CHAPTER NO.

1 INTRODUCTION

Non-tariff barriers to trade (NTBs) are trade barriers that restrict imports but are not in the usual form of a tariff. Some common examples of NTB's are anti-dumping measures and countervailing duties, which, although they are called "non-tariff" barriers, have the effect of tariffs once they are enacted.

Their use has risen sharply after the WTO rules led to a very significant reduction in tariff use. Some non-tariff trade barriers are expressly permitted in very limited circumstances, when they are deemed necessary to protect health, safety, or sanitation, or to protect depletable natural resources. In other forms, they are criticized as a means to evade free trade rules such as those of the World Trade Organization (WTO), the European Union (EU), or North American Free Trade Agreement (NAFTA) that restrict the use of tariffs.

Some of non-tariff barriers are not directly related to foreign economic regulations, but nevertheless they have a significant impact on foreign-economic activity and foreign trade between countries.

Trade between countries is referred to trade in goods, services and factors of production. Non-tariff barriers to trade include import quotas, special licenses, unreasonable standards for the quality of goods, bureaucratic delays at customs, export restrictions, limiting the activities of state trading, export subsidies, countervailing duties, technical barriers to trade, sanitary and phyto-sanitary measures, rules of origin, etc. Sometimes in this list they include macroeconomic measures affecting trade.

Six Types of Non-Tariff Barriers to Trade Specific Limitations on Trade: Quotas Import Licensing requirements Proportion restrictions of foreign to domestic goods (local content requirements) Minimum import price limits Embargoes

Customs and Administrative Entry Procedures: Valuation systems Anti-dumping practices Tariff classifications Documentation requirements Fees

Standards: Standard disparities Intergovernmental acceptances of testing methods and standards Packaging, labeling, and marking

Government Participation in Trade: Government procurement policies Export subsidies Countervailing duties Domestic assistance programs Charges on imports: Prior import deposit subsidies Administrative fees Special supplementary duties Import credit discrimination Variable levies Border taxes

Others: Voluntary export restraints Orderly marketing agreements

CHAPTER NO.2 TYPES OF NON-TARIFF BARRIERS

There are several different variants of division of non-tariff barriers. Some scholars divide between internal taxes, administrative barriers, health and sanitary regulations and government procurement policies. Others divide non-tariff barriers into more categories such as specific limitations on trade, customs and administrative entry procedures, standards, government participation in trade, charges on import, and other categories. We choose traditional classification of non-tariff barriers, according to which they are divided into 3 principal categories.

The first category includes methods to directly import restrictions for protection of certain sectors of national industries: licensing and allocation of import quotas, antidumping and countervailing duties, import deposits, so-called voluntary export restraints, countervailing duties, the system of minimum import prices, etc. Under second category follow methods that are not directly aimed at restricting foreign trade and more related to the administrative bureaucracy, whose actions, however, restrict trade, for example: customs procedures, technical standards and norms, sanitary and veterinary standards, requirements for labeling and packaging, bottling, etc.

The third category consists of methods that are not directly aimed at restricting the import or promoting the export, but the effects of which often lead to this result. The non-tariff barriers can include wide variety of restrictions to trade. Here are some example of the popular NTBs.

Licenses The most common instruments of direct regulation of imports (and sometimes export) are licenses and quotas. Almost all industrialized countries apply these non-tariff methods. The license system requires that a state (through specially authorized office) issues permits for foreign trade transactions of import and export commodities included in the lists of licensed merchandises. Product licensing can take many forms and procedures. The main types of licenses are general license that permits unrestricted importation or exportation of goods included in the lists for a certain period of time; and one-time license for a certain product importer (exporter) to import (or export). One-time license indicates a quantity of goods, its cost, its country of origin (or destination), and in some cases also customs point through which import (or export) of goods should be carried out..

Quotas Licensing of foreign trade is closely related to quantitative restrictions quotas - on imports and exports of certain goods. A quota is a limitation in value or in physical terms, imposed on import and export of certain goods for a certain period of time. This category includes global quotas in respect to specific countries, seasonal quotas, and so-called "voluntary" export restraints. Quantitative controls on foreign trade transactions carried out through one-time license.

