Non-tariff measures (NTMs) have taken centre stage of any discussion on global trade flows. A large part of these trade flows happen along the global and regional value chains, so the onus of keeping these stumbling blocks out of the way falls on all participants. NTMs impose huge costs on exporters, particularly from developing countries. Interestingly both the developed and developing nations impose NTMs on imports, in order to address safety, health, environment and other similar concerns. The reality, however, is that often NTMs are imposed to protect domestic producers. There is a thin line between NTMs and Non-Tariff Barriers (NTBs) and the discourse around NTMs is often witnessed by one side defending its action by offering a rationale while the other tries to prove that these measures cause unnecessary obstacles to the smooth flow of trade.
GATT (General Agreement on Trade and Tariffs) was created primarily to bring down import duties (Tariffs) which nations had imposed to protect their producers and help the State generate revenue for funding its sovereign functions. Trading nations brought down their tariffs significantly to encourage liberal flows of goods across political borders. While tariffs have come down significantly, global trade flows have been severely impacted by the emerging NTMs that nations have adopted. These measures are created through various policy instruments such as laws, regulations and regulatory practices, presumably to serve national objectives but often used to create new barriers at the borders.
Primary Sources, Literature Survey and Information from Individual Countries
Many studies documenting the NTMs faced by Indian exporters are in the public domain. Most have drawn from the secondary information available on the subject and tried to consolidate specific information at one place. This study has been carried out using three sources of information. First, a survey of exporters in different product areas, exporting to all major destinations of India’s export interest. This survey has helped understand industry perceptions related to the Tariff and Non-Tariff Measures they face. An extensive interaction with several Export Promotion Councils has helped in not merely accessing documentation of measures reported to them by their constituents and efforts made by them to deal with such measures, but also to develop an appreciation of their capacities to assist their constituents. Further, our interactions with some government representatives involved in addressing these issues and an examination of institutional mechanisms available to address these concerns, has provided a basis to consider potential ways of mitigating the effects of such NTMs. The study documents information received from all these sources.
The second source of information is a literature survey on the subject. This examines the emerging trends in the evolution of NTMs faced by exporters from a developing country perspective. The literature survey shows that NTMs are proliferating, increasing in complexity and are directly correlated with the decrease in tariffs. While NTMs engage most of our attention, it would be a mistake to ignore the impact of various aspects of tariffs on India’s exports. The study thus examines the spectrum of issues faced by Indian exports in this regard, including the link or overlap between tariffs and NTMs. It is difficult to comprehend a problem unless its impact is quantified, so the study also attempts an impact analysis of NTMs faced by Indian exports.
The third source includes existing reviews of NTMs adopted by specific countries, such as the annually updated reports by USTR and the EU, the Trade Policy Report prepared by the WTO Secretariat, and specific trade related documents and announcements by Customs and other agencies of the specific countries covered.
This study provides detailed information on NTMs in various markets and for different products of export interest to India, and also shows the two types of links between tariffs and NTMs. In one case, lower tariffs have been accompanied by NTMs, often with a rise in its incidence. Another is the situation in which certain products face high levels of both tariffs and NTMs. The first part of the report examines the theoretical basis of NTMs and analyses experiences, effects and trends of NTMs and Tariff measures while the second part actually documents such measures more specifically adopted by some of the major trading partners of India.
