CHAPTER 6 EFFECT OF NON TARIFF BARRIERS AND TARIFF ON …shodhganga.inflibnet.ac.in/bitstream/10603/6220/11/11_chapter 6.pdf · EFFECT OF NON TARIFF BARRIERS AND TARIFF ON SSIS 6.1

154

CHAPTER – 6

EFFECT OF NON TARIFF BARRIERS AND TARIFF ON SSIS

6.1 Introduction

Non-Tariff Measures (NTMs) or Non-Tariff Barriers (NTBs) is not entirely self-

evident. Baldwin (1970) in his seminal work defines “non-tariff distortion as any

measure (public or private) that causes internationally traded goods and services, or

resources devoted to the production of these goods and services, to be allocated in such a

way as to reduce potential real world income”13

This is a useful definition but is

problematic in the context of defining “potential” real world income. Deardorff and

Stern (1997) have authored the most recent work, but they use the term, non-tariff

barriers (NTBs).14

According to them, NTBs have the following stylized characteristics,

namely reduction in quantity of imports, increase in the price of imports, change in

elasticity of demand for imports and variability and uncertainty in their implementation.

While the authors‟ analysis is mostly theoretical, they propose a classification system,

which has, at its core, price (other than tariffs) and quantity border measures.

UNCTAD‟s TRAINS (Trade Analysis and Information System) classification

defines over 100 different types of NTMs, and a much smaller subset called “hard core

measures” that includes quantity control measures excluding tariff quotas and enterprise

specific restrictions; finance measures excluding regulations concerning terms of

payment; and price control measures.15

However, this classification excludes many

internal regulatory measures that can also discriminate against imports such as production

subsidies, tax concessions, and discriminatory government procurement. Yet another

problem with this classification is that it does not distinguish between NTMs that are

GATT consistent and not GATT consistent.

13

Baldwin, R (1970), Non-Tariff Distortions in International Trade, Brookings Institutions, Washington, D.C. 14

Deardorf, A and R. Stern (1997), “Measurement of Non-Tariff Barriers”, OECD Economics Department Working Paper

No.179, Paris, OECD. 15

See Malcolm Bosworth, (1999), “Non-Tariff Measures As Trade Barriers: Yesterday‟s Problem or What?” paper prepared

for the OECD Workshop with non-Member Economies on Barriers to Trade in Goods and Services in the Post Uruguay Round Context, Paris, 27-28 Sept. 1999.

155

Finally there is the WTO inventory of NTMs based on notifications collected

from national sources, which in the view of notifying contracting parties constitute non-

tariff measures. This inventory includes licenses, quotas, prohibition, voluntary export

restraints, plus information related to custom surcharges, minimum import prices,

additional taxes and charges and approval process for imports and exports.

In general, NTMs cover all measures affecting trade, there is no single

internationally agreed list of NTMs. other than tariffs, and hence any list of NTMs will be

very long, and is probably continuously growing as governments invent newer and newer

measures.

Countries use many mechanisms to restrict imports. Till the beginning of 1970s,

tariffs (custom duties) were the principal mode of protectionism. But with successive

rounds of GATT negotiations, there was a large drop in the average tariff levels of

manufactured goods in the developed country markets. When tariffs paled into

insignificance, these countries resorted to a form of administered protection known as

Non-Tariff Measures (NTM) - Quantitative restrictions, tariff quota, voluntary export

restraints, orderly marketing arrangements, export subsidy, export credit subsidy,

government procurement, import licensing, antidumping/countervailing duties, technical

barriers to trade, to name a few. It was a return to protectionism harder and more

expensive than in the 1950‟s and 1960‟s. In the 70s and 80s NTMs spread from textiles

and clothing to steel, cars, shoes, etc. Although measurement problems are difficult, it is

estimated that in 1986, 16 percent of imports of industrial countries were subject to “hard

core” NTMs: Quotas, non-automatic licensing and variable tariffs. If one broadens the

definition of NTMs to include state monopolies, import surveillance (including automatic

license) countervailing duties and antidumping provision, the results are more

convincing.

Between 1995 and 2000, according to reliable information16

, WTO members

reported 1441 antidumping investigations. In the Uruguay Round, the approach for

dealing with NTMs was to bring existing barriers into the domain of multilateral

negotiations, strengthen rules governing their use, develop investigation mechanisms to

16

Prusa, T.J. (2003), “The Growing Problem of Anti-Dumping Protection and What It Means for the Asia-Pacific Region”,

mimeo.

156

enforce agreement, and offer improved dispute settlement procedures – the aim was to

minimize trade change and trade restricting effect of NTMs. Some notable success was

also achieved in reaching substantive agreements limiting, clarifying or disciplining the

system that members may use – Article III.8.b allowing subsidies to domestic producers;

Article III.9 allowing members to have internal price control measures; Article VI on

Anti-dumping and countervailing duties; Article VII on methods of customs valuation;

the Agreement on Agriculture converting all quantitative restrictions into tariffs; the TBT

Agreement defining the rights and obligations of members with respect to development

and application of technical regulations and the ways in which products are to be assessed

to determine whether they meet the specified technical standards; and similarly, the

Sanitary and Phytosanitary Measures (SPS) with respect to human, animal and plant life.

