1. INTRODUCTION

International trade increases the number of goods that domestic consumers can choose

from, decreases the cost of those goods through increased competition, and allows

domestic industries to ship their products abroad. While all of these seem beneficial, free

trade isn't widely accepted as completely beneficial to all parties. This article will

examine why this is the case, and look at how countries react to the variety of factors that

attempt to influence trade.

1.1 TARIFF

In simplest terms, a tariff is a tax. It adds to the cost of imported goods and is one of

several trade policies that a country can enact. 

Tariffs barries  represent taxes on imports of commodities into a country/region and

are among the oldest form of government intervention in the economic activity.

1.2 NON-TARIFF BARRIERS TO TRADE

Non-Tariff Barriers (NTBs) refer to restrictions that result from prohibitions, conditions,

or specific market requirements that make importation or exportation of products difficult

and/or costly. NTBs also include unjustified and/or improper application of Non-Tariff

Measures (NTMs) such as sanitary and phytosanitary (SPS) measures and other technical

barriers to Trade (TBT).

NTBs arise from different measures taken by governments and authorities in the form of

government laws, regulations, policies, conditions, restrictions or specific requirements,

and private sector business practices, or prohibitions that protect the domestic industries

from foreign competition.

Examples of Non-Tariff Barriers

Non-Tariff Barriers to trade can arise from:

o Import bans

o General or product-specific quotas

o Complex/discriminatory Rules of Origin

o Quality conditions imposed by the importing country on the exporting countries

o Unjustified Sanitary and Phyto-sanitary conditions

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o Unreasonable/unjustified packaging, labelling, product standards

o Complex regulatory environment

o Determination of eligibility of an exporting country by the importing country

o Determination of eligibility of an exporting establishment (firm, company) by the

importing country.

o Additional trade documents like Certificate of Origin, Certificate of Authenticity etc

o Occupational safety and health regulation

o Employment law

o Import licenses

o State subsidies, procurement, trading, state ownership

o Export subsidies

o Fixation of a minimum import price

o Product classification

o Quota shares

o Multiplicity and Controls of Foreign exchange market

o Inadequate infrastructure

o "Buy national" policy

o Over-valued currency

o Restrictive licenses

o Seasonal import regimes

o Corrupt and/or lengthy customs procedures

1.3 REASONS FOR USING TARIFFS AND TRADE BARRIERS

Tariffs are often created to protect infant industries and developing economies, but are

also used by more advanced economies with developed industries. Here are five of the

top reasons tariffs are used:

1. Protecting Domestic Employment 

The levying of tariffs is often highly politicized. The possibility of increased

competition from imported goods can threaten domestic industries. These domestic

companies may fire workers or shift production abroad to cut costs, which means

higherunemployment and a less happy electorate. The unemployment argument often

shifts to domestic industries complaining about cheap foreign labor, and how poor

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working conditions and lack of regulation allow foreign companies to produce goods

more cheaply. In economics, however, countries will continue to produce goods until

they no longer have a comparative advantage (not to be confused with an absolute

advantage). 

2. Protecting Consumers 

A government may levy a tariff on products that it feels could endanger its

population. For example, South Korea may place a tariff on imported beef from

theUnited States if it thinks that the goods could be tainted with disease.

3. Infant Industries 

The use of tariffs to protect infant industries can be seen by the Import Substitution

Industrialization (ISI) strategy employed by many developing nations. The

government of a developing economy will levy tariffs on imported goods in industries

in which it wants to foster growth. This increases the prices of imported goods and

creates a domestic market for domestically produced goods, while protecting those

industries from being forced out by more competitive pricing. It decreases

unemployment and allows developing countries to shift from agricultural products to

finished goods.

Criticisms of this sort of protectionist strategy revolve around the cost

of subsidizingthe development of infant industries. If an industry develops without

competition, it could wind up producing lower quality goods, and the subsidies

required to keep the state-backed industry afloat could sap economic growth.

4. National Security 

Barriers are also employed by developed countries to protect certain industries that

are deemed strategically important, such as those supporting national security.

Defense industries are often viewed as vital to state interests, and often enjoy

significant levels of protection. For example, while both Western Europe and

theUnited States are industrialized, both are very protective of defense-oriented

companies.

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5. Retaliation 

Countries may also set tariffs as a retaliation technique if they think that a trading

partner has not played by the rules. For example, if France believes that the United

States has allowed its wine producers to call its domestically produced sparkling

wines "Champagne" (a name specific to the Champagne region of France) for too

long, it may levy a tariff on imported meat from the United States. If the U.S. agrees

to crack down on the improper labeling, France is likely to stop its retaliation.

Retaliation can also be employed if a trading partner goes against the government's

foreign policy objectives.

1.4 TYPES OF TARIFFS AND TRADE BARRIERS

There are several types of tariffs and barriers that a government can employ:

Specific tariffs

Ad valorem tariffs 

Licenses

Import quotas

Voluntary export restraints

Local content requirements

Specific Tariffs 

A fixed fee levied on one unit of an imported good is referred to as a specific tariff. This

tariff can vary according to the type of good imported. For example, a country could levy

a $15 tariff on each pair of shoes imported, but levy a $300 tariff on each computer

imported.

Ad Valorem Tariffs 

The phrase ad valorem is Latin for "according to value", and this type of tariff is levied

on a good based on a percentage of that good's value. An example of an ad valorem tariff

would be a 15% tariff levied by Japan on U.S. automobiles. The 15% is a price increase

on the value of the automobile, so a $10,000 vehicle now costs $11,500 to Japanese

consumers. This price increase protects domestic producers from being undercut, but also

keeps prices artificially high for Japanese car shoppers.

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Non-tariff barriers to trade include:

Licenses

A license is granted to a business by the government, and allows the business to import a

certain type of good into the country. For example, there could be a restriction on

imported cheese, and licenses would be granted to certain companies allowing them to

act as importers. This creates a restriction on competition, and increases prices faced by

consumers.

Import Quotas 

An import quota is a restriction placed on the amount of a particular good that can be

imported. This sort of barrier is often associated with the issuance of licenses. For

example, a country may place a quota on the volume of imported citrus fruit that is

allowed.

Voluntary Export Restraints (VER) 

This type of trade barrier is "voluntary" in that it is created by the exporting country

rather than the importing one. A voluntary export restraint is usually levied at the behest

of the importing country, and could be accompanied by a reciprocal VER. For example,

Brazil could place a VER on the exportation of sugar to Canada, based on a request by

Canada. Canada could then place a VER on the exportation of coal to Brazil. This

increases the price of both coal and sugar, but protects the domestic industries.

