International Trade

NAMA – Non-Agricultural Market Access

Introduction

Non Agricultural Market Access (NAMA) relates to trade negotiations on non-agricultural or industrial products. In the NAMA negotiations, WTO Members discuss the terms or modalities for reducing or eliminating customs tariff and non tariff barriers on trade in industrial products.

The product coverage under NAMA includes marine products, chemicals, rubber products, wood products, textiles and clothing, leather, ceramics, glassware, engineering products, electronics, automobiles, instruments, sports goods and toys.

On tariffs, the negotiations take place on the bound tariff which are the bindings taken during the negotiations at the WTO. The bound tariffs are the upper limit of the applied customs tariff which are the tariffs actually applied by the Customs authorities on imports into any country.

In the NAMA negotiations there are tariffs on which no bindings have been taken and these are known as the unbound tariff lines. Based on the commitments taken by India, at the commencement of the Doha Round in 2001, India has more than 31% of it NAMA tariff lines as unbound.

Elements of NAMA Negotiations:

The main elements of the NAMA negotiations are:

  • Coefficient for the tariff reduction formula
  • Flexibilities for protecting sensitive NAMA products
  • Sectoral initiatives for elimination of customs tariff in specific sectors
  • Non-Tariff Barrier (NTB) textual proposals
The Doha Round

During the WTO Ministerial Meeting at Doha in November, 2001; Trade Ministers had agreed on the reduction or elimination of tariff peaks, high tariffs and tariff escalation on NAMA products

In the Framework Agreement of July, 2004, the General Council of the WTO agreed to work on a non-linear formula- known as the Swiss formula applied on a tariff line by line basis. The Swiss formula, which proposed two sets of coefficients, ensured that the developed countries would take higher tariff cuts than the developing countries.

The last round of negotiations took place on the basis of the NAMA text of 6th December 2008. Due to lack of consensus, the Doha round of negotiations have not yet been concluded.

Non Tariff Barrier (NTB)

Non Tariff Measures (NTMs) are all measures on international trade that are not in the form of a tariff or a tax. These measures include trade related procedures such as documentation, certification and inspections; technical regulations; standards; import related measures such as restrictions, prohibitions, seasonal duties, tariff rate quotas ; foreign exchange controls including artificial exchange rates; public procurement practices etc. Certain NTMs such as imposition of anti-dumping and safeguard duties have the effect of tariffs. On the other hand, some measures are intended to protect human, animal and plant, life and health, and are known as sanitary and phytosanitary (SPS) measures.

Non Tariff Barriers (NTBs) are a sub-set of NTMs which violate the obligations under the Agreements of the WTO. Therefore, NTBs are unfair measures which serve to discriminate against imports.

The NAMA negotiations focussed on the listing of NTBs by countries. Subsequently, the Negotiating Group went into text based negotiations on various proposals.

However, like other NAMA issues, no consensus has yet been achieved with regard to the NTBs in the Doha round.

India’s Duty-Free Tariff Preference (DFTP) Scheme for Least Developed Countries
(LDCs)
Introduction:

The Decision to provide Duty Free Quota Free (DFQF) access for LDCs was an outcome of the WTO Hong Kong Ministerial Meeting, held in December 2005. This decision as given in Annex F of the Hong Kong Ministerial Declaration inter alia requires all developed-country Members, and developing-country Members declaring themselves in a position to do so, to:

    • Provide duty-free and quota-free market access on a lasting basis, for all products originating from all LDCs by 2008 or no later than the start of the implementation period in a manner that ensures stability, security and predictability
    • Members facing difficulties should provide market access for at least 97 per cent of products originating from LDCs defined at the tariff line level, by 2008 or no later than the start of the implementation period. In addition, these Members shall take steps to progressively achieve compliance with the obligations set out above, taking into account the impact on other developing countries at similar levels of development, and, as appropriate, by incrementally building on the initial list of covered products;
    • Developing-country Members are permitted to phase in their commitments and shall enjoy appropriate flexibility in coverage;
    • Preferential rules of origin applicable to imports from LDCs are required to be transparent and simple, and contribute to facilitating market access.
Duty Free Tariff Preference (DFTP) scheme of 2008

