Trade Barriers

By-Ankit Gothi(107)

Manan Jain(124)

Parin Maru(136)

PGDM-B

WTO AgreementsAgreement on Technical Barriers to Trade (TBT)

◦ relates to trade restrictive effect arising from the application of technical regulations or standards such as testing requirements, labelling requirements, packaging requirements, marketing standards, certification requirements

Agreement on Sanitary and Phytosanitary Measures (SPS) ◦ Agreement covers all measures which aim to

protect (i) human or animal health from food-borne risks arising from additives, contaminants, toxins or disease causing organisms in their food; (ii) human health from animal- or plant-borne diseases; and (iii) animals and plants from pests, diseases or disease-causing organisms.

Trade Barriers: JapanHigh Tariffs on Imports Beef, Citrus, Dairy, Processed Food Products & RiceThese high tariffs generally apply to food products where Japan has domestic production to restrict imports.

Wheat Import SystemWheat is imported through MAFF's Food Department, which then resells the wheat to Japanese flour millers at prices substantially above import prices.

These high prices discourage wheat consumption by increasing the cost of wheat based foods in Japan.

Wood Products and Building MaterialsJapan continues to restrict imports of certain manufactured wood products through tariff escalation (i.e. progressively higher tariffs based on the level of processing of the wood product).

Trade Barriers: JapanTransparency Transparency issues remain a top concern of companies operating in Japan‘s market

Health IT Cloud Computing IT and Electronic Commerce Policymaking

Insufficient transparency in Japan‘s policymaking process for all above has stifled innovation and competitiveness in Japan and constrained company access.

Legal Services Japan imposes restrictions on the ability of foreign lawyers to provide international legal services in Japan in an efficient manner.

Trade Barriers: JapanInvestment BarriersDespite being the world's third largest economy, Japan continues to have the lowest inward foreign direct investment (FDI) as a proportion of total output.Reasons include:

Attitudes toward outside investors; Inadequate corporate governance mechanisms and a relative lack of

financial transparency and disclosure.

Automobiles and Automobile Parts A variety of nontariff barriers have traditionally impeded access to Japan‘s automobile and automotive parts market.

For example, U.S. automakers seeking to introduce, for testing and demonstration purposes, automobiles using new technology (i.e., fuel cell vehicles) have faced a lack of transparency and other barriers to certifying these new products in a timely and efficient manner.

Trade Barriers: ChinaTariffs and Other Import Charges China still maintains high duties on some products that compete with sensitive domestic industries. For example, • The tariff on large motorcycles is 30 percent• Raisin imports face duties of 35 percent

China reserves a portion of the in-quota imports for state trading enterprises, while it makes the remaining portion (ranging from 10 percent to 90 percent, depending on the commodity) available for importation through non-state traders.

Tariff Classification • Chinese customs officers have wide discretion in classifying a particular

import into any tariff categories.

Trade Barriers: ChinaExport Quotas, Duties and Licenses China maintains export quotas and sometimes export duties on antimony, bauxite, coke, fluorspar, indium etc. to help the development of downstream industries.

Land Issues China‘s constitution specifies that all land is owned in common by all the people.

The State and collectives can either ―grant‖ or ―allocate‖ land-use rights to enterprises in return for the payment of fees, or in some cases without the payment of any fees. The time limit for land-use rights acquired by foreign investors for both industrial and commercial enterprises is 50 years.

Trade Barriers: ChinaIntellectual Property Rights (IPR) ProtectionPersistent inadequacies in the protection and enforcement of IPR represent barriers to other countries exports and investment. For example:

Retail and wholesale counterfeiting End-user piracy of business software and copyright piracy over the

Internet.

Regulations Set high thresholds for entry into service sectors such as banking, insurance and telecommunications.For example: Foreign life insurance companies can only be established as joint ventures, with foreign equity capped at 50 percent.

Construction, Engineering, Architectural and Contracting Services High minimum registered capital requirement Limited scope of projects that can be undertaken by foreign-invested

enterprises.