Nevertheless, most would allow that many of the rules fall short of effectively controlling

the use of NTMs. More frequently than not, there are instances of direct violation of these

rules or are applied unreasonably. Some of these such as anti-dumping are used

sometimes to foster a climate of uncertainty for foreign suppliers, and/or a method of

harassment designed to bring about changes in foreign trading practices and policies17

.

6.2 Effect of NTBs on Handloom Products:

6.2.1 Product-wise NTBs and Export of Carpet and Floor Covering Products:

Table 6.1 shows that the total export of carpet and other textile floor coverings,

knotted, whether or not made up product during 1996 to 2009 was Rs. 11486.95 crore

and total NTBs were 61. The correlation between the non tariff barriers and the export of

this product is approximately - 0.004 which indicates the degree of linear dependence

between non tariff barriers and the export. As it approaches zero there is less of a

relationship i.e. closer to uncorrelated.

17 See, Datta, S. (2003), “Bringing Objectivity to Anti-Dumping Investigations – The India Model”, (mimeo), ALG India,

www.alg-india.com; and Datta, S. (2004), “Discussion paper on the Use of „Facts Available‟ in Anti-dumping investigations”, paper presented at the national seminar “Negotiations on WTO Rules”, organized by Government of India, Ministry of Commerce, New Delhi, Sept. 21-22, 2004.

157

Table-6.1

5701: Carpet and Other Textile Floor Coverings, Knotted, whether or not made up

(Export Value in Rs. Crore)

(Base Year : 2004-2005)

Year NTBs Export(At constant price)

1996 9 350.42

1997 5 404.43

1998 7 656.21

1999 5 867.29

2000 4 643.25

2001 2 541.22

2002 2 565.17

2003 4 507

2004 1 559.45

2005 7 1156.91

2006 4 1407.39

2007 2 1244.72

2008 7 1427.91

2009 2 1155.58

Total 61 11486.95

Correl -0.0039227845

Source: WITS COMTRADE Database

158

Table-6.2

5702: Carpet & Other Textile Floor Coverings, woven, not Tufted or Flocked,

whether or not Made up, including Kelem, Schumacks, Karamanie and similar

Hand Woven Rugs

Base Year 2004-2005

Year NTB Export(At constant price)

1996 9 966.03

1997 5 832.79

1998 7 729.92

1999 5 735.1

2000 4 938.2

2001 2 833

2002 2 872.65

2003 4 1018.27

2004 1 1141.33

2005 7 2055.66

2006 4 2148.08

2007 2 1567.68

2008 7 1109.85

2009 2 1075.76

Total 61 16024.32

Correl 0.016503679


Table 6.2 illustrates that the total export of product carpet & other textile floor

coverings, woven, not tufted or flocked, whether or not made up, including kelem,

159

schumacks, karamanie and similar hand woven rugs products during 1996 to 2009 was

Rs.16024.32 crore and total NTBs were 61. The correlation between the non tariff

barriers and the export of this product is approximately 0.017 which indicates the degree

of linear dependence between non tariff barriers and the export. As it approaches one

there is weak relationship i.e. closer to correlated.

Table-6.3

5703: Carpets and Other Textile Floor Coverings, Tufted, whether or not Made Up

Base Year 2004-2005


1996 9 110.56

1997 5 105.57

1998 7 152.2

1999 5 203.28

2000 4 175.69

2001 2 173.54

2002 2 216.27

2003 4 241.84

2004 1 242.51

2005 7 603.12

2006 4 688.8

2007 2 826.73

2008 7 767.92

2009 2 660.89

Total 61 5168.92

Correl -0.104593677


160

Table 6.3 presents the total export of carpets and other textile floor coverings,

tufted, whether or not made up products during 1996 to 2009 was Rs. 5168.92 Croers and

total NTBs were 61. The correlation between the non tariff barriers and the export of this

product is approximately -0.105 which indicates the degree of linear dependence between

non tariff barriers and the export. As it approaches zero there is less of a relationship i.e.

closer to uncorrelated.

Table-6.4

5704: Carpets and Other Textile Floor Coverings, of Felt, not Tufted or Flocked,

whether or not Made Up

Base Year 2004-2005


1996 9 0.08

1997 5 0.1

1998 7 0.34

1999 5 0.25

2000 4 0.39

2001 2 0.62

2002 2 1.77

2003 4 2.82

2004 1 7.27

2005 7 53.74

2006 4 40.75

2007 2 20.43

2008 7 6.89

2009 2 6.53

Total 61 141.98

Correl 0.098370349


161

Table 6.4 demonstrates that the total export of carpets and other textile floor

coverings, of felt, not tufted or flocked, whether or not made up products during 1996 to

2009 was Rs.141.98 crore and total NTBs were 61. The correlation between the non

tariff barriers and the export of this product is approximately 0.098 which indicates the

degree of linear dependence between non tariff barriers and the export. As it approaches

one there is weak relationship i.e. closer to correlated.