Under this WTO Decision, India became the first developing country to extend this facility to Least Developed Countries (LDCs). India announced the Duty-Free Tariff Preference (DFTP)
Scheme for LDCs in the year 2008. The Scheme was announced to give support to the LDCs in their trade initiatives. Under the Scheme, by 2012, 85% of India’s total tariff lines were
made duty free, 9% tariff lines enjoying a Margin of Preference (MOP) ranging from 10% to 100% and only 6% of total tariff lines retained in the Exclusion List with no duty preferences,
for the exports from LDCs. The market access under the 2008 scheme covered 92.5% lines where LDCs globally exported.

To become a beneficiary under the DFTP Scheme, the prospective beneficiary country is required to provide a letter of intent as well as specimen seals and signatures of the officials authorised to issue the certificate of origin under the DFTP Scheme. The prescribed format of the letter of intent and specimen seals and signatures of the authorised officials, as required under the Scheme have been placed at Annex I and Annex II respectively.

Expansion and simplification of the DFTP scheme in 2014

Based on deliberations with beneficiary countries and taking into account the inputs from domestic stakeholders, the DFTP Scheme was expanded by the Department of Commerce in 2014 both in terms of coverage and facilitation of trade. Based on the amendments carried out through Customs tariff Notification No. 8/2014 dated 1st of April, 2014, the DFTP scheme
now provides duty free/preferential market access on about 98.2% of India’s tariff lines (at HS 6-digit level of classification). Only 1.8% of the tariff lines have been retained in the Exclusion List, with no duty concessions. As per the notification of 2021, only 97 lines are under exclusion list and 115 lines are under MOP (Margin of Preference) list. On all other lines, zero duty access has been provided for exports from beneficiary LDCs.

Secondly, with a view to facilitate trade, certain procedural modifications to the Rules of Origin of the DFTP Scheme were made vide customs non-tariff notification 29/2015-
Cus (NT), dated 10th March, 2015. The key changes in the notification were as under:
i.Rules of origin criteria changed to CTSH + 30% (instead of the earlier criteria of CTH+30%);

ii.Allowing the option for calculation of value addition based on either ex-works price of the goods or FOB value only (the 2008 scheme had only the option of FOB value)

iii.Certificate of origin shall be in ISO standard plain A4 size paper in the prescribed format, (instead of blue coloured A4 size paper).

In short, the new expanded and simplified DFTP Scheme provides improved market access to the beneficiary countries as well as to the other eligible LDCs. The new scheme provides market access on 95.5% of the lines on which LDCs have made to exports to India over the last two financial years (i.e., 2015-16 and 2016-17).

Further CBIC has clarified in Circular No. 53/2020- Customs (8 December, 2020) that where value of goods does not have impact on originating status i.e., the originating criteria is wholly
obtained, the certificate of origin issued in terms of duty-free tariff preference scheme for LDCs with third party commercial invoice may be accepted.

Country Coverage

As of June 2023; 35 LDCs have been notified as beneficiaries to the scheme*. These countries include the following:

S. No.  
Country name  
S. No.  
Country name  
S. No.  
Country name  
1  
Benin  
13  
Liberia  
25  
Togo  
2  
Burkina Faso  
14  
Madagascar  
26  
Zambia  
3  
Burundi  
15  
Malawi  
27  
Afghanistan  
4  
Chad  
16  
Mali  
28  
Bangladesh  
Implementing Notification of the DFTP Scheme and Notifications of Accessions

The relevant Indian customs notifications pertaining to the DFTP Scheme are :

 

