Trade barriers, be they tariff or non-tariff, have a significant impact on exports. Theoretically, an estimate of impact of trade barriers on India’s exports requires knowledge of the extra cost (sometimes known as ‘trade cost’ or ‘tax equivalence’), explains Rajesh Mehta in one of the essays included in the Asian Development Bank publication titled ‘Trade Policy, Industrial Performance, and Private Sector Development in India’ (www.oup.com).
While an estimate of tariffs’ impact can be derived using data on supply and demand price elasticities in India and the destination country, it is very difficult to estimate the impact of non-tariff measures on India’s exports, he says. Why so? Because there is no reliable estimate of extra cost or ‘tax equivalence’ due to these measures, and there is no systematic information on NTBs (non-tariff barriers) faced by India’s exports, Mehta elaborates.
The essay informs that around 44 per cent of India’s exports to the US face several of the hardcore NTBs, the most important being technical (safety) and labelling requirements. And that the main commodities affected are textiles, including readymade garments, iron and steel, fish and seafood.
Marine products
In the case of marine products, for example, there are no common standards and procedures for testing, inspection and analysis of seafood consignments in the EU, the author observes. “The procedure of rapid alert notification is not harmonised across member states. The number of maximum consecutive checks varies from member state to member state. When the shipper is placed on red alert, the same is circulated by the European Commission to all member states.”
Mehta is unhappy that not much has been accomplished in spite of the developing countries’ campaign at various rounds of trade negotiations to eliminate or reduce NTBs. What is required is a coherent negotiating stand taking note of both – the NTBs and tariffs – because sectors with NTBs also face tariff peaks and concealed high tariffs in the form of specific duties, he urges.
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