Quantitative restriction on imports and exports is a direct administrative form of government regulation of foreign trade. Licenses and quotas limit the independence of enterprises with a regard to entering foreign markets, narrowing the range of countries, which may be entered into transaction for certain commodities, regulate the number and range of goods permitted for import and export. However, the system of licensing and quota imports and exports, establishing firm control over foreign trade in certain goods, in many cases turns out to be more flexible and effective than economic instruments of foreign trade regulation. This can be explained by the fact, that licensing and quota systems are an important instrument of trade regulation of the vast majority of the world.

Given the firm commitment made by the Member Countries on the programme of tariff reduction under the CEPT Scheme, attention has now shifted to non-tariff barriers. Now Article 5 of the CEPT Agreement calls on Member States to "eliminate other non-tariff barriers on a gradual basis within a period of five years after the enjoyment of concessions". Member Countries are working to develop detained work programmes on eliminating NTBs for endorsement by the ASEAN Economic Ministers Meeting scheduled in September 1995. Currently, the Preparatory work for NTB elimination is being undertaken by the Interim Technical Working Group (ITWG) on CEPT for AFTA, which reports directly to the ASEAN Senior Economic Officials.

Significant progress has already been made in identifying those NTBs that affect intra-regional trade the most. The identification process involved a number of important steps. First, a working definition of NTBs had to be agreed upon. This working definition (see Table 3) adopted by the ITWG was based on a classification developed by the United Nations Conference on Trade and Development (UNCTAD). Second, it was decided to focus on those NTBs that affect the most widely-traded Products in the region. These products are those in chapters 27 (minerals), 84 (electrical appliances) and 85 (machinery) of the Harmonised System classification. In 1994, these products made up nearly 55% of Indonesia's imports; over 64% of Malaysia's imports; over 50% of the Philippines' imports; and nearly 70% of Thailand's imports.

Major NTB's Identified Based on these various information sources, the following measures have been identified as major NTBs affecting intra-regional trade: customs surcharges, technical measures and product characteristic requirements, and monopolistic measures. Table 4 gives us an indication of the most widespread NTBs in ASEAN. Customs surcharges are applied to about 2.683 tariff lines. Technical measures and product characteristic requirements come in second involving more than 975 tariff lines. Finally we have monopolistic measures involving state-trading or the use of a selected or limited group of importers.

CHAPTER NO.3 WORKING DEFINITION OF NON-TARIFF MEASURES FOR PURPOSES OF IMPLEMENTING THE CEPT AGREEMENT

This section presents working definitions for the trade control measures adopted by the Interim Technical Working Group on CEPT for AFTA. These measures are classified under broad categories according to their nature. Within the broad categories, the measures are further subdivided according to their characteristics. Special mention should be made of the measures for sensitive product categories and technical regulations, which are subdivided according to their corresponding objectives, i.e. for the protection of human health, animal health and life, plan health, the environment and wildlife, to control drug abuse, to ensure human safety and to ensure national security.

PARA-TARIFF MEASURES Other measures that increase the cost of imports in a manner similar to tariff measures, i.e. by a fixed percentage or by a fixed amount, calculated respectively on the basis of the value and the quantity, are known as para-tariff measures. Four groups are distinguished: customs surcharges; additional charges; internal taxes and charges levied on imports; and decreed customs valuation.

Customs surcharges/import surcharges The customs surcharge, also called surtax or additional duty, is an ad hoc trade policy instrument to raise fiscal revenue or to protect domestic industry.

Additional charges Additional charges, which are levied on imported goods in addition to customs duties and surcharges and which have no internal equivalent, comprise various taxes and fees. The category of additional charges includes the tax on foreign exchange transactions, stamp tax, airport license fee, consular invoice fee, statistical tax, tax on transport facilities and charges for sensitive product categories. Various other taxes. such as the export promotion fund tax, taxes for the special funds, the municipal tax, registration fee on imported motor vehicles, customs formality tax, etc., are classified as additional charges, n.e.s. It should be noted that Article VIII of GATT states that fees and charges other than customs duties and internal taxes shall be limited in amount to the approximate cost of services rendered and shall not represent an indirect protection to domestic products or a taxation of imports or exports for fiscal purposes.

Decreed customs valuation Customs duties and other charges on selected airports can be levied on the basis of a decreed value of goods (the so called "valeur mercuriale" in French). This practice is presented as a means to avoid fraud or to protect domestic industry. The decreed value de facto transforms an ad valorem duty into a specific duty.