Local Content Requirement 

Instead of placing a quota on the number of goods that can be imported, the government

can require that a certain percentage of a good be made domestically. The restriction can

be a percentage of the good itself, or a percentage of the value of the good. For example,

a restriction on the import of computers might say that 25% of the pieces used to make

the computer are made domestically, or can say that 15% of the value of the good must

come from domestically produced components.

In the final section we'll examine who benefits from tariffs and how they affect the price

of goods.

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1.5 TARIFF BENEFITS

The benefits of tariffs are uneven. Because a tariff is a tax, the government will see

increased revenue as imports enter the domestic market. Domestic industries also benefit

from a reduction in competition, since import prices are artificially inflated.

Unfortunately for consumers - both individual consumers and businesses - higher import

prices mean higher prices for goods. If the price of steel is inflated due to tariffs,

individual consumers pay more for products using steel, and businesses pay more for

steel that they use to make goods. In short, tariffs and trade barriers tend to be pro-

producer and anti-consumer.

The effect of tariffs and trade barriers on businesses, consumers and the government

shifts over time. In the short run, higher prices for goods can reduce consumption by

individual consumers and by businesses. During this time period, businesses will profit

and the government will see an increase in revenue from duties. In the long term,

businesses may see a decline in efficiency due to a lack of competition, and may also see

a reduction in profits due to the emergence of substitutes for their products. For the

government, the long-term effect of subsidies is an increase in the demand for public

services, since increased prices, especially in foodstuffs, leave less disposable income.

1.6 TARIFFS AFFECT PRICES

Tariffs increase the prices of imported goods. Because of this, domestic producers are not

forced to reduce their prices from increased competition, and domestic consumers are left

paying higher prices as a result. Tariffs also reduce efficiencies by allowing companies

that would not exist in a more competitive market to remain open.

Figure 1 illustrates the effects of world trade without the presence of a tariff. In the graph,

DS means domestic supply and DD means domestic demand. The price of goods at home

is found at price P, while the world price is found at P*. At a lower price, domestic

consumers will consume Qw worth of goods, but because the home country can only

produce up to Qd, it must import Qw-Qd worth of goods.

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Figure 1. Price without the influence of a tariff

When a tariff or other price-increasing policy is put in place, the effect is to increase prices and limit the volume of imports. In Figure 2, price increases from the non-tariff P* to P'. Because price has increased, more domestic companies are willing to produce the good, so Qd moves right. This also shifts Qw left. The overall effect is a reduction in imports, increased domestic production and higher consumer prices.

Figure 2. Price under the effects of a tariff

1.7 TARIFFS AND MODERN TRADE

The role tariffs play in international trade has declined in modern times. One of the

primary reasons for the decline is the introduction of international organizations designed

to improve free trade, such as the World Trade Organization (WTO). Such organizations

make it more difficult for a country to levy tariffs and taxes on imported goods, and can

reduce the likelihood of retaliatory taxes. Because of this, countries have shifted to non-

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tariff barriers, such as quotas and export restraints. Organizations like the WTO attempt

to reduce production and consumption distortions created by tariffs. These distortions are

the result of domestic producers making goods due to inflated prices, and consumers

purchasing fewer goods because prices have increased.

Since the 1930s, many developed countries have reduced tariffs and trade barriers, which

has improved global integration and brought about globalization. Multilateral agreements

between governments increase the likelihood of tariff reduction, while enforcement on

binding agreements reduces uncertainty.

Free trade benefits consumers through increased choice and reduced prices, but because

the global economy brings with it uncertainty, many governments impose tariffs and

other trade barriers to protect industry. There is a delicate balance between the pursuit of

efficiencies and the government's need to ensure low unemployment.

1.8 EXAMPLES

Example of tariff barriers - Say India imposes some tax on import of chinese plastic

goods which raises its final price in India. Since now it becomes more expensive than

price of plastic made in India, it will be difficult to sell Made in China plastic goods in

India and hence its import will stop. This is called tariff barrier because govt imposes tax

or tariff on it.

Example of non-tariff barrier - Say India does not impose any tariff barrier on Chinese

plastic goods, but makes it mandatory that any imported plastic should be of such and

such quality, which say the chinese plastic does not meet, and consequently such plastic

goods cannot be sold in India. Such barrier by govt of India would come under non-tariff

barriers.

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2. FRAMEWORK CONDITIONS AND INDIAN TARIFF

BARRIERS

Trade in India is often conditioned by bureaucratic delays, inadequate infrastructure, and

corruption. Moreover, cultural differences are often perceived as a challenge by foreign

operators - although English is one of the official languages in India, local assistance is

recommended for negotiation situations. It is important to keep in mind that the trade

conditions may vary significantly between states. Likewise, the barriers for FDI (foreign

direct investment) depend on the sector. For specific information on FDI policy, please

read more on The Department of Industrial Policy & Promotion.

Tariffs, Taxes & Duties 

Tariff barriers moreover constitute an significant trade barrier. Tariffs in India vary from

sector to sector and between product groups. Please find sector specific information

on EU’s Market Access Database, which also includes information on non-tariff barriers

to trade. Moreover, the Trade Council can help finding the current custom duty for

specific industries and products.

Tariff rates have been reduced over the past years, but are still quite high compared to

other countries. Additional duty is generally applied to the import tariff, which means the

total import duty often adds up to 30 pct. or more. Please contact theTrade Council for

information on specific import duties.

Corporate tax for foreign companies is approx. 30 pct. Please read more on India’s

taxation laws on Department of Industrial Policy & Promotion (DIPP).   

Import duties, which were previously prohibitively high at levels of 180% or more, have

been rationalised to conform to international levels, albeit in the high end. Duties have

been used as means for anti-dumping at several occasions in previous years.

Companies operating within a range of sectors can benefit from India’s arrangement

with Special Economic Zones (SEZ). The purpose of SEZ is to boost Indian exports by

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establishing favourable framework conditions for business activities and thus attract

foreign investments. SEZ units enjoy comprehensive benefits including tax relief and the

possibility of evade duties on goods bought for development, operation and maintenance

of SEZ units. These SEZs have given the level of foreign investment a substantial boost,

but are considered less efficient to China among other countries. Read more on Special

Economic Zones India. 

India has a number of Inland Container Depots (ICDs) which handle exported as well as

imported shipments. Please find more information on these depots as well as on shipment

and transport between the federal states on India’s Department of Commerce.

Technical Barriers to Trade

The liberalization of the Indian economy since the 1990s has had a very palpable impact

on India’s trade policy vis-à-vis foreign trade. Import regulations have been progressively

eased - both in terms of quantitative restrictions and import duties and almost all items

are now allowed to be imported into India. However, some import restrictions still remain

for certain goods.

