As the government contemplates the expansion of free trade agreements aimed at dismantling tariff barriers, an emerging challenge threatens to impede the progress of trade liberalization in the post-pandemic era. This challenge comes in the form of non-tariff barriers (NTBs), which have experienced a proliferation, potentially negating the benefits of reduced tariff restrictions.
Non-tariff barriers encompass a wide range of measures such as quotas, embargoes, technical regulations, and conformity assessment procedures. These measures are instituted to uphold the safety, quality, and performance standards of goods, but their prevalence has surged in the wake of the pandemic, presenting a formidable hurdle to international trade.
A notable array of Indian exports now face significant hurdles due to NTBs. These include commodities like chilies, tea, basmati rice, milk, poultry, bovine meat, fish, and chemical products destined for the EU market. Exports such as sesame seeds, shrimp, medicines, and apparel bound for Japan, along with a diverse range of products destined for China, are also grappling with the challenges posed by these barriers.
In a similar vein, the US contends with obstacles obstructing the export of fruits and shrimp, while South Korea faces barriers concerning bovine meat. Egypt encounters hurdles related to ceramic tiles, and in countries like Mexico, Argentina, and Saudi Arabia, diverse products such as chili, medicines, and microbiological regents are subject to stringent non-tariff regulations. Furthermore, Brazil imposes barriers on electrical, medical devices, and household appliances.
Non-tariff barriers wield a distinctive level of influence over trade dynamics compared to traditional tariffs. While tariffs can be adjusted to accommodate price changes, NTBs entail intricate compliance procedures, complex regulations, and demanding technical requirements. The complexity of these barriers can dissuade smaller and medium-sized businesses from international trade due to the resources and time required for compliance.
Indian exporters frequently grapple with multifaceted authorization processes, mandatory clearances, and compulsory testing at laboratories. In certain instances, countries impose standards and regulations that deviate from internationally recognized norms, leading to higher compliance costs. In some cases, exporters are compelled to adapt production processes to meet the stringent requirements, potentially resulting in infrastructural and technological misalignment.
The prevalence of non-tariff barriers is more pronounced in developed countries and regions, such as the US and the European Union. Due to their minimal leeway for adjusting tariff rates within World Trade Organization frameworks, these developed economies have increasingly turned to non-tariff barriers as a means of exerting regulatory control over trade flows.
While ongoing discussions around new free trade agreements do acknowledge the importance of addressing technical barriers to trade, it’s crucial to recognize that the evolving landscape of trade barriers necessitates a continuous and adaptive approach.
As governments explore avenues to facilitate smoother international trade, addressing the rising prominence of non-tariff barriers stands as a pivotal task to safeguard the advancements achieved through global trade liberalization efforts.
