Decoding South Asian non-tariff measures

It was a few years back when export of a Bangladeshi beverage manufacturing company had been growing modestly in the north-eastern states of India. All on a sudden, a consignment of exportable beverage, consisting of fruit drinks, was halted by the land customs authorities of India. The customs official demanded that date of manufacturing and date of expiration of the product have to be imprinted on the front of the packet, not at the bottom side. Both the exporter and the importer tried to argue that they were not aware of such a requirement. They also pointed out that all previous consignments had entered the Indian territories with similar packing. Later it was found that the customs officer, being unaware, applied his discretionary power although there was no such a change in the rules.  
Or, take the case of export of toilet soap to Tripura, a north-eastern state of India. The Customs authorities in Agartala refused to allow a consignment of toilet soaps seven years ago. They cited the Indian Drugs and Cosmetic Act 1940 and the Indian Drugs and Cosmetic Rules 1945. These rules mentioned that Agartala land port was 'not' an entry point from Bangladesh for import of toilet soap. Later, it was found that the Indian government had revised the regulation in 2007. The revision allowed Agartala as one of the designated land ports to import toilet soaps from Bangladesh. Thus the issue was settled at a cost of time and energy of the Bangladeshi exporter. The exporting company had to bear additional cost due to undue complexities
These are only two examples of non-tariff measures (NTMs) being faced by the Bangladeshi exporters while entering the Indian market. And it is not only India but also some other countries in South Asia, including Bangladesh, which regularly use NTMs, popularly known as non-tariff barriers (NTBs). Take the examples of Pakistan's restriction of importing only 137 Indian products through Wagah border and Bangladesh's restriction of import under the Bonded Warehouse system through the Chittagong port only. However, there are some exceptions for the same categories of goods from Nepal and Bhutan entering Bangladesh through land ports. But India does not allow such a relaxation.
A STUDY ON REGIONAL PRACTICE: Countries across South Asia are used to such non-tariff restrictions or measures while exporting to other regional countries. But, what actually do these measures mean? What is the rationale to impose such trade barriers? How do these measures hinder expansion of regional trade? How is the South Asian Association of Regional Cooperation (SAARC) intra-regional trade being hampered by these measures?
A study titled NTMs in South Asia: Assessment and Analysis tries to answer many of these questions. The study paper was published by the SAARC Trade Promotion Network (PTN). Three trade experts of Bangladesh, with the support of Dhaka-based Metropolitan Chamber of Commerce and Industry (MCCI), carried out the study. They are Dr. Selim Raihan, a professor of Economics in the University of Dhaka, Dr. Mostafa Abid Khan, a director of the Bangladesh Foreign Trade Institute (BFTI) and Shaquib Quoreshi, a secretary of the MCCI.
The combination of these three members is important. One of the team members has sound academic knowledge. The second one is the longest-serving international trade negotiator of Bangladesh. The last member is directly associated with the real players of the field, exporters and traders.
A NOTE ON NTM AND NTBS: According to the International Trade Centre (ITC), "NTMs are policy measures other than ordinary custom tariffs that affect the international trade in goods. The effect of NTMs on trade may either be the primary goal of the policy (i.e. quotas and prohibition), or only the by-product of another policy objective (i.e. quality control and packaging requirement)."
The ITC also says, "According to WTO agreements, the use of NTMs is allowed under certain circumstances. This includes the technical barriers to trade (TBT) agreement or the sanitary and phyto-sanitary measures (SPS) agreement, both negotiated during the Uruguay Round. These agreements are meant to allow governments to pursue legitimate policy goals even if this can lead to increased trade costs."
The ITC mentions, "NTMs are sometimes used as a means to circumvent free trade rules and favour domestic industries at the expense of foreign competition. In this case, they are called non-tariff barriers (NTBs). It is very difficult, and sometimes impossible, to distinguish legitimate NTMs from protectionist NTMs, especially as the same measure may be used for several reasons."
