Standards across the globe have a potential to impact world trade. This is especially true for exports from developing and least developed countries where companies remain unaware of new rules and regulations applicable to products meant to ensure the safety of people and the environment.
These standards, which sometimes turn into non-tariff barriers to trade that are justified on the basis of health or safety standards, can also be used to act as barriers to trade and are put in place for protectionist purposes. Non-tariff measures (NTMs) in the recent past have also turned into protectionist tools. The Indian government has remained vigilant about the rising number of non-tariff measures in the form of standards and has put some process in place to track and respond to them.
However, it is an important player like industry that needs to take up the work of identifying any protectionist measures. It is also important to note that not all new regulations and standards are barriers and they need to be followed, and industry needs to be vigilant about these new norms that need to be followed.
Surveys on the impact of NTMs, like those conducted by the International Trade Centre, Geneva, have repeatedly shown that, even without protectionist intent, NTMs can raise trade costs, divert managerial attention, and penalise small exporters and those located in low-income countries where access to legal and regulatory information is difficult. Countries imposing NTMs may end up hurting their own competitiveness by making it difficult for domestic producers and exporters to access critical inputs in a timely fashion.
Analysis of data collected by a UNCTAD project on NTMs pointed to the prevalence of technical regulations and standards (technical barriers to trade, or TBT, and sanitary and phyto sanitary, or SPS, measures). TBT affects about 30 per cent of products and trade values, and SPS affect slightly less than 15 per cent of trade.
To compete and succeed in today's dynamic trading environment, an exporter must ensure that his products and services meet rigorous quality requirements (performance, perceived quality, conformity, reliability and durability) demanded by the customer in the global supply chain. While these requirements are much the same for all suppliers and create a level playing field, evidence suggests that some suppliers find high standards and proof of compliance difficult to meet.
Therefore, exporters require information regarding voluntary, market-related, mandatory or statutory requirements, capacity building and advisory services to meet and exceed these requirements economically and consistently and evidence of compliance with requirements acceptable to buyers and regulators. This is where the role of agencies set up by the government to promote exports comes to the fore.
One of the biggest challenges for countries, especially in the developing world, is to harmonise their standards with global standards. This requires a good level of technical expertise. In India, the Bureau of Indian Standards and the Food Safety and Standards Authority of India are tasked with developing new standards, as also ensuring they are in conformity with global standards as far as possible.
With these regulations and standards replacing tariffs in countries across the globe to ensure a level playing field, it will be important to involve industry in standard-setting platforms as also in the response mechanism.
Industry will need to get a lot more vocal about its needs to meet global standards to ensure that it does not fall short of conforming to standards in markets of interest for exports. There is a need for industry to set up an institutional mechanism to deal with this growing issue of tracking and responding to new regulations and standards. While some large firms have a mechanism, medium and small companies will need to look at institutional mechanism in industry associations to help address this issue.
The writer is Principal Adviser at APJ-SLG Law Offices
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