Trade Barriers: US100% scanningAims to enhance security by countering potential terrorist threats to the international maritime container trade system, foresees the 100% scanning of all US-bound containers

Tariff BarriersDespite the substantial tariff reduction and elimination, the U.S. retains a number of significant duties and tariff peaks in various sectors including food products, textiles, footwear, leather goods, ceramics, glass, and railway cars.

Import DutiesAdditional customs impediments, such as import user fees andexcessive invoicing requirements on importers, which add to costs in a similar way to tariffs.

The most significant user fee is the Merchandise Processing Fee, which is levied on all imported merchandise except for products from the least developed countries

Trade Barriers: USPublic Procurement

In the field of public procurement, the main U.S. trade barriers are contained in a wide array of clauses in federal, state and local legislation and regulation giving preference to domestic suppliers or products,

Foreign Direct Investment LimitationsThe Foreign Investment and National Security Act (FINSA) restrains foreign investment in (or ownership of) businesses relating to national security.

U.S. restrictions on foreign investment are particularly evident in the shipping, energy , communications and telecommunication sectors.

Tax DiscriminationSeveral aspects of U.S. taxation practices constitute additional difficulties to foreign investment in the U.S. market. These are mainly related to the nature of reporting requirements and conditions for deductibility of interest payments.

Trade Barriers in India for EU European Union

◦ Viability of an FTA◦ Negotiations in June 2007 and, so far, eleven

negotiating rounds have been held. The last EU-India Summit took place on 10 December 2010 in Brussels.

Burdensome licensing requirements◦ The provisions stipulate prior security clearance and

technology transfer requirements, as well as an obligation to substitute foreign engineers with Indian ones in telecommunication industry.

India restricting exports of cotton

Trade Barriers in India for EU contd.

Standards ,Testing, Labeling and Certification◦ In 2009, the GOI revised its mandatory

certification compliance list, which now includes 85 specific commodities like gas cylinders, dry cell batteries.

◦Products on the mandatory certification list must be certified for safety by the Bureau of Indian Standards (BIS) before the products are allowed to enter the country.

Trade Barriers in India for US Import Licensing

◦ Banned Items( Oils from Animal origin)◦ Items Requiring License (Chemicals)◦ Canalized items (Petroleum products)

Customs Procedures◦ Motor vehicles may be imported through only three

specific ports and only from the country of manufacture.

Sanitary and Phytosanitary (SPS) Measures Export Subsidies Intellectual Property Rights(IPR) Protection

◦ US retained India on the "Priority Watch List"

Service Barriers Banking

◦ a direct branch, ◦ a wholly-owned subsidiary,◦ or through a stake in a private Indian bank.

Audiovisual and Communications Services◦ experience difficulty in importing film/video publicity

Accounting◦ professional accountants should be graduates from India. ◦ Foreign accounting firms can practice if their home

country provides reciprocity to Indian firms Construction, Architecture, and Engineering

◦ offered only on a nonconvertible rupee payment basis Distribution Services

◦ Retail sector

Trade Barriers in India for PakistanNeed for a better mobile connectivity to

improve communication for business and tradeRelay of television channelsOpening up of bank branches on reciprocal

basisPakistan would switch over to negative list of

items for trade with India rather granting MFN status

Trade Barriers in India for BangladeshIn Sept 2011, India announced to

remove 46 textiles lines, of interest to Bangladesh, from India's negative list for the least developed countries under the South Asia Free Trade Area Agreement (SAFTA).

General Investment Barriers

Equity Restrictions◦ The government continues to prohibit or severely

restrict FDI in certain politically sensitive sectors, such as agriculture, retail trading, railways, and real estate.

Investment Disputes◦ India’s poor track record to date in honoring and

enforcing agreements with investors in the energy sector has discouraged further investment in this important sector.

FTA partners of India India has signed FTAs or similar bilateral

agreements with a number of countries including Sri Lanka,Thailand, Singapore, South Korea and Chile, as well as the Mercosur countries (Argentina, Paraguay, Uruguay and Brazil), ASEAN and the South Asian Association for Regional Cooperation (SAARC).

Global Enabling Trade Report

The Enabling Trade Index measures the factors, policies and services that facilitate the trade in goods across borders and to destination. It is made up of four sub-indexes:◦Market access◦Border administration◦Transport and communications infrastructure◦Business environment

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