Ans. As
mentioned earlier tariff is not the only instrument to restrict trade and give
protection to the domestic import competing industry. The non-tariff
instruments are numerous. Recently, United States of America has decided to ban
import of carpets from India on the ground that child labour is used in the
Indian carpet industry to which the human rights activists have serious
objections. In the past on many occasions consignments have been returned by
USA on the ground that the goods pose health hazard to the citizens of the country.
Thus, human rights, damage to environment, health considerations, injury to
domestic industries etc, are the excuses offered by the importing country to
restrict or prohibit imports. Such restrictions are called non-tariff barriers.
Various
non-tariff barriers are imposed by the government to discriminate against
imports or in favour of exports. Let us discuss briefly major kinds of
non-tariff barriers and their implications for international trade.
Customs classification and
valuation :
The duty imposed on a particular import good depends on how it is classified in
the tariff schedule and how it is valued by the customs authorities. This
ambiguity provides customs authorities opportunity for arbitrary classification
and determining value of imported goods. Customs authorities usually charge
higher duties which may act as a deterrent to trade.
Subsidies: Subsidies are provided by
the government to domestic producers or exporters to . stimulate the expansion
of such industries. For example tax exemptions, cash disbursements,
preferential exchange rates, government contracts with special privileges or
some other favourable treatment. Subsidies help companies to be cost
competitive. Government provides various types of export assistance to
exporters to make the export business more profitable and attractive.
Local content and Foreign
investment performance requirement:
Local content regulations are imposed on certain industries to promote import
substitution and encourage the domestic producers, According to these
regulations certain percentage of inputs used in the manufacture of goods are
required to be procured from the domestic suppliers. In the same - way, foreign
investors are required to export a certain proportion of its output from the
domestic country under the foreign investment performance requirement.
Technical Standards and
health Regulations :
Many regulations are imposed on imports with respect to safety, health,
marking, labeling, packaging and technical standards, quality standards and
natural environment. Such regulations pose hardships and create barriers on
foreign produced goods. .As a result, some products may freely enter in one country
and may be banned in another country. For example Japanese government requires
that some import goods be tested in Japan even when they have already been
tested in the domestic country. USA prohibits imports of many types of
agricultural products on these grounds.
Government procurement : According to this policy,
government purchases give preference to domestically produced goods. For example,
buy American regulations of USA government provide US producers Price advantage
on Defence department contracts.
Restrictions on Services: Noh-tariff barriers are
imposed to curtail trade in services. For example restrictions are imposed on
transportation, banking, insurance, advertising, accounting, law, engineering,
construction, franchising, tourism, education, health, business services, etc.
on various grounds.
Besides
above restrictions, there may be voluntarily export restraint, anti-dumping
restrictions, specific permission requirements, administrative delays and
procedures, etc.
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