Table-6.5

5705: Other Carpets and Other Textile Floor Coverings, whether or not Made Up

Base Year 2004-2005


1996 9 466.67

1997 5 438.22

1998 7 439.4

1999 5 445.99

2000 4 390.01

2001 2 378.83

2002 2 374.59

2003 4 367.81

2004 1 353.49

2005 7 766.58

2006 4 1125.88

2007 2 999.26

2008 7 1159.32

2009 2 1029.99

Total 61 8736.04

Correl 0.056540561


162

Table 6.5 shows that total export of other carpets and other textile floor

coverings, whether or not made up products during 1996 to 2009 was Rs. 8736.04 crore

and total NTBs were 61. The correlation between the non tariff barriers and the export of

this product is approximately 0.057 which indicates the degree of linear dependence

between non tariff barriers and the export. As it approaches one there is weak

relationship i.e. closer to correlated.

Tables 6.1, 6.2, 6.3, 6.4 and 6.5 illustrate that non tariff barriers have slight

impact on export of carpet and floor covering products and highest Non-Tariff

Barrier(NTB) i.e. nine namely Conformity Assessment Procedures, Trade Facilitation,

Quality Standards, and Consumer Protection implemented on carpet and floor coverings

products in 1996 by Finland, South Korea, Netherlands and the United States.

Conformity Assessment Procedures describe the type-approval procedure, applicable fire

test procedures and the quality control to be used for the construction and furnishing

materials. Trade Facilitation indicates the inspection of imported carpets prior to customs

clearance is to be abolished and replaced by inspection during market distribution,

following customs clearance. Human Health and Safety in the proposed interim

Ministerial Regulation based on Article 15 of the Food and Drugs Act prohibits the trade

in the products listed under point 4. Quality Standard covers considerations like

terminology, requirements, working and labeling, packing, sampling, criteria for

conformity and various methods of tests for different grades of various types of two-ply

coir yarns spun by manual operation, namely. Consumer Protection Commission has

completed its regulatory review of the Rules and Regulations under the Textile Fiber

Products Identification Act (Textile Rules). The review comments suggested various

substantive amendments to the Rules. The Commission seeks comment. A least NTB i.e.

one (Labeling) applied in 2004 by Guyana. This Technical Regulation specifies

requirements for the labeling and advertising of textiles and textiles products for

prevention of fraud or misrepresentation arising from misleading labeling and

advertising.

163

6.2.1 Product-wise NTB and Export Home Furnishing Products:

Table 6.6 represents that the export of home furnishing products during 1996 to

2009 was Rs. 10535.04 crores and total NTBs were 63. The correlation between the non

tariff barriers and the export of this product is approximately -0.098 which indicates the

degree of linear dependence between non tariff barriers and the export. As it approaches

zero there is less of a relationship i.e. closer to uncorrelated.

Table-6.6

6302: Home Furnishing Products

Base Year 2004-2005


1996 9 46.7

1997 5 59.31

1998 8 61.61

1999 5 82.61

2000 4 166.71

2001 2 186.86

2002 2 246.12

2003 4 375.19

2004 1 558.98

2005 6 1271.7

2006 5 1607.82

2007 3 1870.18

2008 7 2088.68

2009 2 1912.57

Total 63 10535.04

Correl -0.098030793


164

Table 6.6 illustrates that non tariff barriers have slight impact on export of Home

Furnishing products and highest Non-Tariff Barrier (NTB) i.e. nine namely Human

Health and Safety, Consumer Protection and Quality standards implemented on Home

Furnishing products in 1996 by Netherlands, the United States and India respectively and

least NTB i.e. one namely Labeling applied in 2004 by Guyana.

Human Health and Safety is the proposed interim Ministerial Regulation based on

Article 15 of the Food and Drugs Act prohibiting the trade in the products listed under

point 4. Consumer Protection Commission has completed its regulatory review of the

Rules and Regulations under the Textile Fiber Products Identification Act (Textile

Rules). The review comments suggested various substantive amendments to the Rules.

The commission seeks comment on whether it should amend the Textile Rules to: (1)

allow the listing of generic fiber names for fibres that have a functional significance and

are present in the amount of less than 5 per cent of the total fiber weight of a textile

product, without requiring disclosure of the functional significance of the fibre, as

presently required by Textile Rule 3(B); (2) eliminate the requirement of Textile Rule

16(B) that the front side of a cloth label, which is sewn to the product so that both sides

of the label are readily accessible to the prospective purchaser, bear the wording "fibre

content on reverse side" when the fibre content disclosure is listed on the reverse side of

the label; (3) allow for a system of shared information for manufacturer or importer

identification among the North America Free Trade Agreement (NAFTA) countries; (4)

add a provision to Textile Rule 20 specifying that a commission registered identification

number (RN) will be subject to cancellation if, after a change in the material information

contained on the RN Application, a new application that reflects current business

information is not promptly submitted; (5) allow the use of abbreviations for generic

fibre names; (6) allow the use of abbreviations and symbols in country of origin

labelling; and (7) allow the use of new generic names for manufacturing fibres if the

name and fibre are recognized by an international standards-setting organization. In

addition, the commission seeks comment on the possible resolution of apparent conflict

between the commission's country of origin disclosure requirements and new U.S.

customs service regulations pursuant to the Uruguay Round Agreements Act of 1994.