PRICE CONTROL MEASURES Measures intended to control the prices of imported articles for the following reasons (i) to sustain domestic prices of certain products when the import price is inferior to the sustained price; (ii) to establish the domestic price of certain products because of price fluctuation in the domestic market or price instability in the foreign market; and (iii) to counteract the damage caused by the application of unfair practices of foreign trade.

Most of these measures affect the cost of airports in a variable amount calculated on the basis of the existing difference between two prices of the same product. compared for control purposes. The measures initially adopted can be administrative fixing of prices and voluntary restriction of the minimum price level of exports or investigation of prices, to subsequently arrive at one of the following adjustment mechanisms; suspension of airport licenses; application of variable charges, anti-dumping measures or countervailing duties.

Administrative price fixing of import prices By administrative price fixing, the authorities of the importing country take into account the domestic prices of the producer or consumer establish floor and ceiling price limits; or revert to determined international market values. Various terms are used, depending on the country or sector, to denominate the different administrative price fixing methods, such as official prices, minimum import prices or basic import prices.

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Voluntary export price restraint A restraint arrangement in which the exporter agrees to keep the price of his goods above a certain level.

Variable charges Variable charges bring the market prices of imported agricultural and food products close to those of corresponding domestic products, in advance, for a given period of time, and for a pre-established price. These prices, are known as reference prices, threshold prices or trigger prices. Primary commodities may be charged per total weight, while charges on processed foodstuffs can be levied in proportion to the primary product contents in the final product. In the case of the EU, the charges applied to primary products as such are called variable levies and those as part of a processed product, variable components.

FINANCE MEASURES Measures that regulate the access to and cost of foreign exchange for imports and define the terms of payment. They may increase the airport cost in a fashion similar to tariff measures.

Advance payment requirements Advance payment of the value of the import transaction an /or related imported taxes, which is required at the moment of the application for, or the issuance of, the import license.

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Advance import deposits Obligation to deposit a percentage of the value of the import transaction for a given time period in advance of the imports, with no allowance for interest to be accrued on the deposit.

Cash margin requirement Obligation to deposit the total amount corresponding to the transaction value, or a specified part of it, in a commercial bank, before the opening of a letter of credit; payment be required in foreign currency.

Advance payment of customs duties Advance payment of the totally or a part of customs duties, with no allowance for interest to be accrued.

Refundable deposits for sensitive product categories The deposit refunds are charges which are refunded when the used products or its containers are returned to a collection system.

Regulations concerning terms of payment for imports Special regulations regarding the terms of payment of imports and the obtaining and use of credit (foreign or domestic) to finance imports.

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Transfer delays, queuing Minimum permitted delays between the date of delivery of goods and that of final settlement of the import transaction (usually 90, 180 or 360 days for consumer goods and industrial inputs and two to five years for capital goods). Queuing takes place when the prescribed delays cannot be observed because of foreign exchange shortage, and transactions are settled successively after a longer waiting period.

MONOPOLISTIC MEASURES Measures which create a monopolistic situation., by giving exclusive rights to one or a limited group of economic operators. for earlier social, fiscal or economic reasons.

Single channel for imports All imports or imports of selected commodities have to be channeled through stateowned agencies or state-controlled enterprises. Sometimes the private sector may also be granted exclusive import rights.

Compulsory national services Government-sanctioned exclusive rights of national insurance and shipping companies on all or a specified share of imports.

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TECHNICAL MEASURES Measures referring to product characteristics such as quality, safety or dimensions, including the applicable administrative provisions, terminology symbols, testing and test methods, packaging, marking and labeling requirements as they apply to a product. The implementation of these measures by sensitive product categories can result in the application of one of the measures listed under codes ending in 71 to 79.

Technical regulations Regulations that provide technical requirements, either directly or by referring to or incorporating the content of a standard, technical specification or code of practice, in order to protect human life or health or to protect animal life or health (sanitary regulation); to protect plant health (phyto sanitary regulation); to protect the environment and to protect wildlife; to ensure human safety; to ensure national security; to prevent deceptive practices.

The regulation may be supplemented by technical guidance that outlines some means of compliance with the requirements of the regulation, including administrative provisions for customs clearance, such as prior registration of the importer or obligation to present a certificate issued by relevant governmental services in the country of origin of the goods. In certain cases, a prior recognition of the exporter or certificate issuing service by the importing country is also required.

