Technical Barriers to Trade (TBT) measures are one type of Non-Tariff Measures (NTM), that primarily aim at creating regulations, standards and compliance procedures relating to production methods, inputs usage, packing, labelling, testing processes, certification requirements, etc. However, NTMs can turn into Non-Tariff Barriers (NTB) when such measures are not aligned with international practices and standards or create obstacles to international trade or both.
In most cases, TBT measures are harmless. However, there are notifications or measures, which do create obstacles for exporters from other countries. There are also cases when the TBT measure issued by a country is unclear or lacks relevant information and guidelines for stakeholders to understand and follow the same. Hence, in such cases, concerns are raised by other countries, firstly at bilateral/informal level to resolve the issues. Where such issues remain unresolved, affected countries may then resort to Specific Trade Concerns (STCs), taking the issue before WTO TBT Committee. In most cases, the issues are resolved in the forum. In rare cases, where the issue is still not resolved, the parties may approach the Dispute Settlement Body for resolution.
But how effective were TBT measures in India’s context?
To examine the effectiveness of TBT measures, I looked at WTO statistics, which gave some interesting insights on usage of TBT measures.
Since 1995, a total of 84,568 TBT notifications have been issued by 160 countries. Of these, the United States led the pack with an astounding 10017 notifications, followed by Brazil (6257), Canada (4080), EU (3775), Uganda (3752) and China (3411). India is 31st on the list with 704 notifications. Issuance of TBT notifications has increased consistently over the past decade.
*2023 figure extrapolated for entire year
What do the numbers say?
Most of the TBT notifications were harmless in the sense that they did not create obstacles to international trade. Only a fraction of notifications (measures) escalated into Specific Trade Concerns raised during TBT Committee meetings.
Interestingly, recent trends indicate that a lot of the TBT measures are increasingly finding their way into formal WTO TBT Committee meetings.
The trend is similar across shorter periods as well:
Between 1995 and 2023, India issued only 704 TBT notifications or 7% of what US (10017 notifications) issued during the same time.
India faced third highest (64) Specific Trade Concerns (STC), after EU (176) and China (86) in last 28 years. However, compared to India, EU issued 3775 notifications and China issued 3411 notifications. Surprisingly, despite issuing more than 10000 TBT notifications, the US faced only 69 during the same period.
Out of the 64 STCs faced by India, US raised 33 STCs, EU raised 32 STCs, Canada 13 STCs and China raise 11 STCs against India. Important to remember that multiple countries can raise STC against a single measure.
US (325 in 28 years, 71 in last 3 years) and EU (321 in 28 years, 62 in last 3 years) have historically raised the highest STCs. India, on the other hand, has only raised 36 STCs in last 28 years with 20 coming in last 3 years. 20 out of 36 STCs were raised against the EU.
While most major users of TBT system have raised more STCs than responding to them, India was found to be responding more to STCs than raising them.
What could be the reasons for India’s position with respect to TBT measures?
While it may be difficult to ascertain the exact reasons based on the numbers alone, however, several factors may be contributing to this issue:
Low TBT notifications issued by India
Issuing a TBT notification is not an easy affair. TBT measures are meant to improve the product processes (like production methods, inputs usage, quality assessment, testing) and/or assessment procedures (like packing, labelling, etc, certifications, etc). The measures are also required to be in line with accepted international standards/practices, backed by technical literature as well as ensure that they are not hindering international trade. Numbers indicate that over the years, India has taken steps to develop more and more regulations and standards to improve the competitiveness of the product but given that there are thousands of products and allied products, there remains a lot to be done by India. Add to the fact that the technology is changing rapidly and hence, there remains a constant need to update the existing standards to remain competitive in the world market.
TBT measure development involves various stages and requires constant interaction with the industry. It is for the industries to keep abreast with the latest developments and keep interacting with the government to make better use of TBT mechanism instead of waiting for the government to step in.