There are import prohibitions and restrictions on some goods for sanitary reasons and for

other goods testing and certification is required.  Bureau for Indian Standards (BIS)

demands that certain products fulfil the Indian BIS-quality standards which have

gradually come closer to ISO-standards.  In particular import of foodstuff is subject to

various restrictions and import conditions are generally intransparent. It is therefore

recommended to read more on Bureau for Indian Standards and/or to contact the Trade

Council for specific information.

Imported goods are subject to various labelling requirements including the maximum

retail price before they leave their place of origin. A limited number of products are still

not allowed to be imported, or they have to be imported through an official authority or

on the foundation of specific licenses. Please contact the Trade Councilfor specific

information.

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Intellectual Property Rights

India’s Trademark Act from 1999 is in compliance with international norms and

standards, including the Paris Convention for Protection of Industrial Property.

In 2005 India changed its legislation to comply with the WTO agreement on Trade-

Related Aspects of Intellectual Property Rights (TRIPS). However, the reinforcement of

the legislations remains weak. With regard to joint ventures, Danish companies should

hand in a patent application before the Indian partner can make use of the patent in order

to maintain its right to the patent.

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3. NON TARIFF MEASURES

Non Tariff Measures (NTMs) are all measures other than normal tariffs namely trade

related procedures, regulations, standards, licencing systems and even trade defense

measures such as anti-dumping duties etc which have the effect of restricting trade

between nations. Some of these measures could be justified under the provisions or the

exceptions provided under the various multilateral agreements governing international

trade. On the other hand,  certain non tariff measures which cannot be justified under any

of these legal provisions are normally termed as non tariff barriers (NTBs).

With the lowering of tariffs across the globe, NTMs have come into prominence with

Members using these measures to erect entry barriers for goods and services. It is

therefore, not surprising that the developed countries with relatively lower tariffs are the

more prolific users of NTMs / NTBs especially to keep out developing country exports.

 The details of some of the major NTMs that are maintained against Indian exports are as

under: 

Country Item Details of NTM

United States Marine products Increased inspections under the Bio-

Terrorism Act, Customs Bond

requirement, Mandatory labeling

discriminating “farm raised” and

“wild” with punitive fines and non-

recognition of EIC certification.

United States Paper products Non scientific quarantine restrictions,

customs surcharges, eco labeling

stipulations and food safety/ health

standards exist on paper products

exports.

United States Tobacco A TRQ regime restricts imports.

United States Food products Detailed labeling requirements are

stipulated with extensive product and

content description.

Argentina Processed Marine Products,

Matches, Insecticides, Fungicides,

A new regulation (57 &58/2007 dated

24.08.2007) wherein minimum

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Plastics, Rubber, Leather, Wood &

Paper Products, Textiles &

Clothing, Headgear, Footwear,

Articles Of Iron & Steel,

Mechanical & Electrical

Machinery, two wheelers, optical

instruments, furniture, toys,

miscellaneous manufactured

articles

import price has been established for

specified product imports from India

and some other countries. Under this

the Argentine Customs authorities

can ask for validation of  Indian

customs invoice with a full set of

original documents if they suspect

that the invoiced value is less than the

minimum import price established.

Argentina Pharmaceuticals There is delay in registration leading

to non-viability of exports.

Australia Mangoes Australia maintains ban on the pretext

of  the presence of fruit flies and

stone weevils.

Armenia Agro chemicals and

pharmaceuticals

Armenia stipulates registration

requirements and mandates

permission for imports and exports

Bangladesh Poultry products Bangladesh continues to ban imports

despite India gaining the avian

influenza free status.

Brazil Pharmaceuticals Procedural delays occur in the

clearances, inspections and

registration by the Brazilian Health

Surveillance Agency (ANVISA)

Canada Paper products Non scientific quarantine restrictions,

customs surcharges, eco labeling

stipulations and food safety/ health

standards exist on paper product

exports.

Chile  Wheat, wheat flour and sugar A complex price band system

wherein a minimum import price

(well above the international price

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and domestic prices) is stipulated. On

account of a WTO dispute decision,

this band would be lowered by 2%

every year from 2008 to 2014 after

which a Presidential review would be

undertaken.

China Agricultural products Opacity of Sanitary and

Phytosanitary (SPS) measures and

delays in giving clearances

Colombia Pharmaceuticals The registration by Colombian Drugs 

Control and Certification  takes 11 to

12 months, inspections are

undertaken for environmental

compliance and a 10% price

preference is granted  for  French

pharmaceutical companies under a

bilateral agreement.

European

Communities

Bovine meat Standards are more stringent than

OIE (World Organization for Animal

Health) Terrestrial  Animal Health

Code,  a ban is maintained on account

of  Foot and Mouth Disease (FMD)

and prolonged delay in upgradation

of India’s status to GBR1 (No risk of

BSE)

European

Communities

Marine products Rejection and subsequent destruction

of consignments with

chloramphenicol / nitrofuran

residues, rejections in Italy and

France due to presence of  Vibrio

Parahaemolyticus without judging the

virulence factors, rejection due to

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alleged presence of  bacterial

inhibitors/ anti-biotic residues

without any confirmatory tests.

European

Communities

Chemicals The Registration, Evaluation and

Authorisation of Chemicals

(REACH) legislation increases cost

of compliance by € 85,000 to €

325,000 per chemical.

European

Communities

Engineering and Electronics The stipulation of CE (originally

known by the French term

Conformité Européenne) marking to

indicate conformity with the essential

health and safety requirements

increases cost for small and medium

enterprises.

Japan Footwear The tariff rate quota (TRQ) restricts

imports to the quantum of the quota.

Korea Chemicals, pharmaceuticals,

computer and medical equipment

Certification requirements (including

prior approval) add on to the cost of

exports.

New Zealand Paper products Non scientific quarantine restrictions,

customs surcharges, eco labeling

stipulations and food safety/ health

standards exist on paper products

exports.

Norway Marine products The pathogen analysis is carried out

by the NMKL method which is not

accepted internationally.

Russia Meat products Standards for bovine meat are more

stringent than the OIE  Terrestrial

Animal Health Code, EIC

Conformity certificates are not

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recognized and Certification with

respect to swine fever and FMD are

insisted upon for poultry exports

which are not relevant..

Ukraine Bovine meat, coffee, tea, spices,

pharmaceuticals, cosmetics,

plastics, leather products, textiles &

clothing

A compulsory certification  with the

option of either (a) certificate of

acceptance of foreign certification by

Derzh Standard or (b) Conformance

certificate by Ukrainian Agency. 

Though ISO 9000 Standards are

adopted by Derzh Standard, foreign

certification recognition exists only to

the extent of international treaty

obligations of Ukraine.