Tariffs
While addressing NTBs has become critical to a nation’s pursuit of promoting its exports, tariffs continue to engage their attention. It is a common perception that tariffs in the developed world have come down substantially whereas in the developing world they are still significantly higher. This perception is not far from reality, but the fact remains that even in the developed world many tariff peaks can be observed, which form major barriers to exports from the developing world. Tariffs serve many purposes. They protect infant industry in developing economies and allow them space to grow, they help some developing countries in revenue generation and they are instruments to help countries to deal with external competition. Tariffs have also often been used as tools to promote import substitution-based industrialization. Lately, tariffs have been used to create barriers on grounds of national security, such as the recent imposition by the United States on several products imported from China. Some in turn have been imposed in retaliation of such measures, equally strongly. Similarly, import duties are quite often imposed through various trade remedial measures such as anti-dumping duties, safeguard duties and countervailing duties to create a level playing field and address unfair trade practices. An analysis of tariffs in India’s main export markets shows that Indian exports face stiff tariffs in major export markets. This is both due to tariff peaks in developed economies and the change in the significance of different markets in Indian exports. An examination of ten dynamic product areas of India’s export interest to five top export destinations, which roughly account for 80% of India’s total exports of those products, shows that the direction of trade has moved from developed countries to developing countries, where the tariff is higher than average, particularly in China, Nepal and Mexico.
While average tariffs for most products, apart from some food, textile and clothing items are low, tariff peaks in products of export interest to India tend to be high. For example, while the average tariffs on apparel is 12% in the US, on women skirts and blouses it tends to be over 32%. The examination of average and peak tariff on products of export interest in India’s major export destinations shows that they are higher than the simple average of the country. For example, USA’s average tariff is 3% whereas for product categories where India has an export interest the simple average rises to 4%. Similarly, for EU, which has an average tariff of 5%, the products of interest to India carry a tariff of 8%. In the case of Australia, a tariff peak of 163% on transport equipment clearly discourages any exports from India. Tariff peaks, mostly for textiles and clothing of interest to India in EU and Japan, are quite high. In the US, coffee, tea and spices have a tariff peak of 51%. Products such as gems and jewellery and pearls, which account for nearly 15% of India’s exports, have a tariff peak of 32% whereas leather and footwear have a tariff peak of 56%.
An examination of countries within the medium tariff range imposing an average tariff of 6 to 15%, shows imposition of high tariffs on several products of interest to India. For example, labour intensive products like coffee, leather and footwear, several food items and light manufacturing products, incur tariff rates of over 10% in the Chinese market. In Indonesia, high tariff peaks on products such as leather, footwear and transport equipment, which are products of export interest to India, have been noticed. Similarly, several other such products find a place in exclusion lists in important FTAs such as the India-ASEAN FTA. Indian exports also face high tariffs in developing countries which follow a high tariff regime, such as Sri Lanka and Thailand (despite India having FTAs with them). Some least developed countries enjoy duty preferences in certain product areas under General Systems of Preferences (GSP) in major markets such as the US and EU, where India, though equally competitive, is deprived of potentially full market access. Another opportunity where India is potentially excluded from a market, is when competitors have preferential arrangements with large markets either as RTAs or through specific programmes, such as arrangements between the EU and Pakistan for textile products.
A curious fact about India’s FTAs is the low extent of the utilization of tariff preferences. While the global utilization of preferences is as high as 70% to 80%, India generally uses tariff preferences under FTAs only to the extent of 5-25%. This again is dependent on selection of trade partners and the depth of tariff concessions secured from them. Another factor relevant for lesser utilization of the preferences, inter alia, is the relative ignorance of Indian exporters about the available trade preferences, a fact clearly borne out by the responses in the primary survey. In many cases the exporters are simply not aware of the existence of the FTA or believe that compliance with it will be expensive and time consuming, such as obtaining Rules of Origin certificates. Some of the trade agreements India has negotiated are with countries which have low average tariffs and therefore the likelihood of using the trade preferences is limited. Unless peak tariffs of interest are addressed in such agreements, their utility raises questions. Indian exports are also more responsive to income changes as compared to price changes. Therefore, in a scenario of economic slowdown, the uptake of India’s exports is adversely impacted.
Taxonomy of NTMs
NTMs cover a wide variety of measures as shown below, based on a widely accepted classification for these measures.