23/2022 
Customs 
30-Apr
2022 
Seeks to amend the various Customs Tariff 
notifications in order to align the HS Codes 
of the said notifications with the Finance 
Act, 2022, w.e.f. 01.05.2022 
60/2021
Cus 
30-Dec
2021 
Seeks to amend FTA/PTA notification to 
align with HSN 2022 w.e.f. 1.1.2022 
50/2021
Cus 
22-Oct
2021 
Seeks to amend notification No. 96/2008- 
Customs dated 13.08.2008 to include Sierra 
Leone 
26/2021
Cus 
08-Apr
2021 
Seeks to amend customs notifications to 
make changes consequential to enactment of 
Finance Act, 2021 
16/2021
Cus 
05-Feb
2021 
Seeks to amend notification Nos. 96/2008
Customs, 57/2009-Customs, 101/2007
Customs and 50/2018-Customs 
consequential to imposition of Agriculture 
Infrastructure and Development Cess 
(AIDC) 
36/2019
Cus 
30-Dec
2019 
Seeks to amend Customs Tariff notifications 
so as to align them with amended Customs 
Tariff. 
68/2017
Cus 
27-Jul
2017 
Seeks to amend Notification No. 96/2008
Customs dated 13th August 2008 to insert S. 
No. 35-Republic of Niger and S. No. 36 
Republic of Guinea in the Schedule to the 
notification. 
02/2017 
Cus 
27-Jan
2017 
Seek to further amend Notification No. 
96/2008-Customs dated 13.08.2008 so as to 
prescribe a Margin of Preference of 60% for 
all goods falling under sub-heading [0802 
80] under the Duty Free Tariff Preference 
(DFTP) scheme. 
67/2016
Cus 
31-Dec
2016 
Seeks to amend Notification No.105/1999- 
Customs; 75/2005- Customs; 74/2005- 
Customs; 28/1995- Customs; 76/2003- 
Customs; 21/2012- Customs; 72/2005- 
Customs; 24/2005- Customs; 101/2007- 
Customs; 12/2012- Customs; 26/2000- 
Customs; 73/2005- Customs; 10/2008- 
Customs; 96/2008- Customs; 57/2009
Customs; 72/2009- Customs; 24/2005- 
Customs; 101/2007- Customs; 151/2009- 
Customs; 105/1999- Customs; 85/2004- 
Customs; 73/2005- Customs; 10/2008- 
Customs 
46/2016
Cus 
23-Aug
2016 
Seeks to further amend Notification No. 
96/2008-Customs dated 13.08.2008 so as to 
include Republic of Guinea-Bissau in the 
list of countries eligible for preferential tariff 
under the said notification. 
39/2016
Cus 
21-Jun
2016 
Seeks to further amend Notification No. 
96/2008-Customs dated 13.08.2008 so as to 
include Republic of Togo and Republic of 
Chad in the list of countries eligible for 
preferential tariff under the said notification. 
34/2016
Cus 
19-May
2016 
Seeks to further amend notification No. 
96/2008-Customs dated 13.08.2008, so as to 
carry out the following changes: to omit 
Samoa and Maldives from the list of 
countries eligible for preferential tariff under 
the said notification; to amend the name of 
Republic of East Timor as Democratic 
Republic of Timor-Leste. 
12/2015
Cus 
10-Mar
2015 
Seeks to amend notification No. 96/2008
Customs, dated the 13th August, 2008 
29/2015  
Cus (N.T.) 
10-Mar
2015 
Customs Tariff (Determination of Origin of 
Products under the Duty Free Tariff 
Preference Scheme for Least Developed 
Countries) Rules, 2015. 
08/2014
Cus 
01-Apr
2014 
Seeks to amend Notification No. 96/2008
Customs, dated 13-08-2008 (DFTP scheme 
for LDCs ) 
Customs 
2009 
number G.S.R. 590, dated the 13th August, 
2008. 
07/2009  
Customs 
19-Jan
2009 
Amends Notification No. 96/2008-Customs, 
dated the 13th August, 2008 
113/2008
Cus 
31-Oct
2008 
Uganda, Rwanda and Madagascar  
Exemption to imports therefrom  
Amendment to Notification No. 96/2008
Cus. 
 
99/2008  
Customs 
28-Aug
2008 
Amendments in the notification No. 
96/2008-Customs, dated the 13th August, 
2008 
96/2008 – 
Customs 
13-Aug
2008 
Regarding Duty free tariff preference for 
Least Developed Countries