Uzbekistan All products Cumbersome procedure for

registration and certification, a

custom processing fee @ 0.7% of

value and lengthy procedure for

conversion of hard currency as well

as profit repatriation.

 

With a view to strengthening its  information base on NTMs/ NTBs, the Department of

Commerce has attempted to put in place a database of NTMs/ NTBs imposed by trading

partners on its exports.

 We would welcome inputs from the trade and industry, apex chambers of commerce,

export promotion councils, trade analysts, researchers etc on specific NTMs/ NTBs

imposed against Indian exports with a view to expanding this database.

Database of NTMs/ NTBs

i. Country wise

ii. Product wise

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India specific NTB Database based on study by ICRIER 

i. Electric & Electronic products

ii. Pharmaceuticals products

iii. Product Specific requirements in the US

iv. Product specific requirements in the EC

v. State Specific requirements in the US

vi. State specific requirements in the EC

vii. NTBs in the Gulf C00peration Council (GCC)

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4. TARIFF AND NON-TARIFF BARRIERS BENEFIT DEVELOPING

COUNTRIES - NEW STUDY

There is considerable evidence for the hypothesis that under certain conditions,

restrictions on trade can promote growth, especially of developing countries, according to

a study published in the Journal of Development Economics.

The study by Halit Yanikkaya, an academic at the College of Business and

Administrative Services, Celal Bayar University (Turkey), has examined the growth

effects on 108 economies of a large number of measures of trade openness, using the

same yardsticks or measures of openness and over the same periods, and applying

econometric models and regressions. The study has used two broad categories: measures

of trade volumes and measures of trade restrictions and measures their effects on growth

in the 108 economies.

The study and the results of the data analysed challenges what the author calls “the

unconditional optimism in favour of trade openness among the economic profession and

policy circles.”

It finds that on the basis of trade volumes, there is a positive and significant association

between trade openness and growth.

According to the conventional view and studies on the growth and trade restrictions, trade

restrictions have an “adverse association between trade barriers and growth.”

The study finds a contrary evidence and says: “our estimation results from most

specifications (of tariff and trade barriers) show a positive and significant relationship

between trade barriers and growth”.

“Equally important,” the study adds, “these results are essentially driven by developing

countries, and thus consistent with the predictions of the theoretical growth literature that

certain conditions, developing countries can actually benefit from trade restrictions.”

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Several empirical studies of the ‘80s and ‘90s provided an affirmative answer for the

view that “open economies” grew faster than closed ones, and that “outward-oriented”

economies have consistently higher growth rates than “inward-oriented” ones. These led

to a strong bias in favour of trade liberalisation and under-pinned the World Bank/IMF

policy conditionalities and advice to developing countries and the Washington Consensus

of the 1990s.

Yanikkaya says that this strong bias in favour of trade liberalization was partly due to the

tragic failures of the import substitution strategies especially in the 1980s, and the

overstated expectations from trade liberalization. The World Bank- sponsored studies, by

Dollar and others, said they had found positive correlations between open economies and

faster growth across countries.

The first major challenge from academia came from Dani Rodrik, and followed by a

cross-country empirical analysis, using the same measures of ‘openness’ across a range

of countries, which brought out that these studies had reached the conclusion of open

economies growing faster because they used different yardsticks for countries and over

different time-periods: But when the same yardsticks were used and over the same time-

periods, the results showed that fast growth had taken place in some of the countries with

higher trade restrictions (India and China), but which had adopted a measured approach

to trade liberalization (after creating capacity domestically, and calibrating liberalization

measures).

Since then a number of studies have come out challenging the view that liberalization of

trade and investments is always a plus and there is growth in the long-run. These studies

have brought out that openness to external trade and trade liberalization are two different

concepts, and that the latter promoted growth (and brought in foreign direct investment

and associated technology) only under certain conditions, and when the host-country

State played an active role.

The Yanikkaya study notes that while there is a near consensus about the positive

correlation between trade flows and growth, the theoretical growth literature (which

studied growth effects of trade restrictions) came to the view that the effects were very

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complicated in the most general case, and mixed in how trade policies play a special role

in economic growth.

This, the author attributes to the way ‘openness’ is described very differently in various

studies, making classification of countries on basis of ‘openness’ a formidable task.

Hence, using different measures of openness produces differing results.

The Yanikkaya study looks at the growth effects on a large number of measures of trade

openness. Two broad measures of trade openness are used and studied: one is on effect of

various measures on trade volumes, which indicate a positive and significant association

between openness and growth, and is in line with conclusions of empirical and theoretical

growth literature.

However, the estimation results for various measures for trade barriers, contradicts the

conventional view on the growth effects of restrictions, and suggests “an adverse

association between trade barriers and growth. The estimation results from most

measures of trade restrictions show a positive relationship between trade barriers and

growth, a result driven by developing countries.

These results are consistent with the predictions of theoretical growth literature, namely,

that under certain conditions, developing countries can actually benefit from trade

restrictions.

In a survey of the literature, the study finds that international trade theory (based on static

trade gains) provides little guidance to the effects of international trade on growth and

technical progress, the new trade theory argues that gains from trade can arise from

several fundamental sources differences in comparative advantage and economy-wide

increasing returns.

While there are many studies about the effects of trade policies on growth - during the

failed import substitution strategies of the 1980s and the export-promotion policies - there

is a lack of clear definition of ‘trade liberalization’ or ‘openness’.

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The most difficult has been measuring ‘openness’. An ideal one would be an index that

includes all trade barriers distorting international trade, such as average tariff rates and

indices of non-trade barriers. Such an index, incorporating effects of both tariff and non-

tariff measures has been developed by J.E.Anderson and J.P.Neary. But it is not available

for a large number of economies. Other studies, like those by Dollar and, Sachs and

Warner used available data.

If the growth engine is driven by innovation and introduction of new products, then

developing countries should benefit more by trading with developed countries than with

other developing countries. However, the Yanikkaya study results do not support this,

both providing growth regressions positively and significantly.

The study finds that a developing country benefits through technology diffusion by

trading with a developed country, and since the US is the leader in technology,

developing countries benefit through this bilateral trade. Also, countries with higher

population densities tend to grow faster than those with lower densities.

In using measures of trade restrictions - several of whom it acknowledges are not free

from measurement errors - the study reaches some very different conclusions than

conventional trade theory suggests. Thus, it finds that trade barriers in the form of tariffs

can actually be beneficial for economic growth.

In the current context (of the Doha Round and the drive of Europe and the US to tear

down and harmonise developing country tariffs), this is a significant and telling result,

providing support for the viewpoint of developing countries in these talks. The

framework for modalities for tariff liberalisation in industrial products in the NAMA

negotiations put forward by the chairman (and WTO secretariat) is misguided and needs

to be opposed and jettisoned. When export taxes and total taxes on international trade are

used as a measure of trade restrictions, the study finds that save for fixed effect estimates,

there is a “significant and positive association” between trade barriers and growth. This is

similar to the results for average tariffs.