International classification of NTMs
- A Sanitary and phytosanitary measures
- B Technical barriers to trade
- C Pre-shipment inspection and other formalities
- D Price control measures
- E Licences, quotas, prohibitions and other quantity control measures
- F Charges, taxes and other para-tariff measures
- G Finance measures
- H Anti-competitive measures
- I Trade-related investment measures
- J Distribution restrictions
- K Restrictions on post-sales services
- L Subsidies (excluding export subsidies)
- M Government procurement restrictions
- N Intellectual property
- O Rules of origin
- P Export-related measures
NTMs can be classified into various categories but the most significant ones for exporters are the Technical Barriers to Trade (TBT) and Sanitary Phytosanitary Measures (SPS). The measures that are permitted under various covered agreements of the WTO include among others import licenses, trade remedial measures, Rules of Origin, investment measures and technical regulations that are covered under the SPS and TBT agreements of the WTO. Trade remedial measures include anti-dumping, countervailing and safeguards. Other similar measures include quantitative restrictions, export subsidies, tariff rate quotas, etc. Data from the WTO’s integrated trade intelligence portal (I-TIP) shows a total of 64,858 NTMs notified at the WTO between 1995 and December 2018. Out of these, 89% were covered under SPS (37%) and TBT (52%) agreements. The review of TBT and SPS notifications shows a consistent rise in the number of notifications over the years. Between 2010 and 2018 and average of 3600 SPS and TBT notifications per year were issued. Interestingly, both these agreements have a positive mandate for promoting trade and are so worded that members do not use these measures as restrictions creating unnecessary obstacles to international trade. The increase in numbers has also been largely attributed to many least developed and developing countries becoming very active in the notification process at the WTO. Interestingly, some of these countries have been observed to be notifying standards, which even their own producers may not be in a position to follow, creating a suspicion that such regulatory activity is spurred by established foreign producers to ring fence their established markets.
SPS notifications primarily cover food and food products whereas the scope of TBT notifications is much wider. The top ten products, which are covered by the SPS/TBT notifications, are food, chemicals, autos and auto components, electronic products, machinery, iron and steel, construction equipment, cosmetics, fertilizers and pharmaceuticals. The list of top ten countries issuing SPS notifications in the last three years is headed by Brazil followed by Canada, the European Union, United States and Japan in that order. Brazil is a major agriculture exporter, which explains its top position. Developed countries have used the SPS agreement more often, presumably to protect their human, plant and animal health. To what extent these measures are necessary to serve the desired objective, has been examined in the relevant chapters.
Evolution of NTMs
A feature of the relationship between tariffs and NTMs is that as nations bring down their tariff walls, their non-tariff measures increase, many of them proving to be trade barriers for the developing world. Therefore, while on the one hand, through the mechanism of the WTO and a multiplicity of trade agreements, tariff liberalization may have taken place, in reality non-tariff measures have increased. A study that estimated the ad-valorem equivalent (AVEs) of NTMs at the product level for several countries found that NTMs were higher than tariffs through the period 1997-2015. In fact, tariffs decreased from 10% in 1997 to 4% in 2015 whereas NTM protection grew from 22% in 1997 to 51% in 2009 and remained at that level till 2015. The most frequent NTMs used were technical measures followed by quality control and to a lesser degree price control and monopolistic measures. NTMs were generally higher for agriculture than manufacturing with a sharp rise post-2008 in the manufacturing sector. It may be of interest to note that the global economy faced serious challenges since 2008 and it is not surprising that many national economies resorted to non-tariff measures to protect their industry while continuing to appear globalization-friendly by not reviewing tariff structures. Further, within manufacturing, most NTMs were erected in labour-intensive sectors such as textiles, footwear, machinery and electrical equipment and rubber and plastics. In 2015, textiles figured prominently as one of the most protected sectors.
