Non-Tariff Measures: A case of Agricultural Trade between India and Japan
Author: Shaikh Mohd Mouzam

In a world of growing economic interdependence, sustained economic development of almost every nation depends on the expansion of trade in goods and services. But the revival of protectionism since the mid-1970s, through increasing and diverse use of NTBs, has casted doubt on the realisation of this basic objective. Non-tariff barriers (NTBs) or Non-tariff measures (NTMs) generally refer to any measure other than tariff which restricts or distorts trade. Terms non-tariff barriers (NTBs) or non-tariff measures are usually used interchangeably.

Several rounds of GATT/WTO negotiations resulted in significant reduction in average tariff levels across all products but there was an increase in use of non-tariff measures as barriers to trade after 1995. India has imposed total of 191 NTMs on Japan’s total imports since 1995 while Japan imposed a total of 894 NTMs on India’s total imports for the same reference period. This is almost five times more than NTMs imposed by India. Out of 191 NTMs imposed by India about 60 per cent of them were sanitary and phyto-sanitary measures (SPS) and about 40 per cent were technical barriers to trade measures (TBT). Comparatively Japan has imposed more of TBT measures (i.e., 66%) than SPS measures on India’s exports because Japan is considered as one among the top technological leaders of the world.

It can be seen in from Fig.1 that India has imposed more of SPS measures than TBT measures and opposite in case of Japan. However, from the actual notifications or measures imposed in pre (1995-2010) and post FTA periods (2011-2015) by both the countries, it can be concluded that Japan has imposed more of SPS measures in both periods than what India had imposed on Japan’s exports. The product coverage of these measures was higher in pre-FTA period than post-FTA period. Japan has imposed SPS measures on a large range of products at HS four-digit level compared to India in both the periods. From 1995 to 2015, India imposed 191 total NTMs, covering 5145 products at the HS four-digit level while Japan has imposed 896 NTMs, covering 10539 products. This showed that Japan has protected its domestic economy for safety concerns of ageing population. Same trend was observed from TBT measures as of SPS measures. More of TBT measures were imposed by Japan than India on imports and product coverage at HS four-digit level was also found to be higher in the case of Japan’s NTBs imposed on India’s exports in both the periods.

In terms of objectives (i.e., different types) in imposition of the TBT measures, “labeling, certification and conformity assessment” accounted for the largest number of both countries TBT notifications imposed on each other. About 66 per cent of total TBT measures imposed by India on Japan were related to labeling, certification and conformity assessment, followed by consumer health & safety (16%) and environmental protection & human health (11%) In case of different types of TBT measures imposed by Japan on imports from India until the year 2015, 46 per cent were related to labeling, certification and conformity assessment followed by animal and human health (20 %), consumer health and safety (17 %) and harmonization (4.2 %). It shows that Japan is very strict in terms of labelling requirements, nutrition claims and concerns, quality and packaging regulations of food items as its major section of population is old aged.

In terms of objectives related to SPS measures, the largest numbers of notifications of both the countries were related to “food safety” (i.e., 62% and 74% by India and Japan, respectively). This shows that both the countries gave paramount importance to food safety issues which concerns about maximum residue limits (MRLs), parts per million (PPM) with regard to residuals of chemicals and pesticides and use of food additives. India imposed more of plant protection and animal health related SPS measures after food safety. Contrastingly, Japan imposed more of animal health related SPS measures on Indian imports after food safety measures. These measures hinder the Indian exports of animal products because in India animal husbandry activities are often subsidiary activities supporting the primary source of income and our exporters cannot comply with high import standards imposed by Japan. It is clear that SPS notifications by India have been relatively less skewed to “food safety and animal health’ compared to SPS notification by Japan.

In terms of standards, both the countries indicated different stand, India being a developing country is a strong proponent of international standards with about 79 per cent of the total NTBs imposed on Japans exports to India was of international standard and a very low percentage of 21 per cent in usage of national standards. Contrastingly Japan has applied more of national standards (i.e., 55%) in their NTBs notification imposed on India’s exports than the international standards (i.e., 45%). Earlier studies have shown that prevalence of “national standards” in developed countries could be detrimental to the market access prospects of developing countries especially in the case of raw agricultural and processed food products.

Conclusion

Therefore the major hindrance in agricultural trade nowadays is not tariff or custom duties but the Non-tariff measures such as SPS and TBT measures. Developing countries like India has to improve their standards by harmonizing or strictly adhering to international standards so as to increase its agricultural exports to developed countries.

References:

1. WTO-RTA DATABASE, 2015, World Trade Organisation. https://www.wto.org/english/tratop_e/region_e/region_e.htm
2. OECD, 2013, OECD economic surveys, Japan,
3. MOC&I, 2015, Ministry of Commerce and Industry.New delhi.
4. APEDA, 2015, Agricultural and Processed Food Products Export Development Authority.http://agriexchange.apeda.gov.in/indexp/FTASearchengine


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