On non-tariff barriers, there are difficulties of estimation because of data limitations;

hence these are excluded in most empirical studies. But studies by J.Edwards (cited in the

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Yanikkaya study) found such restrictions having an insignificant relationship with

growth, and came to the view that NTBs are poor indicators of trade orientation, since a

broad coverage of NTBs did not necessarily mean a higher distortion level.

Using several new measures of trade openness and restrictions now available, and

applying them on a framework model explained in details (but needs econometric

knowledge for the lay trade person to test and see), the Yanikkaya study, says that there is

“considerable evidence for the hypothesis that trade restrictions can promote growth,

especially in developing countries, under certain conditions.” The study makes clear that

it has no intention of establishing a simple and straightforward positive association

between trade barriers and growth, but rather to show that “there is no such relationship

between trade restrictions and growth.” Such a relationship depends mostly on the

characteristics of a country. Restrictions can benefit a country depending on whether it is

developed or developing (a developed one seems to lose), whether it is a big or small

country, and whether it has comparative advantage in sectors receiving protection

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5. CASE STUDY

5.1 DISMANTLING TRADE BARRIERS IN INDIA

The European Commission's Trade and Investments Barriers Report, published in March

2012, points out that some progress has been made to dismantle trade barriers in India:

Two trade barriers were fully removed in 2012: export restrictions on cotton

and security requirements for telecommunication equipment.

Progress has also been achieved with regard to sanitary and phyto-sanitary

rules.

No positive movement has been seen in the area of equity caps.

India's industrial policies contain trade-restrictive elements.

The report also identified India's national manufacturing policy as a key

priority for reform.

The EU and India hope to increase their trade in both goods and services and investment

through the Free Trade Agreement negotiations launched in 2007.

Following the EU-India Summit in February 2012 negotiations entered an intense phase.

Important issues include market access for goods, the overall ambition of the services

package and achieving a meaningful chapter on government procurement.

EU-India trade negotiations

The negotiations cover:

access to each other's markets, for goods, services and to public procurement

contracts,

the framework for investment

the rules that frame trade, such as intellectual property and competition

sustainable development, growth in trade is in tandem with the environment,

social and labour rights.

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Trade picture

India is an important trade partner for the EU and an emerging global economic

power. The country combines a sizable and growing market of more than 1 billion

people.

The value of EU-India trade grew from €28.6 billion in 2003 to €79.9 billion in

2011.

EU investment in India more than tripled between 2003 and 2010: going from

€759million in 2003 to €3 billion in 2010. 

Trade in commercial services tripled during the same time period, going from

€5.2billion in 2002 to €17.9 billion in 2010.

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EU and India

India has embarked on a process of economic reform and progressive integration with the

global economy that aims to put it on a path of rapid and sustained growth. However,

India's trade regime and regulatory environment remains comparatively restrictive (for

example see the World Bank's Ease of Doing Business Index ). India still maintains

substantial tariff and non-tariff barriers that hinder trade with the EU. In addition to tariff

barriers to imports, India also imposes a number of non-tariff barriers in the form of

quantitative restrictions, import licensing, mandatory testing and certification for a large

number of products, as well as complicated and lengthy customs procedures.

With its combination of rapid growth, complementary trade baskets and relatively high

market protection, India is an obvious partner for a free trade agreement (FTA) for the

EU.

The parameters for an ambitious FTA were set out in the report of the EU-India High

Level Trade Group in October 2006, which was tasked with assessing the viability of

an FTA between the EU and India. Other studies have reinforced the economic potential

of anFTA between the EU and India, notably asustainability impact assessment was

carried out by the EU.

Negotiations for a comprehensive FTA were started in June 2007 and are ongoing. This

would be one of the most significant trade agreements, touching the lives of 1.7 billion

people.

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India enjoys trade preferences with the EU under the Generalised Scheme of Preferences.

To assist India in its efforts to better integrate into the world economy – with a view to

further enhancing bilateral trade and investment ties – the EU is providing trade related

technical assistance to India.

5.2 DESPITE TRADE GROWTH, INDIA POSES BARRIERS: US REPORT

Substantial growth in India-US bilateral trade and recent economic reforms unleashed by

New Delhi notwithstanding, US companies face a series of trade and tariff barriers, an

official report said here.

In its latest report ‘2013 National Trade Estimate: Foreign Trade Barriers’ the US Trade

Representative (USTR) has listed out a whole range of difficulties US companies face in

India, which according to officials prevent them from realising the full potential of India-

US economic relationship.

“While the United States has actively sought bilateral and multilateral opportunities to

open India’s market, US exporters continue to encounter tariff and non-tariff barriers that

impede imports of US products, despite the Government of India’s ongoing economic

reform efforts,” the report said.

According to the report released yesterday, the US goods trade deficit with India was $

18.2 billion in 2012, up $ 3.5 billion from 2011.

US goods exports in 2012 were $ 22.3 billion, up 3.9 per cent from the previous year.

Corresponding US imports from India were $ 40.5 billion, up 12.1 per cent.

India is currently the 18th largest export market for US goods, the USTR report said.

US exports of private commercial services (i.e. , excluding military and Government) to

India stood at $ 11.0 billion in 2011 (according to latest data available), and US imports

were $ 16.9 billion.

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Sales of services in India by majority US-owned affiliates were $ 14.2 billion in 2010

(latest data available), while sales of services in the US by majority India-owned firms

were $ 7.3 billion.

“The stock of US foreign direct investment (FDI) in India was $ 24.7 billion in 2011

(latest data available), down from $ 24.8 billion in 2010.

US FDI in India is largely in the professional, scientific, and technical services,

finance/insurance services, and the information services sectors,” it said.

USTR said the structure of India’s customs tariff and fees system is complex and

characterised by a lack of transparency in determining net effective rates of customs

tariffs, excise duties, and other duties and charges.

US exporters have alleged that India’s customs valuation methodologies do not reflect

actual transaction values and raise the cost of exporting to India beyond applied tariff

rates.

US companies have also faced extensive investigations related to their use of certain

valuation methodologies when importing computer equipment. Companies have reported

being subjected to excessive searches and seizures, it alleged.

The USTR held that India “lacks an overarching Government procurement policy”, and

as a result, its Government procurement practices and procedures vary at the state and

central levels and by ministry.

“Foreign firms are disadvantaged when competing for Indian Government contracts due

to the preference afforded to Indian state-owned enterprises and the prevalence of such

enterprises,” it said.