NTBs are trade-restrictive measures which are virtually included in the NTMs. But some of these measures are compatible with the World Trade Organisation (WTO) rules and regulations on standard and some other areas.
THE STUDY REPORT: The present study uses NTM classification prepared by the United Nation Conference on Trade and Development (UNCTAD) as it is the most recognised classification of NTMs globally.  
The main reason behind the study is clearly described in the introductory section of the book. It says, "In the initial years of the formation of SAARC in the 1980s, the popular hypothesis for the reason behind limited intra-region trade was the prevailing high tariff rate (customs duty) among the member countries. High customs duties have come down substantially over the years since the formation of SAARC due to increased globalisation of trade, establishment of WTO regime, and South Asian Free Trade Agreement (SAFTA). Despite significant reduction in customs duty in the region, the Intra-SAARC trade has been quite static as before, about only 5% of the total trade of this region is with non-SAARC countries. Now the popular hypothesis is that limited intra-region trade is not caused by the high customs duty or tariff, but is the result of the Non-Tariff Measures (NTMs) and the resulting trade barriers, i.e., Non-Tariff Barriers (NTBs)."
In fact, intra-regional trade among the SAARC member-states is very low compared to the Association of South East Asian Nations (ASEAN): 22 per cent of global trade and the European Union (EU) 54 per cent of global trade. One should, however, keep in mind the fact that South Asia is a late starter of regional integration process compared to the ASEAN and the EU.
Nevertheless, intra-regional trade expansion in South Asia is yet to gain momentum due to NTMs as observed by the study.
The authors went through different NTMs of all the eight countries. Maximum NTMs are found in India, Pakistan and Bangladesh. It is not surprising at all as these three countries are three big economies of the region. However,  Indian NTMs are more visible because of the big size of the country.
In fact, exporters of other countries or importers of India regularly face fluctuation of standards and procedural steps while dealing with officials in India. This is mainly due to poor coordination between state-based customs officials and the business community in India. For example, as cited in the study, even after the product-specific Mutual Recognition Agreement (MRA, first-ever in the SAARC) for cement was reached with Pakistan, the conformity assessment procedure was changed soon after the MRA was signed.
The study team made rigorous efforts of consultation with policymakers, concerned government officials, businessmen, experts and journalists in eight countries to understand the dynamics of NTMs. They tried to compile NTMs. As the book mentions, "This study attempts to perform economic analysis of prevailing NTMs for specific products and to find out the impact on regional trade. This study attempts to answer whether the numerous and complex NTMs prevailing in the region have economically significant impact on regional trade, or whether regional trade remains limited due to other important reasons, such as the lack of effective demand for a particular product in other countries in the region due the availability of similar products, or other factors like poor transport infrastructure, unattractive prices, quality issues etc."
Thus the researchers themselves set a very broad ground to decode NTMs across South Asia. Rigorous technical tools of analysis were used to understand the effects of several NTMs.
Most significant outcome of the study is developing a template for monitoring and reporting of NTMs. This template can be used for any country for any particular trading partner and for any product. Thus trade bodies dealing with NTMs for their businessmen will be benefited.
A few shortcomings of the study, however, should be noted. It does not deal with political reasons that sometimes intensify some NTMs in South Asia, especially India and Pakistan. The geo-political tension between these two countries casts its shadow on regional trade expansion. To keep the study confined to economic arena, researchers probably avoided the bilateral contentious issues. The study also did not shed light on possible link between informal trade and NTMs in the region. It may be an interesting topic for future studies.  
Finally, the recommendations set by the study team are not fully new.  For example, it suggested to harmonise TBT/SPS standards and create a forum for regular interactions between the key government officials and trade bodies on NTM issues, particularly the procedural ones. These sorts of suggestions have been on board for long.  
The recommendations for developing a lobby and advocacy agenda for reducing and eliminating NTMs and establishing a benchmark for NTMs to be carried out by NTM-Desks are important. Initial process of setting up the desk in Bangladesh, Nepal and Pakistan has already started.
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