinary herbs. Cleanliness, flavour, colour and aroma are the most important factors considered by importers and buyers, but no standardized grading system is used. Quality criteria vary from one country to another and from herb to herb and are usually imposed by large importing and processing companies. Requirements regarding cleanliness and admitted levels of pesticides and herbicides are becoming more strict. Most purchases are made on the basis of an analysis of the samples supplied by the exporter in a laboratory selected by the buyer (Maftei, 1992).

3.3.3. Essential oils

Numerous bodies monitor product quality and trading procedures and draw up specifications for essential oils. The most widely recognized standards are those set by the International Organization for Standardisation (ISO). Standards have also been established by various national pharmacopoeias. The general interests of traders and users are served by trade associations such as Flavour and Extract Manufacturers Association (FEMA) in USA. International Federation of Essential Oils and Aroma Traders (IFEAT), based in Geneva, monitors toxicological and other hazardous aspects of various raw materials used in perfume compounds.

International (ISO) standards exist for majority of the essential oils. In the case of cinnamon leaf oil, for example, different ranges for the major constituent, eugenol, exist. All major importing countries have established standard specifications for Brazilian rosewood oil and there is also an international (ISO) standard. National and international standards exist for eucalyptus oil and there is an international (ISO) standard for sandalwood oil. Citral content is the most important indicator of oil quality of Litsea cubeba oil and an international (ISO) standard specifies a minimum value.

An international (ISO) standard exists for "gum spirit of turpentine" intended for use in paints and varnishes. Turpentine purchased by the chemical industry as a source of isolates for conversion to pine oil and fragrance and flavour compounds is assessed on the basis of its composition.

While overall olfactory properties are important and will be judged by prospective buyers, the use of cedarwood oil as raw materials for derivative manufacture means that chemical composition is also important. International standards exist for Texas and Virginia cedarwood oils. In USA, recent FMA standards replace older EOA ones and are available for Chinese as well as for Texas and Virginia cedarwood oils. Compositional data for the American oils are somewhat different to those cited in the ISO standards and illustrate the fact that standards can only be treated as guidelines for facilitating the assessment of quality.

3.4. State control and policies

State control on production, prices and trade also affects international trade of some NWFPs. Such controls have often proved self-defeating in the long run. The Iranian government, for example, fixed prices that made gum tragacanth non-competitive in international markets. Iran's recent recovery internationally highlights the fact that a correct understanding of the world market and supply is important to securing improved markets.

Banning or restricting collection of NWFPs by governments also restrains their trade. The Indian government, for example, has closed some forests for collection of gum karaya, on the basis that it damages trees, although gum collection is done from mature trees. The Indian Government also tried to control exports, and prohibit private Bombay merchants from shipping gum karaya on the ground that they were making greater financial gains than the tribal populations who tapped the trees and collected the gum. Government exports through the National Association for Export Development (NAFED) were attempted at higher farm-gate prices. These events coincided with an upsurge in availability of substitutes and stimulated replacement of gum karaya. In 1989, NAFED was replaced by another Indian government agency, Tribal Development Federation (TRIFED) to regulate trade in gum karaya, and a certain amount of trading was restored to the traditional Bombay merchants (Anderson, 1993).

Even state regulations at the collection stage are known to have adverse effects on international trade in NWFPs. In Pakistan, for example, two systems of collection of medicinal plants have remained in vogue in coniferous forests in north-western parts of the country. Whereas an elaborate system of annual leases through tenders for extracting predetermined and fixed quantities of the herbs was adopted in the forests of Hazara, their collection remained free and unregulated in neighbouring forests of Malakand, where anybody could collect and trade them. An authorization from Forest Department for their transportation out of Malakand and a fixed amount of royalty and duty were the only restrictions in that region.

Surprisingly, in spite of elaborate departmental controls and regulations, over-exploitation of medicinal plants as well as other NWFPs took place in the forests in Hazara, resulting in a complete ban on their collection. Consequently, none of the forests have been leased out for collection of the herbs for more than a decade. On the contrary, however, there is a flourishing business of medicinal plants and morels collected from forests in Malakand, to the extent that most of these products are exported to other countries directly from the central town of Mengora (Iqbal, 1991a and 1991b).

4. IMPORT BANS AND BOYCOTTS

NWFP trade does not face import bans and boycotts such as those proposed against timber since most groups, including environmentalists, consider on both economic and ecological grounds, that increased international trade in NWFPs could help reduce the pressures on forests. Analysis of economic and ecological "advantages" of extractivism can be found for example in Peters et al. (1989) and Fearnside (1990). Varangis etal. (1993), however, note that economic feasibility of large scale extractivism is difficult and may in some case be questionable given the limited size of markets for these products.

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13/. A full discussion of the various types of trade restrictions their characteristics and functions can be found in Bourke (1988).
14/. Autonomous tariff rates have been considered for the products to which conventional rates are not applicable.
15/. MFN Tariff.
16/. GATT bound tariff.

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