The report also refers to India’s export subsidy programmes, including exemptions from

taxes for certain export-oriented enterprises and exporters in Special Economic Zones

and duty drawback programmes that “appear to allow for drawback in excess of duties

levied on imported inputs“.

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USTR said the Indian Government had a strong ownership presence in major services

industries such as banking and insurance, while private firms play a preponderant to

exclusive role in some of the fastest growing areas of the services sector, such as

information technology and business consulting.

It also referred to the “Indian policy that foreign satellite capacity must in practice be

provided through the Indian Space Research Organisation (ISRO), effectively requiring

foreign operators to sell capacity to a direct competitor.”

The report said the US companies have noted that this requirement creates additional

costs, allows ISRO to negotiate contract terms with the goal of moving the service to one

of its satellites once capacity is available, and puts ISRO in a position of being able to

determine the market growth rate.

The USTR report has also expressed its displeasure over the conditions imposed by India

on entry of FDI in multi-brand retailing.

“The September 2012 retail policy announcements also explicitly prohibit FDI in single-

brand and multi-brand retail by means of electronic commerce,” it said.

Foreign providers of higher education services interested in establishing a presence in

India face a number of barriers, it said.

This included a requirement that representatives of Indian states sit on university

governing boards, quotas limiting enrolment, caps on tuition and fees, policies that create

the potential for double-taxation, and difficulties repatriating salaries and income from

research, it said.

5.3 NON-TARIFF BARRIERS AFFECTING INDIA’S EXPORTS

Non-Tariff Measures (NTM) is one mechanism countries use to restrict imports. NTM

include quantitative restrictions, tariff quotas, voluntary export restraints, orderly

marketing arrangements, export subsidy, export credit subsidy, government procurement,

import licensing, antidumping/countervailing duties, and technical barriers to trade.

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The ascend of NTMs holds special significance to developing countries like India as they

have been encountering difficulties in accessing developed country markets. Therefore,

this paper seeks to:

identify and trace the type structure of NTMs affecting India’s exports

examine these commodity-wise/category-wise with the main focus on developed

country markets

suggest or recommend policy options.

The case starts by highlighting that Indian exports do face non-tariff barriers in major

export markets especially the US, EU, Japan and other developed countries, which

significantly hinder India’s exports to these markets.

Trade barriers (tariff and non-tariff) in destination countries have a significant impact on

India’s exports because these measures impose additional costs on such exports.

However, the author could not estimate the impact of non-tariff measures on India’s

exports, since there is no reliable estimate of these extra costs or "tax equivalence" due to

these measures and there is no systematic information available on NTMs faced by

India’s exports.

The picture that emerges from this analysis is that Indian businesses continue to be

hunted by a variety of restrictions in the form of standards and compliance costs. The

author makes some policy recommendations to help Indian policy makers respond to

these challenges:

a multilateral trade forum that includes moving NTMs on top of the WTO

agenda, plugging loopholes in the multilateral rules to make the system less

restrictive as well as improving the empirical database

putting in place bilateral and/or regional FTAs

internal measures need to be taken to deal with issues such as import restrictions,

the lack of coordination between the different departments and the lack of adequate

processing facility and the basic infrastructure like storage and transportation.

5.4 NON-TARIFF BARRIERS STUMP PHARMA EXPORTS TO CHINA: FICCI

India’s exports of pharmaceuticals could make a significant dent in the Chinese market

and help meet overall trade expectations of US$ 30 billion by 2014, provided Non Tariff

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Barriers in the shape of procedural, legal and cultural barriers that hinder market access

are removed, according to FICCI.

Based on feedback received from pharma exporting companies, FICCI has called for

urgent steps to streamline customs procedures as well as efficient and effective use of

technology for electronic data interface in customs administration and information

exchange. A bilateral pre-shipment inspection agreement would also benefit both

countries.

FICCI has suggested that recognition agreements on standards should be arrived at and

full details of standards should be made easily available. It has recommended that the

various non-tariff barriers be identified and addressed and both countries act to remove

them in a time bound framework. Easier trade financing and greater cooperation between

the EXIM banks of the two countries would also work to the benefit trade between the

two countries.

In this context, it is important to note that Indian exports of drug, pharmaceuticals and

fine chemicals to markets such as the US, Europe, Africa and South America have grown

by 19% year-on-year in the last three years while the world average growth rate for this

sector is about 6%. In contrast, in the last three years India’s exports to China have grown

at just 3%. From US$ 94 million in 2002-03, Chinese imports from India have grown to

US$ 106 million in 2003-04 to US$ 109 million in 2004-05. This accounts for barely 2%-

3% of Indian exports of drugs and pharmaceuticals to the world. This indicates that the

high-performing Indian pharma sector has not found the environment conducive for

achieving similar growth with China.

The Non-Tariff Barriers identified by FICCI in pushing pharma exports to China include:

Procedures for product and company registration and for procuring Import Drug

License are expensive and time consuming. Over and above the official cost of

US 7000 per product, they can cost anywhere between US$ 20,000 to $40,000 per

product. Besides, it may take 18 months to three years to procure an Import Drug

Licence. These licences and registration are essential for beginning to export or

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ship goods even to factories owned by the companies that are situated in China.

This is a considerable deterrent for Indian entrepreneurs to initiate exports to

China.

Long customs procedures, re-inspections and discriminatory packaging &

labelling regulations that even specify the colour used for packaging, result in

delays and higher costs and most of all consume energy and patience.

The banking procedures for foreign players, particularly for remittance of foreign

exchange, are tough and tedious. Even the sight payments are remitted after a

minimum of 30 to 45 days due to the foreign exchange declaration system of

Chinese banks.

Once in the Chinese market, the drug distribution is mostly through hospitals. In

practice, locally produced drugs are preferred and this manifests in the form of red

tape for Indian pharma products.

Intellectual Property Rights acts as another restrictive non-tariff trade barrier.

China surpassed the US as the world’s most litigious country for IP disputes in

2005, with 13,424 cases filed with Chinese courts compared to 10,905 cases filed

in the US during the same period. International companies were involved in only

268 of the IP cases filed in China last year, which represents an increase of 76%

over the number in 2004. This overly cautious approach in seeking IP

enforcement by international companies in China is partly due to their

unfamiliarity with Chinese civil litigation.

Lack of transparency in information about local markets and trade statistics add to

the low awareness of foreign businesses in China. This lack of transparency

clouds insight into the Chinese market and hampers marketing strategies of Indian

pharma companies in China.

In all of the above, language is a major barrier to trade. There are very few

Chinese-speaking people in India that can be resourced as interpreters. Although

the number of Chinese who are learning English is growing, communication

remains a major impediment to trade.