The evolution of trade protection can also be studied across countries in a regional and income type context. North America shows a consistent trend of rising protectionism over the period, while most regions and income groups exhibit a fluctuating trend. A regression analysis was done using data from tariffs on products of export interest to India to test whether NTMs increased when tariffs decreased. The regression analysis verified the inverse co-relation, though the impact of other variables could impact the result. This study shows that there is an inverse co-relation between NTMs and tariffs for Indian exports, i.e. the lower the tariffs the higher the number of NTMs and vice-versa. However, two exceptions stand out – China and Brazil. In these two countries both levels of tariffs and NTMs are high. Moreover, for certain product categories, such as agricultural products, both tariffs and NTMs tend to be high.
After food products, chemicals have received the greatest attention and among all the regulations European Union’s REACH regulation is easily the leader of such non-tariff measures. REACH (Restriction, Evolution and Authorization of Chemicals) was introduced in 2007 through a legislative framework with the objective of shifting responsibility from public authorities to the industry with regard to assessing and managing the risks posed by chemicals and providing appropriate safety information for users. It has impacted a wide range of companies across many sectors beyond the chemical industry. The REACH regulation has led to a huge compliance cost for smaller and medium sector enterprises in India. Many smaller producers in order to implement REACH, had to spend disproportionately even on data collection and management while their exports were not large enough. A large number of chemical producers turned sub-contractors to the European industry due to the adoption of REACH by the EU because then the onus of registration shifted to their principals. Measures similar to REACH have been adopted thereafter by China, South Korea and Taiwan. These measures have proved to be major trade barriers for developing country exporters and have proved protectionist in the long run.
Among the new array of non-tariff measures, are some which impose conditionality regarding the entire environmental consequences of the product, the process of making the product or its energy related impact. Now even the Voluntary Water Efficiency Labelling Scheme is being encouraged by some importers such as Hong Kong and Singapore. Newer regulations are being adopted by countries such as US, Mexico, Brazil, Ecuador, Israel and Argentina, on energy conservation and energy efficiency standards for electrical products and appliances. The main focus of these regulations is to promote energy efficiency and reduce wastage of resources. The critical point at which these objectives will transition into the realm of protectionism is difficult to measure now. The expanding array of labour related standards as applicable to manufacturing and services are being proposed in several countries. Though labour and environment standards are not part of the core trade disciplines, they are introduced as barriers by several countries in their technical regulations or by large buyers as private standards.
The relevant WTO agreements mandate members to notify changes to existing regulations across product categories. Member countries are expected to allow adequate time for other members to offer comments and based on such comments or discussions, if requested, the notifying member is expected to issue notifications. Sixty days is a reasonable time for notifications, between the date of notification to the WTO and the coming into effect of the regulation. SPS measures that are notified include all relevant laws, decrees, regulatory requirements and procedures, processes and production methods, testing, inspection, certification and approval procedures, quarantine treatment etc. TBT measures cover all technical regulations, standards or conformity assessment procedures except when these are SPS measures, regardless of their objectives. The major hurdles faced by member countries on account of notifications are insufficient notice periods or when the language of notification is other than English. The response to such notification and substantive compliance becomes difficult and expensive, particularly for small and medium industries. Sometimes, the regulations run into scores of pages adding to translation costs. Often web-links to relevant laws or regulations are not provided, making it difficult for other countries to locate them for response or compliance. Some countries even make their regulations priced publications, making access to them difficult and expensive. All these issues can be addressed in committees of the WTO and bilaterally.
The Ecosystem of NTMs
Countries which have imposed a large number of non-tariff measures can be divided into two. First, those who have the technical, human and financial capacities to build a large non-tariff architecture around their international trade. All developed countries have over time built such capacities and as a matter of fact, some of them continue to extend and strengthen them, creating compliance issues and enhancing costs for those who want to access their markets. To what extent all the technical regulations are justified or the practices acceptable, is a debatable point, to say the least.
There is another category of NTMs which, as mentioned above, is increasingly being adopted in developing nations on the basis of advice by some large multinational corporations or by some third country interests. The hidden intent is often to protect the market for such corporations or the third country exports. In the latter case at times it may be observed that even most of the producers of the notifying country themselves may not be able to comply with the standards, leaving the market exclusively to others.