Quality Standard prescribes the requirements of grey, scoured, bleached, dyed or printed

165

rib-knitted cotton vests with or without sleeves of round or V neck type. This Standard

also covers coloured rib-knitted cotton fabric obtained by knitting the fabric with dyed

yarn. This Standard does not specify general appearance, feel, lustre, degree of

whiteness, shade, colour or print design of vest. Labeling Technical Regulation specifies

requirements for the labeling and advertising of textiles and textiles products for

prevention of fraud or misrepresentation arising from misleading labeling and

advertising.

6.2.3 Country-wise NTB on Handloom Products:

Table 6.7 illustrates total 157 Non Tariff Barriers implemented on handloom

products and highest i.e. 29 non tariff barriers are implemented on home furnishing

products whereas carpet and floor covering products have least number of tariff i.e. 25

Table 6.7

Country-wise NTB on Handloom Products

S. No Country 5701 5702 5703 5704 5705 6302

Grand

Total

1 United States 7 7 7 7 7 9 44

2 Germany 1 1 1 1 1 1 6

3 Italy 1 1 1 1 1 1 6

4

European

Communities 4 3 4 4 3 3 21

5 Australia 1 1 1 1 1 1 6

6 Netherlands 4 4 4 4 4 4 24

7 Slovak Republic 4 4 4 4 4 4 24

8 Egypt 2 2 2 2 2 2 12

9 Japan 2 2 2 2 2 2 12

10 Czech Republic 2 2

26 25 26 26 25 29 157


166

The United State America applied highest non tariff barriers on handloom

products i.e. 44 to protect domestic industry while Czech Republic applied minimum non

tariff barriers i.e. 2 only on home furnishing products. Czech Republic has not applied

non tariff barrier on carpet and floor covering products.

6.3 Effect of Tariffs on Handloom Products:

A tariff is a tax or duty imposed by one nation on the imported goods or services

of another nation. Tariffs are a political tool that have been used throughout history to

control the amount of imports that flow into a country and to determine which nations

will be granted the most favorable trading conditions. High tariffs create protectionism,

shielding a domestic industry's products against foreign competition. High tariffs usually

reduce the importation of a given product because the high tariff leads to a high price for

the customers of that product. There are two basic types of tariffs imposed by

governments on imported goods. First is the Ad Valorem tax which is a percentage of the

value of the item. The second is a Specific Tariff which is a tax levied based on a set fee

per number of items or by weight. Tariffs are generally imposed for one of four reasons:

to protect newly established domestic industries from foreign competition; to protect

aging and inefficient domestic industries from foreign competition; to protect domestic

producers from "dumping" by foreign companies or governments. Dumping occurs when

a foreign company charges a price in the domestic market which is below its own cost or

under the cost for which it sells the item in its own domestic market; to raise revenue.

Many developing nations use tariffs as a way of raising revenue.

The WTO agreement includes commitments by countries to bind their tariff rates

at an agreed-upon maximum rate for each import product category. The maximum tariff

in a product category is called the bound tariff rate. The bound tariff rates differ across

products and across countries: some countries agree to higher maximums; others agree to

lower maximums. In general, less-developed countries have higher bound tariff rates than

developed countries, reflecting their perception that they need greater protection from

competition against the more highly developed industries in the developed markets.

167

6.3.1 Product-wise Bound Tariff and Applied Tariff on Carpet & Floor Covering

Products:

Table 6.8

570110: Carpets & other textile floor coverings of wool or fine animal hair,

knotted

Top Export Destinations from India

Bound Tariff (%) Average Applied

Tariff (%) Bound

(%)

Germany 8 8.05 99.43

United States 1.13 1.50 75.53

Turkey 8.05 99.42

United Kingdom 8 8.05 99.38


Table 6.8 illustrates that the average applied tariff percentage of the United Kingdom

,Germany and the United States is more than that of bound tariff percentage. Since

Turkey has no tariff binding for this product it means that this country is free to set

whatever tariff it wishes.

Table 6.9

570190: Carpets & Floor Coverings Knotted Of Other Textile Material



Tariff (%) Bound

(%)

Germany 5.75 5.94 96.87

Belgium 5.75 5.95 96.60

United Kingdom 5.75 5.95 96.60


168

Table 6.9 illustrates that the average applied tariff percentage of the United Kingdom ,

Belgium and Germany is more than that of bound tariff percentage.

