Non-Tariff Barriers as a term are seen to signify any measures other than a tariff or a tax that impede international trade. They have been seen as a sub-set of non-tariff measures, (NTMs) the term used more frequently in GATT and UNCTAD parlance. These measures include both direct price influencers such as export subsidies, exchange rate controls, methods of import valuations, customs surcharge, lengthy customs procedure, establishment of import prices, unreasonable standards and inspection procedures and indirect price influencers such as import licensing.


NTB's with certain exceptions are a breach of GATT (now WTO) rules but nevertheless their overall use has been on the increase since the Tokyo Round of multilateral trade negotiations (September 1973 to April 1979) where they were first discussed.


In the Textile & Clothing sector the Non-Tariff barriers (NTB) have virtually shaped the development of international trade ever since the end of the 2nd world war in the form of Quantitative Restrictions {Quotas) These "Quotas" starting initially as temporary measures became institutionalized for over four decades. With the removal of Quotas on Textile & Clothing items in 2005, the issue regarding the role of non-tariff barriers continues to attract attention as countries devise ways and means of shielding domestic producers from competition.


NAMA negotiations & NTBs


Recognizing their importance in distorting international trade, the Non-Agricultural Market Access (NAMA) negotiations launched pursuant to the Doha Round Ministerial meeting (2001) agreed to discuss textual proposals to deal with Non-Tariff Barriers (NTB's) in particular on products of export interest to developing countries.


As per the present status of the NAMA negotiations on Non-Tariff Barriers member states have so far submitted around 14 proposals.


These proposals have been grouped under two broad categories viz:


  1. Horizontal Proposals (Related across sectors)
  2. Vertical Proposals (Related to specific sectors)


Amongst the Horizontal Proposals are:


  • Ministerial Decision on Procedures for the Facilitation of solutions to Non-Tariff Barriers (known as the Horizontal Mechanism)
  • Decision on the elimination of Non-Tariff Barriers imposed as unilateral trade measures
  • Ministerial Decision on Trade in Remanufactured Goods


The vertical proposals relating to specific sectors have been further classified into Export Related Proposals and Proposals related to Technical Barriers to Trade (TBT).


While the Export related Proposals cover areas like:


  • Revised submission on Export Taxes
  • Protocol on Transparency in Export Licensing to the General Agreement on Tariffs and Trade 1994. The proposal relating to Technical Barriers to Trade cover specific sectors like Chemical Products, Electronics, Automotive Textiles, Clothing, Footwear and Travel qoods


The NAMA text has stated that 7 of the 14 proposals merit attention .While most proposals have little support, three of them are under active discussions .They are :


  1. "Ministerial Decision on Procedures for the Facilitation of Solutions to NT8's known as the Horizontal mechanism.
  2. Ministerial Declaration on Trade in remanufactured goods.
  3. Proposals related to the Agreement on Technical Barriers to Trade (TBT).


Amongst the sectoral proposals having a bearing on TBT, the Textile & Clothing sector has also been identified for separation attention.

 

Studies have shown that the Textile & Clothinq sector has been subjected to the maximum types of Non-Tariff Barriers .These barriers range from Labelling restrictions, Certification requirements, Minimum Import Prices, Import restrictions, Additional documentation, Rules of origin .Labour and environmental standards.Within the Textile & Clothing sector, the Cotton textile sector has attracted the maximum number of Non Tariff Measures followed by the apparel and clothing sector.

Among the importing countries, it is observed that highest number of non-tariff restrictions is imposed by EU, USA & Mexico, though other countries have also joined in recent times.


Some recent examples of Non-Tariff barriers imposed by leading importing countries are enumerated below


USA


In the case of the USA, which is the largest single market for textile products exported from India, restrictions have been imposed in the form of rules of origin. Norms violating US child labor policies, issues relating to compliance with environmental norms and security checks of consignments.


Indian exporters also face stringent cornpliance audits for ensuring maintenance of labour standards.


The US also imposes product characteristic requirements or labeling requirement in over 95% of apparel tariff lines.


European Union


In the case of the EU, the current push being given to a separate Agreement on Labelling provisions for the Textile & Clothing sector has the potential to become a serious trade barrier in the years to come.

Further the EU's policy of granting special incentives for enforcing labor standards and environmental safeguards is a direct attempt to link non-trade issues with trade policy.


The repeated attempts to initiate anti dumping and anti subsidy measures against the exports of Bed linen from India, which have been well documented are also part of the ECs efforts to Impose non-tariff barriers on Indian exports


The recent legislation passed on use of certified chemical substances acronymed REACH (Registration, Evaluation, Authorisation and Restriction of Chemical Substances) is being seen in many quarters, emerging, as a serious barrier to trade In apparel and processed goods


Other Countries


Apart from the USA, EU, other countries have also Imposed non-tariff barriers on Indian exports of Textiles.

In recent months, Turkey has not only Imposed safeguard measures on export of cotton yarn from India but has also placed special export registration arrangements only for Textiles & Clothing products which requires cumbersome procedures to be followed by importers and exporters resulting in incurring of high costs of compliance.


Safeguard measures on Import of cotton yarn from India were also sought to be imposed by Egypt and Peru.


Both Egypt and Peru withdrew the measure after the Council mounted diplomatic pressure. However, Peru has recently put in place Phytosanitary measures on Imports of cotton from India, thereby restricting trade


Argentina has also Imposed Minimum Reference prices on Imports of various textile products to safeguard against low cost Imports.


Labelling requirements for textile & clothing products have been imposed by the Mercouser Group of countries viz. Argentina, Brazil, Paraguay & Uruguay


Nearer home, In South Asia, Pakistan has not granted Most Favored Nation (MFN) status to India. Bangladesh, on the other hand has been giving cash subsidy of 2% for use of local cotton yarn.

It has also not implemented the regional cumulation clause. for SAARC, which would enable Garments made in Bangladesh from Indian fabrics eligible for GSP benefits Many such examples can be cited to show how countries are imposing non-tariff barriers in order to protect the local industries.


Conclusion:


While efforts are being made to list out the types of nontariff barriers what is required is a mechanism to find solutions to these issues. The present arrangement is Inadequate and time consuming Recourse to Dispute Settlement Procedures of WTO are also not very effectively as seen in recent times


What is required is a concerted effort on the part of Government and trade bodies to intervene effectively In ensuring barrier-free trade as demonstrated recently in the rescinding of safeguard investigations on cotton yarn by Egypt and Peru There is also a need for developing global standards for certifications and product testing.


Finally, a clear commitment by countries to adhere to the multilateral agreement without seeking a prior exclusions and sectoral breakouts is required, so that "disguised protectionism" In the form of NTB's do not become the norm In international trade.


The Author is Executive Director, Texprocil