Product characteristics requirements Technical specifications prescribing technical requirements to be fulfilled by a product.

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Marking requirements Measures defining the information for transport and customs, that the packaging of goods should carry (country of origin, weight, special symbols for dangerous substances, etc.) Labeling requirements Measures regulating the kind and size of printing on packages and labels and defining the information that may or should be provided to the consumer. Packaging requirements Measures regulating the mode in which goods must be or cannot be packed, in conformity with the importing country handling equipment or for other reasons, and defining the packaging materials to be used. Testing, inspection and quarantine requirements Compulsory testing of product samples by a designated laboratory in the importing country, inspection of goods by health authorities prior to release from customs or a quarantine requirement in respect of live animals and plants. Pre-shipment inspection Compulsory quality, quantity and price control of goods prior to shipment from the exporting country, affected by an inspecting agency mandated by the authorities of the importing country. Price control is intended to avoid under invoicing and over invoicing, so that customs duties are not evaded or foreign exchange is not being drained.

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Special customs formalities Formalities which are not clearly related to the administration of any measure applied by the given importing country such as the obligation to submit more detailed product information than normally required on the basis of a customs declaration, the requirement to use specific points of entry, etc.

MOST PREVALENT NTBs, BY NUMBER OF TARIFF LINES (Preliminary)

Non-tariff Barrier Customs surcharges Additional Charges Single Channel for Imports State-trading Administration Technical Measures Product Characteristic Requirement Marketing Requirements Technical Regulations

Number of Tariff Line Affected 2,683 126 65 10 568 407 3 3

Modality for Eliminating NTBs Since the measures that act as NTBs tend to vary greatly in their nature, NTBelimination will mean a different thing depending on the measure concerned. In the case of surcharges this might mean something as simple as doing away with these

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surcharges. On the other hand, technical regulations cannot be done away with because there are valid reasons for maintaining them, such as public safety, environmental concern, or health reasons. In which case, the elimination of these measures as NTBs might mean harmonizing product standards or developing mutual recognition of standards across Member Countries. The idea is to limit the tradehampering effects of technical regulations or measures. In the case of monopolistic measures or state monopoly, the process of NTB elimination might mean creating a window for competition and market access by other ASEAN Member Countries.

General Features of the Process for Eliminating NTBs There has already been an agreement on the general features of the process for eliminating NTBs in ASEAN. The process Involves (a) Verification of information on NTBs, (b) prioritization of products/NTBs, (c) Developing specific work programmes, and (d) Obtaining a mandate from the ASEAN Economic Ministers to implement the work programmes.

Member Countries are now in the process of verifying the list of NTBs and products covered by these measures compiled by the ASEAN Secretariat. Several criteria have already been considered by the Interim Technical Working Group on CEPT for AFTA (ITWG) to identify which products/measures have to be dealt with first. These criteria

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can be used singly or in combination with each other to set priorities. These criteria are in order of importance:

(a) Number of private sector complaints, (b) Difference between domestic and world prices, and (c) Trade value.

The first criterion would rely on the private sector's or exporters' complaints. Presumably, they are in a better position to tell how different measures existing in the country of destination acts as a trade barrier. The second criterion is the price divergence between domestic and world prices. The price wedge gives an indication of how much trade is hindered since if there are no trade barriers presumably importation would tend to wipe out this price difference. The difficulty with this criterion is that it is difficult to find the price data to make this sort of comparison. Finally, the trade value criterion would priorities those NTBs/products which is traded most widely (both within and outside the region).

The advantage of this criterion is that the ASEAN Secretariat already has this information. The disadvantage of this criterion is that it does not tell us whether the NTB present in the sector hampers trade or not. The fact that there is extensive trade in this product may indicate that the NTB is not an important hindrance to trade. As pointed out above, these criteria are not mutually exclusive. They can be used jointly, and in fact, where all three criteria converge, they should give a robust indicator of the degree to which NTBs exist in that product or sector.

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Other ASEAN-wide Activities bearing on NTBs Although, the work on NTB elimination is now currently centered in the Interim Technical Working Group on CEPT for AFTA (ITWG), it is recognized that expertise from different ASEAN bodies will have to be tapped for carrying out this work eventually. One of these bodies is the ASEAN Consultative Committee for Standards and Quality (ACCSQ) which has already set up a Task Force to deal with NTB elimination. Under the Senior Officials of the ASEAN Ministers of Agriculture and Forestry (SOM AMAF) is a Working Group on SPS measures which have come up with action plans on NTB elimination in the areas of crops, livestock and fisheries. The action plans involve compiling information on technical measures in ASEAN countries covering agricultural products, and looking into how greater transparency, mutual recognition and harmonization of SPS standards can further liberalize intraASEAN trade in agricultural products.

