Final Technical paper on NTB…RM…Unedited version -April 2005
NON-TARIFF BARRIERS AFFECTING INDIA’S EXPORTS Rajesh Mehta2,3
Countries use many mechanisms to restrict imports. Till the beginning of 1970s, tariffs (custom duties) were the principle mode of protectionism. But with successive rounds of GATT negotiations, there was a large drop in the average tariff levels of manufactured goods in the developed country markets. When tariffs paled into insignificance, these countries resorted to a form of administered protection known as Non-Tariff Measures (NTM) - Quantitative restrictions, tariff quota, voluntary export restraints, orderly marketing arrangements, export subsidy, export credit subsidy, government procurement, import licensing, antidumping/countervailing duties, technical barriers to trade, to name a few. It was a return to protectionism harder and more expensive than in the 1950’s and 1960’s. In the 70s and 80s NTMs spread from textiles and clothing to steel, cars, shoes, etc. Although measurement problems are formidable, it is estimated that in 1986, 16 percent of imports of industrial countries were subject to “hard core” NTMs: Quotas, non-automatic licensing and variable levies. If one broadens the definition of NTMs to include state monopolies, import surveillance (including automatic license) countervailing duties and antidumping provision, the results are more compelling. Between 1995 and 2000, according to reliable information5, WTO members reported 1441 antidumping investigations. In the Uruguay Round, the approach for dealing with NTMs was to bring existing barriers into the realm of multilateral negotiations, strengthen rules governing their use, develop surveillance mechanisms to enforce compliance, and offer improved dispute settlement procedures – the aim was to minimize trade distorting and trade restricting effect of NTMs. Some notable success was also achieved in reaching substantive agreements limiting, clarifying or discipling the system that members may use – Article III.8.b allowing subsidies to domestic producers; Article III.9 allowing members to have internal price control measures; Article VI on Anti-dumping and countervailing duties; Article VII on methods of customs valuation; the Agreement on Agriculture converting all quantitative restrictions into tariffs; the TBT Agreement defining the rights and obligations of members with respect to development and application of technical regulations and the ways in which products are to be assessed to determine whether they meet the specified technical standards; and similarly, the Sanitary and Phytosanitary Measures (SPS) with respect to human, animal and plant life. Nevertheless, most would concede that many of the rules fall short of effectively controlling the use of NTMs. More frequently than not, there are instances of flagrant violation of these rules or are applied unreasonably. Some of these such as anti-dumping are used sometimes to foster a climate of uncertainty for foreign suppliers, and or a method of harassment designed to bring about changes in foreign trading practices and policies6. In the same way, domestic policies and regulations may also
Earlier versions of this paper were presented at technical workshops of ADB Policy Networking Project in October 2004 and Jan. 2005. Author is thankful to the participants of the seminars, particularly Anwarul Hoda, K.L. Krishna and Arvind Virmani, for useful comments and suggestions. Detail comments provided by Hoda were very useful in revising this paper. I am also thankful to Saikat Sinha Roy for his help in preparation of this paper. Prof. R.G. Nambiar and Dr A. Robert have also provided inputs in the write-up of this paper and I am extremely grateful to them. However, I am responsible for any errors or omissions. Senior Fellow, Research and Information System for Developing Countries (RIS), New Delhi. Email:...
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