Table 6.10

570210: “KLM”, “SCHMCKS”, “KRMNE” & Similar Hand Woven Rugs



Tariff (%) Bound

(%)

Germany 3 3.36 89.39


Italy 3 3.36 89.39

Denmark 3 3.39 88.54


Table 6.10 illustrates that the average applied tariff percentage of Germany, the United

Kingdom, Italy and Denmark is more than that of bound tariff percentage.

Table 6.11

570220: Floor Coverings Of Coconut Fibres (Coir)



Tariff (%) Bound

(%)

United Kingdom 4 4 100

Germany 4 4 100

Italy 4 4 100

Netherlands 4 4 100


169

Table 6.11 illustrates that the average applied tariff percentage of the United Kingdom

Germany, Italy and Netherlands is equal to bound tariff percentage. Hence their bound

%age is 100. For the most developed economies, 100 percent of the tariff lines are bound

Table 6.12

570231: Other Carpets & Floor Coverings Of Wool/Fine Animal Hair Of Pile

Construction, Not Made Up



Tariff (%)

Bound (%)

Germany 8 8.00 100

United States 6 6.22 96.54

Portugal 8 8.00 100

Belgium 8 8.00 100

United Kingdom 8 8.00 100


Table 6.12 illustrates that the average applied tariff percentage of the United States is

greater than bound tariff percentage while Germany, Portugal, Belgium and the United

Kingdom is equal to bound tariff percentage. Hence their bound %age is 100. For the

most developed economies, 100 percent of the tariff lines are bound.

170

Table 6.13

570232: Carpets & Textile Floor Coverings, Woven, Of Manmade Textile Materials,

Of Pile Construction, Not Made Up



Tariff (%) Bound

(%)

Germany 8 8.00 100


Belgium 8 8.00 100

Portugal 8 8.00 100

Italy 8 8.00 100



greater than bound tariff percentage while Germany. Portugal, Belgium and the United

Kingdom is equal to bound tariff percentage. Hence their bound % is 100. For the most

developed economies, 100 percent of the tariff lines are bound.

Table 6.14

570239: Carpets & Textile Floor Coverings,Woven, Of Other Textile Materials, Of

Pile Construction, Not Made Up



Tariff (%) Bound

(%)



Germany 8 8.00 100

Italy 8 8.00 100


171


greater than bound tariff percentage while that of Germany, Italy and the United

Kingdom are equal to bound tariff percentage. Hence their bound %age is 100. For the


Table 6.15

570241: Other Carpets & Floor Coverings Of Wool/Fine Animal Hair Of Pile

Construction, Made Up



Tariff (%) Bound

(%)


Germany 8 8.00 100


Table 6.15 illustrates that the average applied tariff percentage of Germany and the

United Kingdom is equal to bound tariff percentage. Hence their bound %age is 100. For

the most developed economies, 100 percent of the tariff lines are bound.

Table 6.16

570249: Carpets & Textile Floor Coverings, Woven, Of Other Textile Materials, Of

Pile Construction, Made-Up



Tariff (%) Bound

(%)



Belgium 8 8.00 100


172


greater than bound tariff percentage while that of Belgium and the United Kingdom are

equal to bound tariff percentage. Hence their bound %age is 100. For the most developed

economies, 100 percent of the tariff lines are bound.

Table 6.17

570259: Carpets & Other Textile Floor Coverings Of Other Textile Materials, Not

Of Pile Construction, Not Made Up



Tariff (%) Bound

(%)


Germany 8 8.00 100

Italy 8 8.00 100


Netherlands 8 8.00 100



greater than bound tariff percentage while that of Germany, Italy, Netherlands and the

United Kingdom is equal to bound tariff percentage. Hence their bound %age is 100.

Table 6.18

570291: Carpets & Other Textile Floor Coverings of Wool/Fine Animal Hair, Not

Of Pile Construction, Made Up



Tariff (%) Bound

(%)

Germany 8 8.00 100




173


greater than bound tariff percentage while that of Germany and the United Kingdom is

equal to bound tariff percentage. Hence their bound %age are 100. For the most


Table 6.19

570299: Carpets & Other Textile Floor Coverings Of Other Textile Materials, Not

Of Pile Construction, Made Up



Tariff (%) Bound

(%)


Spain 8 8.00 100

France 8 8.00 100



greater than Bound Tariff percentage while that of Spain and France is equal to bound

tariff percentage. Hence their bound %age are 100. For the most developed economies,

100 percent of the tariff lines are bound.

174

Table 6.20

570310: Carpets and Other Textile Floor Coverings of Wool/Fine Animal Hair

Tufted, W/N Made Up



Tariff (%) Bound

(%)


Germany 8 8.65 92.52


Belgium 8 8.71 91.90


Table 6.20 illustrates that the average applied tariff percentage of the United States,

Germany, the United Kingdom and Belgium is greater than bound tariff percentage.