In the area of SPS, NTMs relating to pesticide residue levels play the most critical role in impacting market access for products from developing countries. The fixing of Maximum Residue Limits (MRL) is a very controversial activity. As long as the MRL is fixed on the basis of a universally accepted scientific rationale and a sound risk analysis, there may be no controversy. However, some nations, particularly the European Union, have started adopting the precautionary principle in order to identify such chemicals and to determine their harmful levels. Arguably, this is a debatable issue and not supported by the SPS agreement, which lays critical emphasis on scientific rationale and the language of the agreement is more trade-friendly than to encourage barriers to trade. There is a major debate on two other issues in this area. First, the same country adopts different levels of residues of the same chemical for different products. This discriminatory marker of the ill-effects of pesticide residues is driven most of the time by protectionist intent in favour of a domestic product or producer. Secondly, fixing MRLs at the level of detection unconnected with the levels which are actually harmful to human health is another major concern. It is common knowledge that advancement in the fields of electronics and engineering are improving the technical capacities of machines and equipment, particularly their detection capabilities. These machines can detect a relatively much lower presence of chemicals. But can that alone be a reason for bringing down the MRL further? It is a trade discouraging practice and increases costs of compliance. Sometimes the exporter is expected to establish the non-toxicity of a certain chemical used in production/processing of an agricultural product when the relevant chemical is not in use in the- importing country. These examples provide a strong basis to establish a sort of nexus between the regulatory practices adopted by the importing country and the interest of sellers of the new equipment.
Many a times NTMs are based on insufficient scientific information. A case in point is the EU decision to withdraw ten substances for sale and use within the EU on account of their alleged status of being endocrine disruptors. The SPS agreement mandates a scientific justification in cases where national standards differ from international standards. However, such justification is often absent, despite the fact that international standards are formulated after following evolved and inclusive practices by institutions such as Codex Alimentarius. Article 10 of the SPS agreement allows developing countries special and differential treatment, however, the time period given for compliance with such unscientifically fixed levels is often too short and beyond a developing country’s capacity for response. The study brings out some interesting cases of lack of standardization of national regulations with international regulations, for example, where different definitions are adopted for the same or similar product in different countries. An interesting example is that of milk. The illustration in the Chapter 3 proves that many countries, which can avoid such distortion by simply adopting internationally acknowledged definitions such as those accepted by the Codex Alimentarius, prefer variation at times to protect their markets or promote their producers. Among the latest in the armoury of SPS measures, which often work as trade barriers, is the new discipline of bio-security regulations, to manage the risk of pests and diseases entering into a given territory. This has added more layers to the enforcement of environmental conditions and compliance much more expensive and difficult. A small exporter, often from a developing or least developed country, suffers the most.
Survey Results
The survey interviewed 587 firms of which over 25% did not report any NTM-related problems. Most of the firms surveyed were small-scale and hence their reactions are of material interest. While the firms themselves could not identify detailed SPS and TBT measures they did report that quality control measures were further aggravated by a complement of other non-tariff measures such as port restrictions, tighter use of conformity assessment procedures, specific tests within the importing countries or designating inspectors from importing country regulatory agencies to exporting countries and expecting the exporters to bear the costs of these tests and inspections, etc.
As far as countries are concerned, the complexity of standards is increasing both in developed and developing countries. However, the problems of exporters to developing countries mostly relate to tariffs, port clearances or bureaucratic delays. Trade defence measures are used by both developed and developing countries. The more sophisticated measures are used by developed countries and their conformity assessment procedures have been expensive and difficult to meet. In some cases, this has led to a rejection of consignments, e.g. shrimp, and it has taken over a year to restore these firms to the accepted list.