While China has consistently complained about anti-dumping cases in India. India has

responded by delivering on its words and this is no longer a bone of contention between

the two nations. It is for the Chinese now to set the ground rules right and ensure that all 31

non-tariff barriers are removed. At the same time, China needs to ensure that the quality

standards are maintained in pharmaceutical products. India has the largest number of

USFDA approved plants outside the US. There more than 75 plants which are also WHO

GMP (Good Manufacturing Practices) certified and could easily cater to the demand for

high quality pharma products.

5.5 APTMA URGES INDIA TO REMOVE NON-TARIFF BARRIERS

The All Pakistan Textile Mills Association (APTMA) has said that the Indian

Government should withdraw non-tariff barriers (NTBs) imposed on Pakistan to improve

the bilateral trade between the two Asian neighbours.

 

Welcoming a 15-member team of Indian journalists, led by Mumbai Press Club president

Gurbir Singh, APTMA chairman Yasin Siddik said Pakistan’s business community

supports giving most-favoured nation (MFN) status to India, but the NTBs imposed by

the Indian side would hamper the smooth flow of trade between the two nations.

 

He suggested that India should remove NTBs to make the MFN status a success.

 

He said in spite of India giving MFN status to Pakistan in 1996, Pakistan’s exports to

India are much lower, which is a clear proof that India has not opened up its market to

Pakistani goods.

 

In 2009-10, the bilateral trade between India and Pakistan stood at US$ 1.4 billion, of

which, Indian exports to Pakistan accounted for US$ 1.2 billion, while Pakistan’s exports

to India were a meager US$ 268 million, according to Mr. Siddik.

 

He suggested that India should open up its market to Pakistani goods in order to enhance

bilateral trade and capitalize on the potential for joint business strategies, especially in the

textile industry.

 

He said the granting of MFN status by Pakistan to India must be reciprocal to the lifting

of NTBs by the Indian Government, and hence, the policymakers should take up this

issue with their Indian counterparts.32

 

He further suggested that both Pakistan and India must harmonize their customs

procedures for assessing compliance with safety and quarantine standards, for which

special laboratories should be set up at border crossings.

5.6 PHARMAS DEMAND REMOVAL OF NON-TARIFF EXPORT BARRIERS

Pharmaceutical entrepreneurs have urged the government to remove non-tariff barriers to

exporting their products to India.

They said that additional duty and lengthy paperwork had been slowing exports of

allopathic medicines and herbal products to the southern neighbour.

Nepal’s general medicinal products are of high quality and are competitively priced, but

the trade barriers have hindered exports and even harmed growth of the local industry,

they added.

They claimed that pharmaceutical factories were operating at 30-40 percent of capacity,

and they could get a shot in the arm if exports could be boosted.

According to the Association of Pharmaceuti-cal Producers of Nepal (APPON), exporters

have to pay additional duty besides going through lengthy procedures to register their

products and get them certified by Indian authorities. APPON General Secretary Deepak

Prasad Dahal said countervailing duty was levied on allopathic and ayurvedic medicines

exported to India.

“After registering the pharmaceutical products with the Indian authorities, traders have to

wait for at least another seven months to get them certified by labs in India,” he added.

According to Dahal, ayurvedic medicines too have to be put through the tedious process

before they can be shipped to India. “However, herbs in raw and unprocessed form can

be exported to India easily,” he added.

Entrepreneurs have also complained that Indian products are granted trouble-free entry

into India while Nepali products do not enjoy the same privilege.

Criticising the government policy, APPON’s President Umesh Lal Shrestha said that

Indian products which are banned in India were being registered without any hindrance in

Nepal. He also demanded that the government restrict imports of general medicines that

are being produced in Nepal.

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As per an APPON study, Nepal is self-reliant in 77 types of general medicines.

“However, the government is providing licences to sell products that could face

duplication in the domestic market.”

Shrestha also urged the government to facilitate sales of Nepali products when supplying

subsidised medicines in rural areas. “The government buys Rs 3 billion worth of

medicines annually for distribution to the poor, and most of the procurement contracts go

to foreign-based companies,” he added.

According to Shrestha, the bidding process for Nepali pharmaceuticals is too complicated

compared to the conditions applied to foreign-based companies.

Meanwhile, the Depart-ment of Drug Administration said it had started work to restrict

sales of foreign allopathic medicines which are being manufactured locally in a bid to

protect domestic industry. Narayan Prasad Dhakal, drug administrator at the DDA, said

they had started discussions with stakeholders. “We have been discussing whether to put

these general medicines in the negative list or impose similar technical barriers in order to

reduce their imports,” he added.

According to APPON, local products account for 44 percent of Nepal’s pharmaceutical

market which is worth Rs 17 billion annually.

5.7 SAARC NATIONS TO WORK TOGETHER TO REMOVE NON-TARIFF

BARRIERS

India has said it is working to resolve all matters related to non-tariff barriers (NTBs) to

boost trade among South Asian countries and has said there is a need for greater

awareness on such measures.

“Lack of awareness about NTBs is creating lot of problems. Stakeholders like business

associations should organise seminars to make traders aware of the procedures followed

by each countries. The move would help in increasing trade,” said Indira Murthy,

Director, Commerce Ministry.

NTBs are measures other than tariffs that restrict trade like technical standards, quality

specifications and lack of adequate infrastructure.

Murthy said India was making all efforts to sort out NTB related issues amongst

members of the South Asian Association for Regional Cooperation (SAARC) to boost

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trade. She was addressing a seminar on NTBs affecting regional trade in the SAARC

region organised by CUTS.

“There is a sub—group that is looking at the issues related with land custom stations.

Negotiations are on to remove the NTBs,” she said.

She added that the Governments are engaged to remove barriers related with

infrastructure and facilitates at customs stations like testing laboratories.

Stressing on the importance of adequate infrastructure for removal of NTBs,

Khairuzzaman Mozumder, Deputy Secretary, Ministry of Commerce, Bangladesh, said

that it was heartening to note that most SAARC countries were ready to work in the area.

“There has to be cooperation between Governments in the region to improve

infrastructure and they have to come up with the resources. While India would get the

funds on its own, the ADB is to provide grants and loans to countries like Bhutan,

Bangladesh and India. All have to upgrade together for the exercise to be meaningful,” he

said.

Pakistani Customs and Trade Policy official Robina Ather said it was necessary to

identify, evaluate and eliminate NTBs for trade to grow in the region. “We need to focus

on priority NTBs so that they can be sorted out fast,” she said.

According to the proposed Business Plan for improving regional trade drafted by CUTS,

South Asian countries should identify products of high importance to regional trade,

measured by supply capacity and matching import demand within the region.

CUTS has conducted an assessment and identified products for each South Asian country

which meets their export interests and import demand respectively.

