Non-tariff measures serve as legitimate public policy objectives. Using non-tariff measures in the global market is witnessing an increasing trend. The current year's World Trade Report published by the WTO focuses more on non-tariff measures. The WTO Trade Report 2012 clearly indicates the importance of increasing transparency in using non-tariff barriers and measures.

Due to NTMs, an average loss of 30 billion USD is incurred in global trade. The 2012 WTO report confirms the negative impact of NTMs, stating NTMs are less about shielding producers from import competition and more about attaining public policy objectives. The report further reveals that the expansion of the global production chain and growing consumer concerns in developed countries affect the adoption of non-tariff measures, which is an issue for exporters.

India's trade benefits:

A rough estimation states that $3 billion worth of informal trade happens between countries normally. This can be brought into the mainstream by bringing better trade measures. Informal exports from India to Pakistan mainly include textiles, garments, jewelry, and spices, which are being transported through Singapore and Dubai. Tariff liberalization is likely to boost trade activities between India and Pakistan, as the latter is currently importing many products at high prices from many other countries.

Indian Textile Industry Impact:

India's share of global trade is 4%. The Indian textile industry attracts 20% of non-tariff barriers (NTBs) and non-tariff measures (NTMs). Cotton and clothing items have attracted many NTBs. Textile and apparel exporters in India are complying with various barriers such as anti-dumping actions, labeling, custom duties, government regulations, environmental norms, and certifications. India faces around 60 NTBs and NTMs on textile and clothing items, of which approximately 65% are from countries such as Argentina, Mexico, Brazil, Chile, and Colombia.

Studies conducted by the Textiles Committee on the effect of NTBs on Indian trade reveal that cotton and cotton products from India are impacted due to various trade barriers imposed on the country. The 2012 World Trade Report investigates why governments use non-tariff measures such as domestic regulations.

Buyers today are increasingly focusing on measures that are trade-restrictive, but not NTMs. The EU has come up with many regulations such as packing, waste management, REACH, etc. They are further concerned about a number of social and environmental standards. Many brands have set goals to reach zero discharge by 2015 and are working on improving their supply chain processes. Despite being considered too ambitious and feared to escalate operating costs, companies are more concerned with improving their environmental footprint.

Notable brands such as Nike, Puma, Adidas, etc are the major signatories for this aspiration. More brands are joining the band wagon. As more brands are getting environmentally conscious, pollution, and environmental control norms are being met. Now the matter of concern is whether zero discharge can be considered as a NTM. The packaging and waste management norms adopted by EU was making it mandatory for exporters to conform to set standards, and was considered as a NTM. The point of consideration here is that whether or not, it would apply for the Indian Government. Spinners in India often witness wild speculation in prices, thus making the Indian textile, and apparel uncompetitive in the global market.


Currently, Indian textile and apparel are into believing that meeting social and environmental standards are no longer an option. The WTO Report states, "The principal concern is that common rules at the multilateral level will result in a loss of regulatory freedom to pursue non-trade objectives for services. One way to overcome concerns regarding regulatory autonomy would be to focus the discipline on the necessity of the measure used to achieve its stated purpose." Another would be to foster greater awareness of the trade and investment implications of regulatory practices. (Source: World Trade Report, 2012)


Exporters follow their own way of working for meeting compliance standards. Textile and apparel makers are seeing benefits of complying with these voluntary standards. By this, Indian exporters are able to prove in the global markets that, by being a fair supplier or by having a GOTS certification they are able to earn a premium.


Global market is now moving towards a duty free trade. More protectionism will make a country to lose competition in the global market affecting its economic growth in the long run.


Reference:


World Trade Report, 2012, Trade and public policies: A closer look at non-tariff measures in the 21st century, wto.org.