The primary survey shows that India’s exporting community is quite diversified in terms of their understanding of the international trade eco-system and their articulation also varies with the extent of the scale at which they operate. That is why the results of the primary survey have been cross-validated with the feedback provided by Export Promotion Councils, other industry associations and large exporters, who have the capacity to understand this eco-system and articulate their concerns well. The perceptions recorded at the grass-root level offer two broad learnings. The average exporter is not concerned whether the hurdle to export is from within the exporting country’s trade eco-system or at the destination or in between. Any measure which he perceives as a hurdle in the smooth flow of his exports, has a certain cost implication for him, which makes the process that much more expensive and quite often he might lose the market to a competitor. There are some exporters, who have adapted to non-tariff measures and do not consider them as obstacles either out of ignorance or simply as a result of their entrepreneurial zeal. They have adapted to these measures in a business-as-usual way. However, a large number of exporters recognize the costly implications of non-tariff measures and would like to see them out of the way.
As far as domestic measures are concerned, exporters can understand issues relating to Customs, logistics, infrastructure or local taxation. Their knowledge about institutional issues such as the existence of trade agreements is inadequate. These issues need to be addressed at the domestic level. However, the much bigger hurdle for exports comes from the tariff and non-tariff related consequences. They need to be addressed in a far more organized, studied, coordinated and persistent manner in cooperation with trading partners and the domestic industry.
The fact that many exporters are relatively less informed about the institutional framework available to them for trade, is a commentary on major inadequacies in the trade policy framework. Many exporters are still not aware of the multilateral, plurilateral or bilateral institutional mechanisms available for preferential trading. Even when they may be exporting under a preferential mechanism, it is likely that they may not be able to distinguish between a bilateral trade agreement and a unilateral General System of Preferences (GSP). Such businesses may experience the duty differential in an export destination with reference to similar products of another country, but they may not be familiar with the fact that there could be a preferential trading arrangement, available to exporters of the other country, which are in effect not available to them. These experiences point to a strong need for in-depth advocacy and extension programmes, which will include not merely creating awareness on institutional frameworks but on more important details such as Rules of Origin, Non-Tariff Measures and ways of getting around those measures. Some years ago the Department of Commerce started such programmes in a limited way with the intention of popularizing Preferential Trade Agreements. But that alone is not enough. The woefully low utilization of RTAs by Indian exporters is an evidence of the fact that Indian exporters either do not find enough use of the FTAs for their products, feel the process of availing such preferences cumbersome or are simply not aware of such preferences. But even this is not enough. The government should establish an extensive and well-equipped architecture for building skills and awareness among economic operators to make efficient use of international trade opportunities.
Trade Effects of NTMs
Estimating the effects of NTMs is not an easy task. Studies which have done so use a simple partial equilibrium framework to develop a tariff equivalent to the NTM that reflects by how much supply, demand or trade are affected by the measure. Measurement typically focuses on the change in import price associated with the introduction of the NTM, the resulting import reduction, the price elasticity of import demand, and the welfare cost of the NTM. A relatively common approach is to calculate ad valorem equivalents of NTMs, i.e. the ad valorem tariff rate that would induce the same level of imports as the NTM in question. This is relatively straightforward in the case of quotas as, under perfect competition, their price and quantity effects can be replicated by appropriately chosen taxes on trade. The most common approaches to the measurement of NTMs are the price-gap approach, which aims at deriving a tariff/tax equivalent to the NTM, the quantity approach and inventory-based frequency measures.
Due to the complexity of obtaining data on prices in India, this chapter has used the inventory-based frequency measure approach. However, trade defence measures offer direct equivalent tariffs, so initially all such measures have been used in a Computable General Equilibrium Framework (CGE) to project an overall effect. NTMs may also have positive effects by depressing cost of inputs in the domestic economy. Netting out the positive and the negative effects at the economy-wide level shows the following effects – Exports: -0.01%, Imports: -0.2%, Employment: -0.05%, GDP: -0.02%, Output of Export Sectors: -0.03%. While at the aggregate levels these figures may look small, the sectoral effects are considerable.
