The EU and India in Search of a Partnership
Chapter 6: Non-Tariff Barriers
6.1 WHAT IS A NON-TARIFF BARRIER? Non-tariff barriers (NTBs)1 are measures other than tariffs, which have the potential to distort trade (Baldwin 1970; OECD, 2005b; Business Dictionary, 2009), that are connected with state (administrative) activity and influence prices, quantity, structure, and/or the direction of international flows of goods and services as well as the resources used to produce these goods and services (UNCTAD, 2005). The primary motives for using NTBs are to promote economic, industrial and regional development as well as protect specified sectors from imports or from dumped or unfairly subsidized imports. NTBs often serve legitimate purposes in their domestic market, but become barriers in international markets. For example, a country may legitimately act to increase safety standards for motorized vehicles within its jurisdiction. The regulations adopted to accomplish this legitimate domestic objective however, can act as NTBs for a foreign supplier who must now adjust their production process to meet the new regulations. Also unlike tariffs, NTBs are not subject to reporting to the WTO. Common measures of NTBs include tariff-equivalents of the NTB and its frequency measures. These NTB measures are used in various trade models, including gravity equations, to assess trade and/or welfare effects of the measured NTBs (Beghin, 2006). Several studies have attempted to classify and highlight the growing importance of NTBs in world trade, however a broad consensus on their typology is lacking at the international level (Donnelly and Manifold, 2005; OECD, 2005b). Trade measures or barriers (including tariffs) with discretionary or variable...
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