5.8 US EXPORTERS FACE TRADE BARRIERS FROM INDIA

Despite India's ongoing economic reform efforts, US exporters continue to encounter

tariff and non-tariff barriers that impede imports of Americans products to India, an

official report has said.

In its report 2012 National Trade Estimate Report on Foreign Trade Barriers, the US

Trade Representatives (USTR) said the US has actively sought bilateral and multilateral

opportunities to open India's market.

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"The structure of India's customs tariff and fees system is complex and characterised by a

lack of transparency in determining net effective rates of customs tariff, excise duty and

other duties and charges on imports into India," said the India section of the report.

US goods trade deficit with India was $ 14.5 billion in 2011, up $ 4.3 billion from 2010,

it said.

US goods exports in 2011 were $ 21.6 billion, up 12.4 per cent from the previous year.

Corresponding US imports from India were $ 36.2 billion, up 22.5 per cent.

Noting that India is currently the 17th largest export market for US goods, the report

said US exports of private commercial services (excluding military and government) to

India were $ 10.3 billion in 2010 (latest data available), and US imports were $ 13.7

billion.

Sales of services in India by majority US-owned affiliates were $ 13.1 billion in 2009

(latest data available), while sales of services in the US by majority India-owned firms

were $ 7.2 billion.

The stock of US foreign direct investment (FDI) in India was $ 27.1 billion in 2010, up

from $ 20.9 billion in 2009, it said adding, that US FDI in India is led by the information,

professional, scientific, and technical services, and manufacturing sectors.

In its report, USTR said India' procurement practices and procedures are often not

transparent.

Foreign firms also rarely win Indian government contracts due to the preference afforded

to Indian state-owned enterprises and the prevalence of such enterprises.

USTR said India's tax exemption for profits from export earnings has been completely

phased out, but tax holidays continue for certain export-oriented enterprises and exporters

in Special Economic Zones.

"In addition to these programmes, India continues to maintain several other export

subsidy programmes, including duty drawback programmes that appear to allow for

drawback in excess of duties levied on imported inputs," it said, adding that India also

provides pre-shipment and post-shipment financing to exporters at a preferential rate.

5.9 CHINA NEED NOT FEAR TARIFF BARRIERS IN INDIA

Chinese solar module makers should not fear India tariff or trade barriers that could

restrict or affect exports to the fast-growing market.

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Chinese manufacturers slowed marketing efforts in India due to the growing wave of

module import opposition in the U.S., fearing that the Indian government would also

impose import duties. 

India’s Ministry of New and Renewable Energy (MNRE) has gone on record to say that

it has no plans to impose tariff barriers against Chinese products. MNRE seems to be just

about happy with one clause in its national solar mission policy, which stipulates that

projects adopting crystalline module technology will have to import these modules from

the local markets. The MNRE mission policy made an exception for solar thermal

technologies and equipment earlier. And, now, it has made an exception for thin-film

modules as well.

Elsewhere within India, various state governments, including the key western states of

Gujarat and Rajasthan, have allowed project developers to import technologies and

equipment at almost zero percent duties. 

There are various reasons why the Indian government would not impose barriers:

India generally refrains from imposing anti-dumping duties on products being

imported from any particular country. It is only in case of food-grains that the Indian

government generally takes such steps.

The government would rather have prices go down considerably, rather than

extend its commitments in subsidizing solar power projects. The recent bids for on-grid

solar projects have substantially reduced the subsidy burden. 

The Indian government is quite keen to promote solar power generation and

reduce its dependence on fossil fuels, particularly if it must enable the industry to become

more productive. Power shortage is a major bane for the manufacturing sector, which

either shuts down or uses other expensive and polluting fossil fuels. This is a large

captive market that will soon open. 

Power shortage is a much bigger issue for the government, rather than supporting

India’s module manufacturer’s business.

The federal (central) as well as the key states of India have already demonstrated that

they are serious about promoting and expanding the solar market. Tariff barriers will only

prove to be counter-productive. 

If the U.S. imposes trade barriers, China can focus on the Indian market where the hunger

for power is huge and continuously growing.

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CONCLUSION

Indian exports do face non-tariff barriers in major export markets especially the US, EU,

Japan and other developed countries, which significantly hinder India’s exports to these

markets.

Trade barriers (tariff and non-tariff) in destination countries have a significant impact on

India’s exports because these measures impose additional costs on such exports.

Developing countries like India need to focus urgently on the removal of non-tariff

barriers if they are to promote trade and growth.

Non-tariff barriers need to be brought to the forefront of the global trade debate and made

a priority by trade negotiators. Developing countries need to remove their hugely

bureaucratic non-tariff barriers to trade. Currently, for example, exporters from India

have to go through 12 separate bureaucratic processes involving 10 separate agencies.

More reliable data on non-tariff barriers need to be collected in order to quantify their

coverage and the problems caused by them.

Developing countries also need to remove tariff barriers which are still prevalent in some

industries. India, for example, has a tariff barrier of 99 per cent on roasted coffee and

Mexico 71 per cent.

India pointed that it is working to resolve all matters related to non-tariff barriers (NTBs)

to boost trade among South Asian countries and has said there is a need for greater

awareness on such measures.

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BIBLIOGRAPHY

BOOKS AND JOURNALS

Carbaugh, Robert J. International Economics, South-Western, 1995.

Cross, Frank B. “Paradoxical Perils of the Precautionary Principle,” Revision 851,

Washington and Lee Home Page, Volume 53:3, 1996.

“New Principle to Protect Human Health and the Environment,” Health Alert, Earth

Guardian, CQS, 1999.

O’Riordan, Tim and James Cameron. “Interpreting the Precautionary Principle,”

Earthscan Publications, Ltd., Island Press, 1994.

James L. Butkiewicz & Halit Yanikkaya, 2011. "Institutions and the impact of

government spending on growth," Journal of Applied Economics, Universidad del

CEMA, vol. 0, pages 319-341, November.

INTERNET WEBSITES

Non-Tariff Barriers to Trade

http://www.tradebarriers.org/ntb/non_tariff_barriers

Tariffs and Modern Trade

http://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp

Framework Conditions and Indian Tariff Barriers

http://indien.um.dk/en/the-trade-council/india-as-a-market/framework-conditions-

and-barriers/

Dismantling Trade Barriers in India

http://ec.europa.eu/trade/policy/countries-and-regions/countries/india/

Despite Trade Growth, India Poses Barriers: US Report

http://www.thehindubusinessline.com/news/international/despite-trade-growth-india-

poses-barriers-us-report/article4572858.ece

Non-Tariff Barriers affecting India’s Exports

http://www.eldis.org/go/home&id=19128&type=Document#.Uuin6dK6bbg

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