The methodology used for translating the effects of SPS and TBT measures is to first estimate their frequency by looking at the coverage ratio, and then using the GTAP model to find their tariff equivalent. Once these have been established the model is further ‘shocked’ or recalibrated with the tariff equivalent to obtain the export, employment and output declines in particular sectors. In some sectors such as rice, the decline in exports possibility is around 96% in the market introducing the NTM. This is validated by actual interviews when it was found that after EU imposed stringent MRL restrictions, India was unable to export rice to EU markets. Very high trade effects were also observed in sectors such as food products, seafood, and textiles (affected due to regulations such as those on pigments and dyes). This has also been validated by the survey with industry associations. Commensurate declines were observed in employment and output. Hence SPS measures may actually cut off exports altogether, whereas trade defence measures may only have slowing effects on trade. This is borne out by the fact that entire consignments of food-related products are rejected for not complying with SPS measures, whereas trade defence measures have mainly slowing effects on exports.
Country Studies
The chapter on country studies provides details on NTMs in the major export destinations of India. While the main discussion is on NTMs, this is juxtaposed with tariffs, including the coverage of free trade agreements in terms of products that are exempt from tariff reduction. The country studies validate the result that even for countries with low tariffs, there is a significant impact of NTMs on India’s exports. Further, the discussion shows that certain product categories such as foodstuffs and other agricultural products face both high tariffs and high NTMs even in countries which have an overall low tariff average. It is noteworthy that the largest export markets of India are also those with the highest number of NTMs, resulting in the associated burden in terms of costs, procedural requirements and time taken to complete the requirements. The discussion also shows that in a number of cases, especially agricultural products, pharmaceuticals, chemicals and equipment, the approval process for export market access can be long-drawn out, requiring bilateral discussions over an extended period of time.
The country studies also aim to inform exporters about the present situation in different key markets and provides a number of sources for ongoing information that could be useful in the future. In this context, specific trade concerns raised by other countries are also mentioned, because they may be relevant for India’s existing and potential export aspirations. Country studies also show the various initiatives made by India to bilaterally address trade-related concerns. The information in this Chapter can provide a basis to monitor and keep improving the information relevant for Indian exporters to be better aware of the NTMs in their major markets.
Conclusion
This discussion begs the question whether the tariffs adopted by most trading nations over the last seventy years has made international trade any less burdensome, as whatever positive impact tariff reductions have on promoting global trade flows is offset by the introduction of NTMs. It is not implied that NTMs as a class of trade discipline are undesirable. They have their legitimate existence, but the international architecture of rules clearly prescribes that they be trade-friendly and not impede the flow of trade to the best extent possible. A developing country is faced with a serious dilemma when it comes to compliance with these regulations. While on the one hand, trading nations have brought their tariffs down significantly, apparently making access to their markets easy, on the other hand the adoption of NTMs increases compliance costs and also introduces new trade restrictions.
For a developing country like India this experience can be mitigated by adopting a few measures. The chapter on Conclusions discusses some recommendations in this regard. First of all, information on these measures, their changes and coping strategies should be collected on a bi-annual basis and disseminated to exporters through their Export Promotion Councils. Second, Red Alert systems should be instituted to identify stringent existing and emerging standards. Third, the WTO process should be fully used to challenge these standards as necessary. Fourth, compliance issues should be more intensively and strategically discussed bilaterally through trade forums already established by the government of India. Lastly, domestic capacity to meet and set standards should be improved through both the hardware such as laboratories, better science and software which includes improving standards incrementally, raising awareness and building a database of best practices. These are just a few examples of coping strategies. Discussions with producers in an organised manner could result in many more solutions.
This is a first attempt to document NTMs in a framework used by countries such as the US, EU and Japan. These reports should become a regular feature as NTMs are moving goalposts which are sensitive to technology changes and consumer concerns. They can also be used for protectionist purposes as shown in the report. This report should be brought out every two years. In the interim, as shown by the survey, a report on domestic impediments to meeting NTMS or expanding exports should also be brought out.