Identifying trade barriers is not an easy task. The much-talked-about Non-Tariff Measures (NTMs) on bilateral trade between Bangladesh and India needs to be reviewed in this context. As NTM is a broader concept and as there are some elements compatible with the rules of the World Trade Organisation (WTO), classification of NTMs will be more helpful to detecting the nature of the barriers.
Classification of NTMs, as prepared by the United Nations Commission for Trade and Development (UNCTAD), shows that there are two major categories of NTMs applicable to imports. One is technical and the other is non-technical. The technical category has three components: Sanitary and Phyto-Sanitary Measures (SPS), Technical Barriers to Trade (TBT) and Pre-Shipment Inspection and other requirements. The non-technical category has several components including rules of origin, subsidies, intellectual property etc. Thus, decoding NTMs requires better understanding of their technical and non-technical aspects.
In recent times, debate and discussions regarding NTMs as well as Non-Tariff Barriers (NTBs) have become more precise. Research organisations and trade bodies in both Bangladesh and India are focusing on classification of NTMs. The idea is to clearly identify the type of the NTM and whether it is compatible with multilateral rules. In this connection, focusing on TBT is a good exercise.
UNDERSTANDING TBT: The WTO agreement on TBT is defined and guided by multilateral trade rules. According to this definition, technical barriers (TB) can be technical regulations, standards or conformity assessment procedures. Thus it has basically three components. Technical regulation is known as a document depicting product characteristics or related processes and production methods, along with the applicable administrative provisions, with which compliance is mandatory. It may also include symbols, packaging, marking or labelling requirements applicable for any product, process or production method.
Standard is a document which provides rules, guidelines or characteristics of any product and production methods. The document has to be approved by a recognised body. Compliance is not mandatory for this, unless otherwise notified.
The third component, conformity assessment procedure, is a procedure to find out whether relevant requirements in technical regulations or standards are fulfilled or not.
The components of TBT include labelling of composition or quality of food, drink and drugs; quality requirements for fresh food; volume, shape and appearance of packaging; testing of vehicles and accessories; regulations for ships and ship equipment; safety regulations for toys and others.
The agreement on TBT actually attempts to ensure that regulations, standards, testing and certification procedures do not create obstacles to trade.
A note of caution needs to be mentioned here. There is a scope of overlapping TBT and SPS as health-related trade restrictions are addressed by both and two agreements are similar in a number of ways. The tricky parts of both the agreements lie on the scope of application, use of international standards, and reasons for application and maintenance of the measures. As per WTO rule, SPS measures are applicable 'to protect human, animal or plant life or health, based on scientific principles and not maintained without sufficient scientific evidence' while TBT measures are for other reasons, including national security or to prevent deceptive practices.
For example, a country may have a set of specific food safety regulations like health warning on the use for different food products. These regulations have to be applied while importing any food or agro product into the country. These are known as SPS. On the other hand, regulations applicable for labelling in the package, lettering on the label, description of nutrition content, disclosure of quality are known as TBT.
IDENTIFYING THE PROBLEMS: Due to complexity in nature, it is some times difficult for exporters and importers to understand TBT. That is why, Bangladeshi exporters to India usually raise their concerns on a lot of NTBs, not on TBT per se. In fact, using TBT as NTB is a broad-based practice across the world and often the measures or their administration and application are not transparent. This leads to the problem of non-compliance with the WTO obligations. Moreover, TBT measures deviate from international standards for several reasons and make the issue more complex. Nevertheless, leading exporters and importers of both the countries are now gradually becoming equipped to handle TBT.
Last year, a leading Bangladeshi industry group pointed out that the Legal Metrology (Packaged Commodities) Rules, 2011 in India has been imposed on imported goods only and Indian local industries are not following the rules in their own country. This practice goes against the non-discrimination principle of the WTO as TBT agreement discourages any method that would give domestically produced goods an unfair advantage.
On the other hand, Indian rice exporters say that they export rice all over the world in Standard Polypropylene bag, but now in Bangladesh, they have to export rice in jute sacks. This is because of the Mandatory Jute Packaging Act, 2010 in Bangladesh, and hence the measure taken by Bangladesh is not a discriminatory one as local suppliers of rice have also to follow the obligation to use jute bags. Thus it doesn't go against WTO principle although it may look like a technical barrier for Indian exporters.
So, identifying the TBT correctly is very important. In a recent study, Consumer Unity and Trusts Society (CUTS), India's Jaipur-based international research organisation, has focused on TBT issues in Bangladesh-India bilateral trade. The study says: "The products which fall under the realm of TBT are often of high importance for both the economies and which contribute in promoting and facilitating trade in various sectors, such as agriculture which is of crucial importance from the point of food security. For instance, Bangladesh imposes restrictions on products such as packaged food, household and consumer goods imported from India while India imposes technical restrictions on products such as machinery, equipment and chemicals for industrial use, processed food items and household and consumer goods."
CUTS study also identifies that interpretation of TBTs by border trade officials is a big problem. Different interpretations across the borders create difficulties for both the exporters and the importers.
AWARNESS BUILDING: Global trade regime is opening up more quickly than ever. At the same time, application of technical regulations and rules of standards are intensifying in order to ensure quality and protect consumer interest. These sometimes lead to barriers and restrictions on movement of goods across the borders.
Against this backdrop, better awareness on TBT measures among producers, traders and officials in both the countries is important. However, it has been found that trade protectionism under the guise of TBT in India is rather widespread, especially in dealing with Bangladeshi products. India has better capacity in applying TBT. According to WTO statistics, between 1996 and 2013, India has made 93 notifications under relevant articles of the TBT agreement. Bangladesh, on the other hand, has not made any notification so far.
TBT measures as a resort to protecting domestic industries will continue in upcoming days and countering such measures will also become more and more important in international trade. Bangladesh cannot avoid this. The good news is that United Nations Department of Economic and Social Affairs (UNDESA) is developing an online alert system to improve communication and information sharing between public and private sector stakeholders in the Least Developed Countries (LDCs) on changes in TBT and SPS regulations. Bangladesh will be benefited by this. Moreover, there is a provision in the TBT agreement on time-limited exemptions from different obligations for the LDCs. The Doha declaration also provides for the LDCs to have technical assistance in preparation and application of TBT measures.
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