Table 6.21

570390: Carpets & Other Textile Floor Coverings of Other Textile Materials,

Tufted W/N Made Up



Tariff (%) Bound

(%)



Italy 8 8.65 92.52

Sweden 8.65 92.52

France 8 8.65 92.52


175

Table 6.21 illustrates that the average applied tariff percentage of the United States, Italy,

Sweden, the United Kingdom and France is greater than bound tariff percentage. Since

Sweden has no tariff binding for this product it means that this country is free to set

whatever tariff it wishes.

Table 6.22

570490: Other Carpets & Textile Floor Coverings Of felt, Not Tufted/Flocked, W/N

Made Up



Tariff (%) Bound

(%)

United Kingdom 6.7 6.70 100.00


France 6.7 6.70 100.00

Spain 6.7 6.70 100.00



greater than bound tariff percentage while that of the United Kingdom, Spain and France

is equal to bound tariff percentage. Hence their bound %age is 100. For the most


Table 6.23

570500: Other Carpets &Textile Floor Coverings, W/N Made Up



Tariff (%) Bound

(%)



Italy 8 8.00 100

Germany 8 8.00 100


176


greater than bound tariff percentage while that of the United Kingdom, Italy and

Germany is equal to bound tariff percentage. Hence their bound %age is 100. For the


6.3.2 Product-wise Bound Tariff and Average Applied Tariff on Home Furnishing

Products:

Table 6.24

630210: Bed Linen, Knitted or Crocheted



Tariff (%) Bound

(%)


Germany 12 12.00 100.00

Netherlands 12 12.00 100.00

Canada 18 18.67 96.43


Table 6.24 illustrates that the average applied tariff percentage of the United States and

Canada is greater than bound tariff percentage while that of Germany and Netherlands is

equal to bound tariff percentage. Hence their bound %age is 100. For the most


177

Table 6.25

630221: Other Bed Linen of Cotton, Printed



Tariff (%) Bound

(%)


Germany 12 12.01 99.95

Canada 17 17.55 96.86

Netherlands 12 12.01 99.95

Sweden 12.01 99.95



Germany, Canada and Netherlands is greater than bound tariff percentage. Since Sweden

has no tariff binding for this product it means that this country is free to set whatever,

tariff it wishes.

.

Table 6.26

630229: Printed Bed Linen of Other Textile Materials



Tariff (%) Bound

(%)


Germany 12 12.01 99.95

Canada 17 17.55 96.86

Denmark 12 12.01 99.95

Poland 18 19.19 93.82


178


Germany, Canada, Denmark and Poland is greater than bound tariff percentage.

Table 6.27

630231: Other Bed Linen Of Cotton



Tariff (%) Bound

(%)

United States 10.82 11.36 95.28

Canada 17 17.55 96.86

Italy 12 12.01 99.95

Denmark 12 12.01 99.95

Germany 12 12.01 99.95



Germany, Canada, Denmark and Italy is greater than bound tariff percentage.

Table 6.28

630239: Other Bed Linen Of Other Textile Materials



Tariff (%) Bound

(%)


Canada 17 17.55 96.86

Italy 12 12.01 99.95


Belgium 12 12.01 99.95


179


Canada, Italy, the United Kingdom and Belgium is greater than bound tariff percentage.

Table 6.29

630240: Table Linen, Knitted or Crocheted



Tariff (%) Bound

(%)

Germany 12 12.00 100.00


Italy 12 12.00 100.00

Canada 18 18.67 96.43



Table 6.29 illustrates that the average applied tariff percentage of the United States and

Canada is greater than bound tariff percentage while that of Germany, Italy and the

United Kingdom is equal to bound tariff percentage. Hence their bound %age is 100.

For the most developed economies, 100 percent of the tariff lines are bound.

Table 6.30

630251: Other Table Linen Of Cotton



Tariff (%) Bound

(%)


Germany 12 12.01 99.95


Italy 12 12.01 99.95

Belgium 12 12.01 99.95


180


Germany, Italy, the United Kingdom and Belgium is greater than bound tariff percentage.

Table 6.31

630259: Other Table Linen Of Other Textile Material



Tariff (%)

Bound (%)


Germany 12 12.01 99.95

France 12 12.01 99.95


Table 6.31 illustrates that the average applied tariff percentage of France, Germany, and

the United Kingdom and Belgium is greater than bound tariff percentage.

Table 6.32

630260: Toilet Linen And Kitchen Linen, Of Terry Towelling/Similar Terry

Fabrics, Of Cotton



Tariff (%)

Bound (%)



Canada 17 17.55 96.86

Germany 12 12.01 99.95


181


Germany, Canada and the United Kingdom is greater than bound tariff percentage.

Some countries, especially those with higher bound tariffs, decide to set their

actual tariffs at lower levels than their bound rates. The actual tariff rate is called the

applied tariff rate. The tables displayed above, from Table 6.8 to Table 6.33 list the

average applied tariff rates and bound tariffs for a selected set of WTO member

countries. Also listed are the percentage tariff binding. For products that have no tariff

binding, the country is free to set whatever tariff it wishes. These tables reveal that:

more-developed countries tend to apply lower average tariffs than less-developed

countries (LDCs); the average bound tariff rates are higher for less-developed countries.

