Trade Policy and Market Access
Bhutan has been in the process of accession to the WTO since 1999, but progress has stalled due to the resistance of the previous government. While Bhutan’s tariffs are not bound by the WTO, it applies a high 17.8 percent average tariff as of 2007 and numerous non-tariff barriers. However there is little information available on tariff and nontariff barriers. Bhutan’s trade structure is dominated by its close relationship with India. This highly liberal bilateral Free Trade Agreement (FTA) features duty-free and quota-free trade and therefore trade with India is not restricted by tariff or rules of origin. The majority of trade takes places with India, amounting to nearly 90 per net of exports and 75 per cent of imports (UNDP 2012). Exports, beyond hydroelectricity to India, remain minimal and of low value. Most imported goods travel overland through India to get to Bhutan. (Bertelsmann Stiftung, 2014) The European Union’s General System of Preferences (GSP) and Everything But Arms (EBA) programme have been extended to Bhutan, but it has so far not been able to make full use of this facility. Bhutan is a member of South Asian Free Trade Area (SAFTA), which is considered to be the most beneficial instrument of cooperation within the region However small countries like Bhutan, the Maldives and Nepal have not increased their exports as a direct result of SAFTA because the main export destination, India, has already liberalized imports from these countries and market access of agricultural products is still blocked by the sensitive lists of non-LDC members.
Bertelsmann Stiftung, 2014, Country Report (Bhutan)
The Heritage Foundation, 2014, Economic Freedom Index (Bhutan)
UNDP, 2012, Diagnostic Trade Integration Study (Bhutan)
Standard Compliance and Other Relevant Import/Export Restrictions
The Bhutan Standards Bureau is an umbrella institution that coordinates and oversees all standardization and related activities. It has the responsibility for standards, metrology, and certification. Bhutan is not only a corresponding member of the International Organisation for Standardisation but also recognizes the mark of the Bureau of Indian Standards pursuant to the India-Bhutan Agreement on Operation of the Certification Scheme. Moreover, the Bhutan Agriculture and Food Regulatory Authority develops scientific testing facilities and procedures in line with international norms such as those established by Food and Agriculture Organization of the United Nations, the World Health Organization, Codex Alimentarius, the World Organization for Animal Health, the International Plant Protection Convention and the Convention on Biological Diversity of which Bhutan is a member. It accepts sanitary and phytosanitary (SPS) measures of other countries utilizing internationally-recognized and accepted SPS approaches in practice. Since neighbouring countries tend to have similar pest and disease profiles, SPS barriers to trade tend to be relatively low. However, SPS barriers to trade with industrialized countries may be very significant.
Bhutan Standards Bureau, 2012, Overview
Ministry of Agriculture and Forests of Bhutan, 2011, Bhutan Agriculture and Food Regulatory Authority