(DTIS) Update, Volume 1 – Main report - Enhanced Integrated ...

CHAPTER 4 – Non-tariff Measures: The Way Forward1. IntroductionNon-tariff measures (NTMs) are regulations other than tariffs affecting the import or export ofproducts. NTMs may affect only traded products (e.g. quantitative restrictions) or they may affect allproducts, whether imported or produced locally (e.g. technical regulations). They may be imposed inresponse to growing societal demands for traceability, protection against various hazards to humanhealth, or the preservation of local public goods like the environment. However, they can also beimposed to protect the domestic market as substitutes to tariffs or contingent protection, in which casethey take the name of non-tariff barriers (NTBs).In Burundi, the regulatory environment in which import and export operations take place hasevolved substantially since the 2004 DTIS. This has been the result of various forces, includingBurundi’s accession to the EAC, which has led to a major effort to harmonize the national legislation tothe EAC’s principles and agreements. Some of the issues raised in a 2008 report by the NTB ReviewCommittee, like frequent roadblocks, have been effectively addressed. Others, including a lack ofregulatory certainty, and a degree of arbitrariness in the interpretation and enforcement of laws andregulations, seem to go on.NTMs currently cover over 80% of Burundi’s imports. This makes the country one of the heaviestNTM users in a sample of 30 countries for which data is available, on par with the EU. It is not clear towhat extent these measures respond to genuine societal demands in an economy where basic needs arenot fulfilled and moral hazard affects the government as much as the private sector. Moreover, shouldthey be enforced on all the goods to which then nominally apply, NTMs could raise the cost of living by30% or more, based on ad-valorem equivalents (AVE) estimated by the DTIS update team.Burundi’s fiscal environment is also changing. In particular, the forceful deployment in 2009 of a newVAT-based fiscal system by the newly-created Office Burundais des Recettes (OBR), together with theformalization of transactions that it entails, is a major change in the business environment. The privatesector’s perception of this change is mixed.o Regular operators welcome the OBR’s attempt to close important loopholes in the enforcement ofborder taxes and the VAT, which distort competition, while recognizing that there is so much theOBR can do when loopholes benefit operators with high-level connections.o At the same time, traditional operators resent the OBR’s heavy-handedness and do not always seemto grasp the extent to which the rules of the game are changing, reinforcing a feeling of legalinsecurity and arbitrariness.This overhaul of the country’s fiscal environment, which was recommended, inter alia, by the 2004DTIS, is portent of benefits in terms of trade facilitation, some of which are already apparent. Butit is also fragile, as heavy-handedness can encourage the emergence of coalitions of traditional operatorswho would like to revert to their old ways and political opponents to modernization. In order to keep themomentum, the transition must be firmly dialogue-based and perceived as such, which is currently notthe case.NTMs strict sensu are not perceived as a major problem, especially by established operators, butthe rapid evolution of the regulatory environment at home and abroad can quickly change that. Itraises, in particular, two potential issues: (i) Regulatory proliferation, combined with weak capabilitiesand a legacy of discretionary and opaque enforcement, which can stifle entry and diversification of theeconomy; (ii) Rising NTBs in at least some neighboring countries, highlighting the need to reinforceEAC disciplines through regional dialogue and institution-building.73 / 153