Despite being the biggest market for almost all consumer and industrial goods, Indian industry (barring few big sectors and players) is still unaware of global standards and regulations and are content with meeting the basic minimum requirements. In contrast, the export market continues to update its standards with the latest technology and developments, which the Indian industry is unable to meet. This then becomes a barrier for the Indian exporters.
Low STCs raised by India may be on account of –
Lack of awareness at grassroots level amongst industries in respect of measures taken by other countries as well as changes at international level creates a gap between Indian standards and international standards. While regular exporters may be aware of the existing international regulations and standards, the problem arises in respect of potential exporters, who may explore a particular market in the future. When other countries update their regulations, the Indian industry may be unaware of the changes and will not be able to raise concerns.
It is also likely that most of the issues that may affect Indian exporters are resolved at the preliminary stages during informal meetings and consultations with concerned countries. Issues may also be resolved during bilateral discussions between countries.
Cases, where India and the concerned countries have entered into a mutual recognition agreement, whereby both set of parties have agreed to accept each others' conformity assessments, like certifications and test results. This greatly reduces disputes with other countries and improves trade.
India may not perceive other countries' TBT notifications as being barriers to exports, which in my opinion, is unlikely.
High rate of STCs raised against India may be on account of –
India’s TBT notifications are perceived as non-tariff barriers adversely impacting trade
Notifications lack clarity or require additional details and documents. In many cases, the issue is simply a lack of related documents associated with the regulation or clarifications in respect of certain provisions or prescribed conditions.
Proactiveness of other countries in identifying issues in the notification that may affect their industries.
What can be done?
Over the last few years, the pace of issuing regulatory measures as well as responding to STCs by India has picked up. This signals the fact that India is striving to promote efficiency by aligning its practices with international standards and practices. However, given that India is fast becoming the biggest market for almost every product, regulatory and compliance procedures for all such goods must also quickly pick up pace. For that to happen, the government and industries must actively collaborate to create regulations and mechanisms. It must also be ensured that such regulations are clear and easy to understand, backed by technical literature, aligned with international standards/practices, and are not designed to create obstacles to international trade. Otherwise, it is likely that India will continue to respond to more and more STCs raised by other countries.
As regards low STCs raised by India, I feel that STCs are better avoided. However, the low STC count is an indication that India does not take up restrictive TBT notifications/measures with other countries too often. One plausible reason for that is that the government does not receive technical feedback from industries on time. In turn, industries may argue that they were not aware of the notifications issued by other countries. Thus, there is a gap here which needs to be fixed.
In my working experience in dealing with TBT issues and interacting with stakeholders, a lot needs to be done to make the industry more aware about the TBT and other non-tariff barriers that other countries impose. Currently, data and information dissemination process are haphazard and inefficient. For example, information about new TBT notifications issued by other countries is hosted on few government portals. Though many export promotion councils are taking efforts to host information on their websites, the feedback from their members do not reach the concerned departments on time.
It is important to remember that the mechanism prescribed under the TBT Agreement allows stakeholders to participate during the preparation of a TBT measure by another country. Transparency provisions require members to notify other members at every important life-cycle stage of a
TBT measure development and allow other members to offer their comments and raise substantive issues.
One way to resolve the lack of information aspect is the WTO ePing website, which makes checking and getting updates very convenient. The website is updated in real-time and sends daily updates for free. All that is required is a free registration process.
Secondly, it is essential that concerned Government departments, export promotion councils and industry bodies must regularly hold capacity building sessions and raise awareness about the relevance of NTBs.
Another possible solution is for the government to engage with counterparts to iron out issues faced by exporters at bilateral level instead of taking it to the WTO TBT Committee. However, for that to happen, the industry must proactively identify issues and notify the government in a time bound manner, rather than wait until the implementation of the measure.
I am sure that there’s a lot more that can be added to the above for India to better utilize TBT as a tool to promote growth.
Looking forward to your comments.
Here's some more slides on interesting statistics and summary of the above.