This means that the WTO agreement has not forced LDCs to open their economies to the

same degree as developed countries; The less developed a country, the fewer tariff

categories are bound. For LDCs, applied tariffs are set much lower on average than the

bound rates. These countries have the flexibility to raise their tariffs without violating

their WTO commitments. WTO-sanctioned trade remedy actions can be used. It can be

concluded that India is facing more tariff in developed countries as compare to

developing countries .

http://www.flatworldknowledge.com/node/199667#fwk-61960-ch01_s09_t01

182

6.3.3 Country-wise Bound Tariff and Applied Tariff on Handloom Products:

Table 6.33

Product – Wise Tariff Rate of Germany

HS-CODE Bound Tariff Applied Tariff-1995 Applied Tariff-2009

570110 8 9.15 8

570190 5.75 7.5 5.75

570220 4 4 4

570231 8 8.4 8

570232 8 8.4 8

570239 8 8.4 8

570241 8 8.4 8

570259 8 8.4 8

570291 8 8.4 8

570310 8 13.4 8

570500 8 8.4 8

630210 12 12 12

630221 12 12.5 12

630229 12 12.5 12

630231 12 12.5 12

630239 12 12.5 12

630240 12 12 12

630251 12 12.5 12

630259 12 12.5 12

630260 12 12.5 12


183

Fig. 6.1

Product-wise Tariff Rates of Germany

0

2

4

6

8

10

12

14

16

5701

10

5702

20

5702

32

5702

41

5702

91

5705

00

6302

21

6302

31

6302

40

6302

59

Product HS-Code

Ta

riff

Ra

tes

Bound Tariff

Applied Tariff-1995

Applied Tariff-2009

Fig 6.1 shows the tariff rates of Germany of handloom products and carpet and Floor

Covering Products. This fig shows that in 1995 the applied tariff, on these products was

almost equal to or greater than bound tariff. But in 2009, applied tariff on these products

decreased and became almost equal to bound tariff.

184

Table 6.34

Product – Wise Tariff Rate of USA


570110 1.13 4.15 1.13

570190 0 5.1 0

570231 6 8.7 6

570232 7.5 8.85 7.5

570239 1.8 5 1.8

570241 0 8.1 0

570249 1.33 4.87 1.33

570259 4.75 6.3 4.75

570291 2.63 5.33 2.63

570299 4.75 6.3 5.43

570310 6 6.9 6

570390 3.8 7.2 3.8

570490 0 4.8 0

570500 1.65 3.1 1.65

630210 6 7.4 6

630221 10.5 15.18 10.5

630229 4.5 8.6 4.5

630231 10.82 15.2 10.82

630239 4.3 8.2 4.3

630240 6.6 9.9 6.6

630256 5.75 6.45 5.75

630259 8.8 9.9 4.63

630260 9.1 10.2 9.1


185

Fig : 6.2

Product-Wise Tariff Rate of USA

0

2

4

6

8

10

12

14

16

5701

10

5701

90

5702

31

5702

32

5702

39

5702

41

5702

49

5702

59

5702

91

5702

99

5703

10

5703

90

5704

90

5705

00

6302

10

6302

21

6302

29

6302

31

6302

39

6302

40

6302

56

6302

59

6302

60

Product HS - Code

Tarif

f R

ate

Bound Tariff

Applied Tariff-1995

Applied Tariff-2009

Fig 6.2 shows the tariff rates of the USA on handloom products and carpet and

floor covering products. This fig shows that in 1995 the applied tariff ,on these products

was greater than bound tariff. But in 2009 , applied tariff on these products decreased

and became almost equal to or less than bound tariff.

186

Table 6.35

Product – Wise Tariff Rate of UK


570110 8 9.15 8

570190 5.75 7.5 5.75

570220 4 4 4

570231 8 8.4 8

570239 8 8.4 8

570241 8 8.4 8

570249 8 8.4 8

570259 8 8.4 8

570291 8 8.4 8

570310 8 13.4 8

570390 8 13.4 8

570490 6.7 6.7 6.7

570500 1.65 3.1 1.65

630239 4.3 8.2 4.3

630240 12 12 12

630251 12 12.5 12

630259 12 12.5 12

630260 12 12.5 12


187

Fig :6.3

Product-wise Tariff Rate of United Kingdom

0

2

4

6

8

10

12

14

16

5701

10

5702

20

5702

39

5702

49

5702

91

5703

90

5705

00

6302

40

6302

59

Product HS-Code

Tari

ff R

ate Bound Tariff

Applied Tariff-1995

Applied Tariff-2009

Fig 6.3 shows the tariff rates of the United Kingdom on handloom products and

carpet and floor covering products. This fig shows that in 1995 the applied tariff ,on these

products was almost equal or greater than bound tariff. But in 2009 , applied tariff on

these products decreased and became almost equal to or less than bound tariff.

