Table of Contents
What Is Market Access?
Market access is the ability of a company to sell its products and services in a foreign market. When it comes to international trade, market access can be accomplished through exporting, licensing, franchising, or establishing a joint venture.
Many factors can affect a company’s ability to gain market access, including tariffs, quotas, and other trade barriers. Market access can also be limited by a lack of infrastructure or regulations in a foreign market.
Definition
Market access is defined as a firm’s capacity to enter a foreign market by selling its products and services. It refers to the ability of a company or country to sell goods and services internationally. There are several ways to gain market access, including exporting, licensing, franchising, and joint ventures.
The conditions and restrictions on market access vary greatly between trade in goods and trade in services. Goods are mainly constrained by measures at the border, such as customs duties or quantitative restrictions, while services have more to do with domestic regulation that exists behind the border.
Understanding Market Access
Market access is the ability of firms to market and sell their products in a given foreign market. It is determined by factors such as tariffs, trade agreements, and market size. Market access can be a challenge for small and medium-sized enterprises (SMEs) due to the lack of resources and market knowledge.
Effective market access is essential for free trade and mutual benefit. For example, free trade agreements and market access strategies help EU exporters by reducing or removing applied tariffs, making it easier to export to many countries.
Market access strategy is important for companies and organizations seeking to enter new markets. Market access barriers, such as tariffs and non-tariff measures, can reduce market opportunities and limit market growth. Effective market access strategies can help overcome these barriers and create new market opportunities.
Market Access as the New Trade Reality
In recent years, market access has become an increasingly important topic in international trade. As the global economy has become more integrated, companies have been seeking to expand their operations into new markets.
At the same time, countries have been looking for ways to protect their industries and jobs from foreign competition. As a result, market access has become a key issue in trade negotiations. Countries are seeking to remove barriers to their exports, while simultaneously protecting their industries from imported goods and services.
Market access in the Multilateral Trading System
The WTO’s multilateral trading system is based on the principle of nondiscrimination. This means that countries cannot discriminate between their trading partners. They must treat all WTO members equally.
Import duties, quantity limits, technological requirements, trade transparency in national trade regulation, and unfair customs formalities and procedures are some of the most typical roadblocks to market access. Customs duties, quantitative restrictions, technical criteria, a lack of transparency in national trade regulation, unjustified application of customs formalities and processes, and their diversity necessitate the use of distinct rules to control these tariff and non-tariff barriers.
The WTO covers three main categories of trade rules: those related to customs duties (tariffs), quotas, and other non-tariff barriers such as technical regulations and standards, sanitary measures, customs formalities, and government procurement practices. In addition, there are also rules concerning transparency and “justiciability” to make sure market access is still available.
1. Custom Duties
Customs duties are taxes or charges levied on the import or export of goods. They are based on the value of the goods and can be either ad valorem (a percentage of the value) or specific (a set amount per unit).
2. Quantitative Restrictions
Quantitative restrictions are limits on the quantity of a good that can be imported or exported. They can take the form of quotas, which set a maximum quantity that can be imported, or bans, which prohibit imports altogether.
3. Non-Tariff Barriers
Non-tariff barriers are measures that restrict trade but do not take the form of tariffs or quotas. They can include technical regulations and standards, sanitary measures, customs formalities, and government procurement practices.
4. Transparency and Justiciability
Transparency is the principle that WTO members should make their trade policies and practices available to the public. This includes making information available on tariffs, quantitative restrictions, and other non-tariff barriers.
Justiciability means that WTO members should provide a mechanism for resolving disputes over trade policies and practices. This can be done through the WTO dispute settlement system, or through bilateral or regional agreements.
Market Access in Services Trade
The WTO’s General Agreement on Trade in Services (GATS) is the main international agreement covering trade in services. It entered into force in January 1995.
The GATS covers four modes of supply of services:
Cross-border supply: where the service is supplied from one country to another without the presence of the service supplier in the country of consumption. This can be done through telecommunications, computer networks, or postal and courier services.
Consumption abroad: where the service is supplied in the country of consumption by a service provider who is based in another country. This includes services such as tourism and medical services.
Commercial presence: where the service is supplied in the country of consumption by a service provider who has a commercial presence, such as a branch or subsidiary, in that country. This includes banking and other financial services.
Movement of natural persons: where the service is supplied by a person who moves from one country to another to supply the service. This includes services such as education and consulting.
The GATS covers all services, except those that are expressly excluded from its scope. These include certain public services, such as health care and education, and services supplied in the exercise of governmental authority.
The GATS establishes a framework for the liberalization of trade in services. It does this by setting out the principles that WTO members should follow when they regulate trade in services. It also contains several specific commitments that WTO members have made to liberalize trade in specific sectors.
