13-11-2012, 12:12 PM
NON TARIFF BARRIER TO TRADE
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INTRODUCTION
Restriction on international trade in terms of Non tariff barrier have multiplied rapidly in 1980’s. the Japanese for example began restricting export of automobile to US in 1981. After one year US government as part of its ongoing intervention In sugar markert, imposed quota system on its sugar import.
The increasing use of protectionist trade policies raised national as well as international issues. As many observer have noted international trade restriction generally have costly consequences . the benefits received by protected domestic producer tend to be over weighted with the losses associated with excessive production and restricted consumption of protected goods protectionist policies also caused foreign adjustment in production and consumption that risks retaliation by affected country.
As a type of protectionist policy ; non tariff barriers produced general consequences identified above. However there are numerous reasons besides their proliferation to focus at solely non tariff barriers. Non tariff barriers encompasses wide range of specific measures. Many of which are not easily measured for example the effect of government procurement process that is biased toward domestic product are difficult to quantity. in addition many non tariff barriers discriminate among a countries trading partner.
MEANING OF NON TARRIF BARRIER:
Non-tariff barriers to trade (NTBs) are trade barriers that restrict imports but are not in the usual form of a tariff. Some common examples of NTB's are anti-dumping measures and countervailing duties, which, although they are called "non-tariff" barriers, have the effect of tariffs once they are enacted.
Their use has risen sharply after the WTO rules led to a very significant reduction in tariff use. Some non-tariff trade barriers are expressly permitted in very limited circumstances, when they are deemed necessary to protect health, safety, or sanitation, or to protect depletable natural resources. In other forms, they are criticized as a means to evade free trade rules such as those of the World Trade Organization (WTO), the European Union (EU), or North American Free Trade Agreement (NAFTA) that restrict the use of tariffs.
Some of non-tariff barriers are not directly related to foreign economic regulations, but nevertheless they have a significant impact on foreign-economic activity and foreign trade between countries.
TYPES OF NON-TARIFF BARRIERS
There are several different variants of division of non-tariff barriers. Some scholars divide between internal taxes, administrative barriers, health and sanitary regulations and government procurement policies. Others divide non-tariff barriers into more categories such as specific limitations on trade, customs and administrative entry procedures, standards, government participation in trade, charges on import, and other categories. We choose traditional classification of non-tariff barriers, according to which they are divided into 3 principal categories.
The first category includes methods to directly import restrictions for protection of certain sectors of national industries: licensing and allocation of import quotas, antidumping and countervailing duties, import deposits, so-called voluntary export restraints, countervailing duties, the system of minimum import prices, etc. Under second category follow methods that are not directly aimed at restricting foreign trade and more related to the administrative bureaucracy, whose actions, however, restrict trade, for example: customs procedures, technical standards and norms, sanitary and veterinary standards, requirements for labeling and packaging, bottling, etc. The third category consists of methods that are not directly aimed at restricting the import or promoting the export, but the effects of which often lead to this result.
QUOTAS
An import quota implies a fixed quantity or value of a commodity that has been allowed to be imported in the country during the given period of time. In practice, quotas may be fixed either in terms of physical value or monetary value of imports or a combination of the two. Further, the time period to which quotas apply varies from country to country, the longest being a year , and the shortest a month. Quotas assigned in quantitative terms are referred to as direct quotas and those expressed in value units implying exchange control, are called indirect quotas
VOLUNETARY EXPORT RESTRAINS
Voluntary export restrains (VERs) are bilateral arrangements instituted to restrain the rapid growth of exports of specific manufactured goods. The united states and the European community have, thus regulated imports of several products .
Under the VERs ,the exporting country voluntarily restrains the export of the specified product in order to either help the other country to reduce its trade deficit to protect domestic industry (of the importing country). VERs are adopted under pressure from the importing country.
The recent advances in VERs and other new protectionism measures dates from the establishment of the multi-fiber agreement (MFA) In the mid 1970s . other bilateral agreements have involved mainly restraining the growth of specific exports from japan and the newly newly industrializing countries (NICs).
ADMINISTER PROTECTION
Administered protection encompasses wide range of bureaucratic government actions, which have grown in absolute as well as relative importance over the last decade or more. recent VERs are in fact regarded as the outgrowth of administered protection actions. We have already mentioned one of the administrative measure , viz licensing. Other important administrative protection measure include the following
SAFEGUARDS
Safeguards actions under WTO article-XIX enables countries to undertake temporary restrictions against import surges threatening the viability of domestic industry, have become a common form of administered protection . although such measures are initially resorted to provide some breathing space and flexibility for structural adjustment they often lead to some or other form permanent barriers .
The Uruguay round has sought to limit the miss use of safeguard action.the Uruguay round agreement which seeks to rationalize safeguards also stiplulates that a member shall not seek ,take or maintain any voluntary export restrain orderly marketing agreements or similar measures on export or import trade. The agreement, however provides for special consideration for the developing countries .
HEALTH STANDARDS
Several health and product standards imposed by developed countries hinder the export of the developing countries because of the added cost of technical requirements . the need for maintaining health and product standards is a unquestionable . the objection should be to their use with the deliberate intention of trade restriction or discrimination.
The agreement on technical barriers oto tarde (also known as the standards code )evolved by the Tokyo round of the GATT lays down that when government or other bodied adopt technical regulation or standard for reasons of safety , healthy, consumer or environmental protection, or for other purpose this should not create unnecessary obstacles to trade. Exporters from developing countries complain , however ,that this code is respected by developed countries in several cases .
CUSTOME PROCEDURE
Certain customs procedure of many country become trade barrier . for example studies point out that frequent changes of japans customs regulations are themselves a significant barriers to exporters, especially those not affiliated with Japanese overseas joint venture. The Tokyo round formulated customs valuation code intended to provide a uniform and neutral system for the valuation of goods for customs purposes which will confirm to the commercial realities and to prevent the use of arbitrary of fictitious values.
CONSULAR FORMALITIES
A number of countries insist on certain consular formalities like certification of exports documents by the respective consulate , of the importing country ,In the exporting country this becomes a trade barrier when the fees charge for this is very high or the procedure is very cumbersum. It is pointed out that obtaining the necessary documents to prove origin itself entails cost , which have been variously estimated in the context of EFTA at 3-5% of f.o.b.prices