Decision of the Seventh AFTA Council The Seventh AFTA Council has tasked these Working Groups to finalize their Action Plans by November 1995 providing a detailed timetable of all their activities.

CHAPTER NO.4 BEWARE OF NON-TARIFF BARRIERS IN GLOBAL MARKETS

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The traditional and non-traditional media love to talk about the love-hate relationship between China and the United States of America. Viewed from the eyes of the global automobile industry, China looks like a picture of paradise. Production, sales and profits are rising, and the forecast is that China will continue to demonstrate strong growth in the years to come. However, as sales explode new draft regulations by the Peoples Republic of China are already making the multinational automakers lose their sleep.

A new government policy paper for this industry in China includes plans to restrict the number of ports where foreign-made cars can be imported. Multinational car makers fear that the clause demanding separate sales outlets for imported and Chinese-made cars will make it much more expensive to introduce new brands. As the locals build their distribution networks for China-made cars, foreign companies had hoped that they would also be the backbone for distributing imports. These hopes are beginning to shatter.

This article is not about the automobile industry nor is it about China; it is about nontariff barriers (NTB) in the world markets. In this article I will identify some of the NTBs that are likely to exist in most countries, even though the nature and extent of such barriers varies from country to country. Some barriers are easy to deal with while others may prove to be insurmountable.

Regulatory Roadblocks

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To achieve their respective fiscal and monetary objectives, governments often provide trade consultations and administrative guidance to business. In some countries the government provides guidance, coordination and arbitration acting, in effect, as a caretaker, coordinator and leader for businesses. Tactics used by governments to achieve their national goals include licensing, foreign exchange allocations, quotas, local content requirements, minimum import price limitations and embargos. The protection of local industry is facilitated through government procurement policies, export subsidies, countervailing duties and domestic assistance programs.

Many countries use import licensing schemes to implement a wide variety of regulations relating to national security, protection of health, safety, the environment, morality, religion, intellectual property and compliance with international obligations. The most common justification given for this practice is to enable the country to speed up the development of new industries by the use of protective measures at early stages of development.

For example, Sanitary and Phyto-Sanitary measures are one form of the non-tariff international trade barrier that has been developed to protect the consumer against unsafe products and deceptive marketing practices. Product related requirements include, but are not limited to, detailed labeling requirements with extensive product content description. Such labeling requirements become a hindrance especially when the product is being exported to different countries each with dissimilar regulations.

STRATEGIC AND OPERATIONAL ROADBLOCKS

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Lack of access to the latest manufacturing technologies, territorial restrictions to trade, collusion among competing firms, and close ties between transacting partners often conspire to restrict the timely availability of component parts and raw material blocking access to efficient distribution channels. Access to a countrys distribution or commercial infrastructure is, at times, impossible because of the close ties between local manufacturers, wholesalers and retailers.

Customs and Market Entry Practices Every nation has its customs and entry procedures. In many countries existing border procedures are unnecessarily cumbersome. Voluminous and complicated document requirements and excessive delays in customs clearance due to human and technical factors serve as non-tariff barriers. For many companies, requirements to provide the same documentation to numerous agencies in one country significantly contribute to the costs.

Technical Barriers Technical barriers to trade (TBT) refer to technical regulations and voluntary standards that set out specific characteristics of a product, such as its size, shape, design, functions and performance, or the way a product is labelled or packaged before it enters the marketplace. Included in this set of measures are also the technical procedures that confirm that products fulfill the requirements laid down in regulations and standards.

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Product specifications are often written in such detail that a fair chance of winning a contract might mandate extensive product modification. The product testing process might take several months to several years. Such tactics become market entry barriers especially when they are not required of domestic firms.

Competitive Barriers Competition among several differentiated brands is a natural barrier in the market since it allows a strong brand name company to charge a premium price and capture a large share of a profitable market segment. If competition from a well known global or local brand is intense, novice international marketers with quality products need to make a heavy investment in marketing communication and brand building.