Market Access and the Role of the World Trade Organization (WTO)
The WTO is the only international organization that deals with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments.
The goal is to help producers of goods and services, exporters, and importers conduct their business while knowing that the rules are clear and transparent and that there is a safety net of preferential arrangements should things go wrong.
The WTO agreements cover goods, services, and intellectual property. They spell out the principles of liberalization, and the permitted exceptions. The agreements are supported by WTO institutions and practices.
The WTO’s overriding objective is to help trade flow as smoothly, predictably, and freely as possible.
The WTO’s trading system is based on the principles of nondiscrimination and reciprocity.
Nondiscrimination means that the WTO treats all its members equally. The most important principle is the “most-favored-nation” (MFN) principle, which requires that a WTO member must apply the same conditions to all trade with other WTO members, whether they are favored or not. The MFN exemption allows developed countries to provide preferential treatment to developing countries.
Reciprocity means that WTO members grant each other the same concessions — for example, if one member lowers a tariff, the other member may do likewise.
The WTO’s trading system is a set of rules and procedures. The WTO agreements are contracts between governments. They are not laws written by legislatures, nor are they international regulations.
Market Access Tools
1. Market Access Map
The Market Access Map is an online tool that provides information on tariffs and preferential tariff arrangements applicable to products of interest in a given market. It is an incredibly useful tool that provides users with data on applied customs duties, including MFN tariffs and preferences given unilaterally and reciprocally in the context of regional and bilateral trade agreements.
Users may compare ad valorem equivalents (AVEs) to determine duties across nations and explore tariff reduction possibilities. The application also includes trade remedies, rules of origin, documentation, and bound tariffs corresponding with WTO members. Additionally, users can utilize features to prioritize export markets, non-tariff measures (NTMs), and trade flows; preparing for market access negotiations.
2. Rules of Origin Facilitator
The Rules of Origin Facilitator is an online tool that provides information on the rules of origin applicable to products exported to and imported from WTO member countries. The application includes a searchable database of origin provisions contained in bilateral and regional trade agreements, as well as the corresponding certificates of origin.
The Facilitator also provides users with guidance on how to determine the origin of a product, including an origin questionnaire and interpretation notes. In addition, the tool includes a searchable database of preferential tariff rate quotas, which are preferential tariff arrangements that provide for the importation of specified products from developing countries at reduced rates.
3. Tariff Analysis Online
Tariff Analysis Online is an online tool that provides users with information on tariffs and other import charges levied by WTO member countries on products imported from other WTO members. The application includes data on MFN tariffs, preferences given unilaterally and reciprocally in the context of regional and bilateral trade agreements, as well as other import charges such as value-added taxes and specific duties.
Users can compare AVEs to determine duties across nations and explore tariff reduction possibilities. The application also includes information on trade remedies, rules of origin, documentation, and bound tariffs corresponding with WTO members. Additionally, users can utilize features to prioritize export markets, non-tariff measures (NTMs), and trade flows; preparing for market access negotiations.
4. I-TIP Services:
The I-TIP service is an online tool that provides information on import procedures, documentation, and other requirements applicable to products imported into WTO member countries. The application includes a searchable database of import requirements and corresponding documents, as well as tips and advice on how to comply with import procedures.
The I-TIP service is an invaluable resource for businesses seeking to export to WTO member countries, as it provides detailed information on the requirements and procedures that must be followed to successfully import products into those countries. In addition, the service includes several useful features, such as the ability to track shipments, create and manage import declarations, and obtain preferential treatment for certain products.
Market Access Challenges
Market access challenges can vary depending on the product, market, and disease area. Some common market access challenges include:
- Regulatory hurdles
- Market access barriers
- Market size and potential
- Reimbursement and pricing issues
- Patient access challenges, etc
Addressing market access challenges requires a comprehensive and tailored approach. Market access consultancies can help you overcome these challenges by developing an effective market access strategy.
An important part of any market access strategy is the value story. The value story is the evidence that supports the product’s value proposition. This evidence can come from clinical trials, real-world evidence, or other sources.
Evidence generation is done through a variety of methods, such as market research, clinical trials, and real-world data studies. This evidence is used to support the value story and market access strategy.
Conclusion!
To be successful in today’s market, market access strategies are key. On the concluding note, it can be said that a market access strategy should be designed and implemented keeping in view market potential, the company’s strengths & weaknesses, and the global market scenario.
There are several market access strategies available, and the right one should be selected based on the specific needs of the company.
What are your thoughts on market access strategies? Let us know in the comments below.
