Written by mukesh jagota
While the government is considering more free trade agreements that address tariff walls, the post-pandemic proliferation of non-tariff barriers (NTBs) are threatening to undo the trade liberalisation plans.
NTBs have come in the form of quotas, embargoes or technical regulations, standards and conformity assessment procedures that are used to ensure safety, quality and performance of goods.
The key Indian exports that routinely face high NTBs are chilies, tea, basmati rice, milk, poultry, bovine meat, fish, chemicals products to the EU;, sesame seed, shrimps, Medicines, Apparels to Japan; food, meat, fish dairy and industrial products to China.
In the US fruits and shrimps exports face barriers while in South Korea bovine meat. Ceramic tiles to Egypt, chilli to Mexico, medicines to Argentina, microbiological regents to Saudi Arabia, electrical, medical devices and household appliances to Brazil. According to an assessment, 80 per cent of India’s trade is subject to some or the other non-tariff barrier.
Non tariff barriers are more effective than tariffs in regulating trade. While tariffs can regulate prices and businesses can adjust to it, the list of compliances, complex rules and time taken to meet the technical and safety requirements can dissuade many smaller and medium businesses.
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Most of the Indian exporters faced the issue of complex and time-taking procedures for authorization, clearances, or for mandatory testing at laboratories. Additionally, some countries also imposed their standards and regulations which are not aligned with international standards. Due to these, exporters face high costs for meeting such rigorous requirements.As sometimes, they have to change the production processes and might lack infrastructure or production technology which impacts their overall exports internationally.
Most of these barriers are put by developed countries and regions like the US and the European Union. “The developed countries have agreed to very low bound tariffs at the World Trade Organisation leaving little room for them to manoeuvre tariffs and so they are using non-tariff barriers in greater numbers,” Secretary General of Apparel Export Promotion Council Mithileshwar Thakur said.
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The new FTAs that are being negotiated also discuss technical barriers on trade but not everything can be covered by the agreements as countries come up with newer kinds of trade barriers.
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