Negotiations on non–tariff barriers have received little attention. Yet, as tariffs decline, NTBs will be used more to protect domestic trade. This paper explains two of the most contentious NTBs for India: Sanitary and Phytosanitary Measures and Technical Barriers to Trade.

By Parashar Kulkarni

Research Officer, Centre for Trade & Development (Centad)

SUMMARY

Though Non-Agricultural Market Access (NAMA) negotiations on tariffs are fairly well advanced, negotiations on Non-Tariff Barriers (NTB) have received much less attention. Yet, as tariffs decline, countries will increasingly look to NTBs to protect domestic trade (click here to read the full text of the paper).

This paper concentrates on two of the most contentious NTBs facing India and developing countries: Sanitary and Phytosanitary (SPS) measures and Technical Barriers to Trade (TBT). It examines the issue of NTBs against the background of notifications that India has submitted to the WTO.

TYPES OF NTBs

Non-tariff barriers can take many forms. Health concerns can be raised to block entry; customs procedures can be made more stringent; country-specific standards can differ (in terms of stringency) for domestic and non-domestic products; certification procedures can be made more cumbersome and expensive.

Trade restrictions are legal if they cause material damage to domestic industry, endanger human and animal health, the environment and national security. The tricky part is judging when these restrictions slip through the legal loopholes and are used as protectionist measures.

Some 23% of India's exports are currently subjected to NTBs in the European Union, 44% in the United States and 45.9% in Japan.

While negotiating, the paper cautions, India must focus not just on existing leading products (such as textiles, leather and marine products), but also those that are likely to grow in the future, like chemicals, pharmaceuticals, IT components, engineering products and transport equipment. Currently, markets for these products are most restrictive as they are in direct competition with developed countries.

Some NTBs are beyond the scope of both the WTO and governments. These are restrictions placed by voluntary organisations and civil society groups. For example, campaigns carried out to dissuade buyers from buying goods that involve unethical manufacturing practices or cruelty to animals. These should be acceded to since they encourage manufacturers to raise standards, do not place any burden on governments, are voluntary and not subject to penalties.

However, the same cannot be extended to labour practices and the environment, the paper argues, as these increase cost to governments, impose statutory obligations on governments, and involve extra-territorial jurisdiction.

MODALITIES AND APPROACHES

When it comes to modalities, the paper takes the position that a sectoral approach is useful to tackle NTBs in priority sectors and increase market access for priority products such as marine foods, textiles, pharmaceuticals, etc. Here, India is in a favourable position because it has much in common with both developed and developing countries.

For example, NTBs notified by the US deal with automobiles and components, pharmaceuticals and textiles, all of which are of export importance to India. Similarly, India's interests also align with the NTBs notified by developing countries such as Thailand's notification on seafood labelling and Egypt's notification on labelling and packing requirements on leather.

The paper suggests that India should build alliances based on products of common interest across developing and developed countries, to build up critical mass in order to move ahead with sectoral proposals.

On the horizontal approach, the paper narrates how current research emphasises Sanitary and Phytosanitary (SPS) measures and Technical Barriers to Trade (TBT) as the main hurdles for developing countries, including India. It draws attention to flexibilities in TBT and SPS agreements as the single most contentious NTBs for developing countries. Focusing on standards and certification, it suggests the following proposals:

  • Establishing an accreditation system for certifying agencies/organisations.
  • Strengthening the use of international standards, along with increased representation of developing countries in standard-setting bodies.
  • Technical assistance and capacity building for developing countries.
  • Mandatory documentation of equivalence procedure.
  • Adopting Codex consignment rejection guidelines.
  • Adopting standards in the English language.
  • Agreement on self-certification.
  • Differential pricing.

OTHER ISSUES

In the area of special and differential treatment, the paper suggests that project-based funding should be institutionalised for developing quality control systems, constructing laboratories, constructing databases of procedures, training laboratory staff, etc. To tackle equivalence-related concerns, India can propose the mandatory documentation of equivalence procedure.

Backdoor attempts to introduce disciplines in competition and investment should be resisted. There is also no need for parallel structures to ensure that all NTBs are treated within NAMA negotiations. Further, there is no need to re-open SPS and TBT agreements, as NAMA and Trade Facilitation (TF) could together be used to discipline both these agreements.