Financial Infrastructure Barriers Many countries require prior import deposits or charge prohibitive administrative fees and higher taxes for foreign companies. Multiple exchange rates are also used to encourage trading on some product categories while discouraging import or export of others. Many governments around the globe have developed opaque financial systems where it is hard to know where the state ends and the corporation begins.

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Physical Infrastructure Barriers Local administrative bodies and physical infrastructure built to protect local interests pose difficulties for road transportation, private and commercial trucking, and interprovincial or interstate purchasing and distribution. Conditions of roads, harbors, airports and telecommunication limit the market potential and results in market barriers. For example, road construction in Thailand has not kept up with traffic growth. In this country, as well as many of its neighboring countries, cars and trucks must compete with bicycles and motorcycles for space in the movement of people and products.

Socio-Cultural and Ethical Norms and Practices International marketers must be aware of the socio-cultural practices since it adds to the cost of doing business while challenging the ethical values and legal responsibility of the exporter. Smuggling, counterfeiting and bribery are more prevalent in some countries and regions than others. These practices create barriers to market access. You may refer to my article on counterfeit goods for its impact on marketers of genuine products. Bribes take many forms ranging from money, to favors, to trips to other countries.

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CHAPTER NO. 5 EXAMPLES OF NON-TARIFF BARRIERS FROM ACROSS THE GLOBE

The office of the Unites States Trade Representatives (USTR) publishes the national Trade Estimate Report on global foreign trade barriers (FTB) every year. Most countries around the world, including the United Stated and Europe, have multiple non-tariff barriers according to the USTR report on FTB. Examples provided below are but a sampling of non-tariff barriers:

Angola Angola is officially open to foreign investment, but its regulatory and legal infrastructure is inadequate to facilitate direct investment and provide sufficient protection

Argentina Since 2002 Argentina has prohibited the import of beef and beef products from the United States due to concerns about what is commonly referred to as Mad Cow Disease. Argentina also banned the import of chicken products from the United States.

Australia The government of Australia maintains restrictions and prohibitions on some agricultural imports through quarantine and health restrictions. These include restriction on chicken, pork, California table grapes, Florida citrus, stone fruit, apples and corn.

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Canada Canada prohibits import of fresh or processed foods and vegetables in packages exceeding certain standard package sizes unless the Government of Canada grants a ministerial easement or exemption.

China China's current banking, finance, insurance and taxation structures are bureaucratic and cumbersome. The goal of any supply chain or logistics manager is to create a seamless flow of product going one way and payment going the other way. Regional fragmentation of finance regulation, tax laws and other institutions has the same effect on the payment side of the supply chain as regional protectionism has on the transport and distribution side. For instance, a company with joint ventures in several locations supplied by one supplier may have to make a separate payment from each venture to the supplier.

Egypt Egypt continues to block imports of U.S. turkey and chicken parts based on reported concerns that the U.S. industry cannot verify it meets Egyptian Halal requirements.

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European Union (EU) The EU has adopted a series of directives that establish essential requirements for a whole variety of equipment including telecommunications equipment. Equipment must be labeled with the CE mark to indicate that it has complied with all relevant directives. Other countries including U.S. and Japan have their own standards for telecommunications and equipment. The purpose of such regulations include electrical safety, electromagnetic compatibility, user safety and quality of communications.

Japan Access to Japans value chain network creates market barriers since there are tight corporate and cultural ties among original Equipment manufacturers (OEM), wholesaler and retailers. Keiretsu are large groups of Japanese companies linked together often through one main affiliated bank.

Malaysia Malaysias import-licensing system, according to critics, inflates the price of imported vehicles and benefits a few privileged license holders. Under the system, licensees are granted so-called Approved Permits (AP), which every car manufactured or assembled outside the country must secure before it can be imported and sold locally. The Ministry of International Trade and Industry issues APs to companies controlled by ethnic Malay investors and endorsed by the ministry as qualified importers. No open bidding is involved in the process, and the APs are awarded at no cost to the recipient. Similar systems also prevail in other industries.

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Thailand In Thailand, farmers complain they can't compete with the low-cost Chinese onions and garlic flooding into the country. And Thai exporters grumble that China uses nontariff barriers such as long delays in customs clearance to keep out perishable Thai tropical fruit such as mangoes and papayas, which rot before they reach their destination due to delays in customs clearance.