188

Table 6.36

Product – Wise Tariff Rate of Italy


570220 4 4 4

570232 8 8.4 8

570239 8 8.4 8

570259 8 8.4 8

570390 8 13.4 8

570500 8 8.4 8

630231 12 12.5 12

630239 12 12.5 12

630240 12 12 12

630251 12 12.5 12


Fig:6.4

Product-Wise Tariff Rates of Italy

0

2

4

6

8

10

12

14

16

5702

20

5702

32

5702

39

5702

59

5703

90

5705

00

6302

31

6302

39

6302

40

6302

51

Product HS-Code

Tarif

f R

ate Bound Tariff

Applied Tariff-1995

Applied Tariff-2009

189

Fig 6.4 shows the tariff rates of Italy on handloom products and carpet and floor covering

products. This fig shows that in 1995 the applied tariff ,on these products was greater

than bound tariff. But in 2009 , applied tariff on these products decreased and became

almost equal to or less than bound tariff.

Table 6.37

Product – Wise Tariff Rate of Netherlands


570220 4 4 4

570259 8 8.4 8

630210 12 12 12

630221 12 12.5 12


Fig : 6.5

Product- Wise Tariff Rate of Netherlands

0

2

4

6

8

10

12

14

570220 570259 630210 630221

Product HS-Code

Tari

ff R

ate Bound Tariff

Applied Tariff-1995

Applied Tariff-2009

190

Fig 6.5 shows the tariff rates of Netherlands on handloom products and carpet and floor

covering products. This fig shows that in 1995 the applied tariff ,on these products was

greater than bound tariff. But in 2009 , applied tariff on these products decreased and

became almost equal to or less than bound tariff.

Trade barriers (tariff and non-tariff) in destination countries have significant

impact on India‟s exports because these measures impose additional cost on such exports.

Theoretically, an estimate of impact of trade barriers on India‟s exports requires

knowledge of the extra cost (sometimes known as „trade cost‟ or „tax equivalence‟)18

. It

also depends upon market conditions in India, destination market, and the rest of the

world.

Being nontransparent, NTMs are difficult to identify and analyse. Since NTMs

cover all measures affecting trade other than tariffs, what then are NTBs. Are the two

terms synonymous? In the literature, both the terms are used interchangeably, and the

distinction is quite vague. The rationale for using the term “measure” instead of “barrier”

is sometimes held on the ground that in some cases policies that stimulate the volume of

trade rather than retard trade such as export subsidies cannot be held as a barrier.19

An estimate of impact of tariffs (in destination countries) on India‟s exports20

can

be derived by using supply and demand price flexibility in India and destination country,

if sufficient data exists. It is very difficult, almost impossible, to estimate the impact of

non-tariff measures on India‟s exports21

, since there is (i) no reliable estimate of extra

18

See, Anderson, J.E. and E van Wincoop (2004), “Trade Costs”, Journal of Economic Literature, and references quoted

therein. Authors quote “A rough estimate of the tax equivalent of “representative” trade costs for industrialized countries is 170 percent. This number breaks down as follows: 21 percent transportation costs, 44 percent border-related trade barriers, and 55 percent retail and wholesale distribution costs (2.7=1.21*1.44*1.55).”

19

See Bora, Bijit (2003), “The Quantification and Impact of Non-Tariff Measures”, paper presented at OECD Global Forum

on Trade: The Market Access Challenge in the Doha Development Agenda, Paris 4-6 June 2003, and WTO document TN/MA/SS, 11 Sept. 2002. 20

See, among others, Vermani, A (1991), “Demand and Supply Factors in India‟s Trade”, Economic and Political Weekly, Feb.

9, 1991: and Mehta, R. and P. Mathur (2004), “India‟s Export by Countries and Commodities: On the estimation of Forecasting Model using Panel Data”, RIS – DP # 84/2004. 21

Mehta, R. (2000), QR Removal and India’s import, RIS, make an attempt to estimate the impact of QR removal on India‟s

import using econometric model; NTM (due to QR removal) is measured by an index commonly as “coverage ratio”.

191

cost or „tax equivalence‟ due to these measures, and (ii) no systematic information is

available on NTBs faced by India‟s exports. NTBs raise export price almost in a manner

as a tariff does. Due to non-availability of (i) these price differences and (ii) supply and

demand conditions, it is not feasible to estimate the impact of these barriers on India‟s

exports.

In the same way, domestic policies and regulations may also result in a variety of

hindrances to trade, depending upon their intent and behavioural responses that are

induced. The growth of NTMs holds special significance to developing countries like

India. These countries have been encountering difficulties in accessing developed country

markets because of restrictive standards, burdensome regulations, and expensive

compliance costs.

Documents

CHAPTER 6 EFFECT OF NON TARIFF BARRIERS AND TARIFF ON …shodhganga.inflibnet.ac.in/bitstream/10603/6220/11/11_chapter 6.pdf · EFFECT OF NON TARIFF BARRIERS AND TARIFF ON SSIS 6.1