United States Industrial alcohol made in Canada and shipped to the U.S. must be tested at a U.S. facility before it can be sold because the U.S. doesn't recognize Canadian test standards for the product. Without the testing, the exporter would pay an excise tax.

Regulatory Recourse

The World Trade Organization (WTO) Agreement on non-tariff barriers to trade contains rules specifically aimed at preventing these measures from becoming unnecessary barriers. But making a rule is not sufficient to eliminate non-tariff barriers. In the past decades opening markets was relatively simple. Measuring the tariffs and judging whether or not they were too high allowed negotiating international agreements to reduce them if they were deemed too high. The General Agreement on Trade and Tariffs (GATT), predecessor to WTO, was quite successful at lowering the tariffs on manufactured goods. In the new world order and global market environment, no independent multinational trade organization including WTO is set up to deal with this new form of protectionism we refer to as non-tariff barriers.

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CHAPTER NO.6 PRACTICAL RECOMMENDATIONS FOR GLOBAL MARKETERS

Develop a thorough understanding of the nature and intensity of non-tariff barriers to determine how you can best leverage the market opportunity by knocking down some of the roadblocks. Form strategic alliances with local businesses to gain access to the distribution channels. Explore the possibility of forming alliances with the governments in countries where government actively participates in business.

Reexamine the value chain and determine if some of the integrated activities in your value chain must be broken down and outsourced to the local businesses. Price your products strategically and base the same on customers ability and willingness to pay. Help develop the legal and physical infrastructure; become a change agent by acting as a good corporate citizen in every society in which you do business.

Final Words It is important to strategically develop a continuous environment monitoring the process to assess market opportunities around the world. This process must include assessment of social, economic, ecological, technological and political; legal and regulatory (STEEP) factors. This monitoring process must include a detailed analysis of the non-tariff barriers discussed in this article.

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PROTECTIONISM IN THE LESS-DEVELOPED COUNTRIES

Much of the industrialization that took place in the late 20th century in some lessdeveloped countries was characterized by the expansion of import-competing industries protected by high tariff walls. In many of those countries, tariffs and various quantitative restrictions on manufactured goods were high, but the effective rates of protection were often even higher, because the goods tended to be highly fabricated and the proportion of value added in production after importation was low. While countries such as Taiwan, Hong Kong, and South Korea oriented their manufacturing industries mainly toward export trade, they tended to be exceptional cases. More commonly, developing nations have mistakenly sought to compete with foreign-made goods for the domestic market. High protection in these countries has often contributed to a slowdown in production, while the export of primary commodities has discouraged expansion of exports of the more valuable manufactured goods. Although domestic production of nondurable consumer goods fosters rapid economic growth at an early stage, less-developed countries have encountered considerable difficulties in producing more-sophisticated, value-added commodities. They suffer all the disadvantages of small domestic markets, in addition to a lack of incentives for technological improvement.

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CONCLUSION

Non-tariff barriers have effects similar to those of tariffs: they increase domestic prices and impede trade to protect selected producers at the expense of domestic consumers. As shown in the case studies of sugar and automobiles, they also have other effects, generally adverse.

Despite the adverse national consequences, the use of non-tariff barriers has increased sharply in recent years. The chances for a reversal of this trend appear to be small. The variety of non-tariff measures, the difficulties of identifying and measuring their effects and the benefits received by specific groups combine to make a significant reduction of non-tariff barriers in the ongoing Uruguay Round negotiations unlikely.

The original mission of GAn, which has been largely achieved, was to reduce tariffs. The question, however, of why policymakers have preferred to use non-tariff barriers rather than tariffs in recent years remains. The more certain protective effects of nontariff bat-riders is one plausible explanation. A second explanation, which focuses on the distribution of the benefits, is that the benefits of non-tariff barriers can be captured by foreign producers and domestic politicians. Such an allocation of benefits increases the probability that the political process generates larger amounts of nontariff barriers relative to tariffs. A final explanation is that their adverse effects are generally less obvious to consumers than the effects of tariffs.

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BIBLIOGRAPHY

Mehta, Rajesh (2006), Non Trade Barriers Affecting Indias Exports Dhar, Biswajit and Kallummal, Murali (2007), Non Trade Barriers in Doha RoundIs a Solution In Sight?

WEBBLIOGRAPHY www.google.com www.wikipedia.com www.investopedia.com

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