Indian exports battle stiff trade barriers

Global trade slowdown is far worse than projected and the trend is leading to greater protectionism, writes FICCI president. If you are concerned with slowdown in world trade, think again. It is indeed far worse than what we commonly believe. As the July-report of 'Global Trade Alert' pointed out, world trade is not just slowing down - the fact is it has not grown at all since January 2015. Such a prolonged phase of 'no growth' in global trade is worrisome and expectedly, it is accompanied by a spurt in protectionism. The incidence of protectionist measures in 2015 is 50 per cent up from that witnessed in 2014. In the first four months of each year during 2010-2015, between 50 and 100 protectionist measures were implemented. In 2016 this figure exceeded 150. Out of the stockpile of 2,835 trade-restrictive measures introduced by WTO-members since 2008, only 25 per cent have been removed by mid-May 2016. Thus, the total number of restrictive measures still in place today stands at 2,127. Given such a sombre backdrop marked by creeping protectionism and volatile trade flows, it is not surprising that exports from India face stiff trade barriers in a number of markets and have fallen for 18 successive months till May this year. Pharmaceuticals Last year the European Union (EU) banned marketing of around 700 Indian-made generic drugs. This ban happened despite the pharmaceutical industry in India having developed its global reputation through strong research and safety protocols over the years. Most of these drugs have already been in the EU market for several years without any adverse pharmaco-vigilance report from any of its member state. The Indian pharmaceutical industry expressed concern after the US Food and Drug Administration (FDA) banned a number of factories from producing medicines for the US, citing inadequate standards. The European Medicines Agency (EMA) and the UK Medicines and Health Regulatory Authority (MHRA) also barred some Indian plants from producing drugs for their markets. On the other hand, many Indian companies have been working on improving their manufacturing standards and compliance by bringing in third-party auditors, training staff, and automating their systems.

Shrimp Take another product. Our shrimp exports encounter threat on rising rejections by the US. A sudden rise in refusal of Indian shrimp exports to US due to antibiotic residues is adversely impacting our seafood sector. In the first five months of the current year, the US Food and Drug Administration (FDA) refused 39 lines of shrimp for reasons related to banned antibiotics. Further, the US department of commerce in its 10th annual review has increased average anti-dumping duty on shrimp imports from India to 4.98 per cent from 2.96 per cent. It is going to hit Indian exporters hard. Agricultural Products Let's now turn to agricultural and allied products which account for nearly 10% of our total merchandise exports. During the last three years, bans were imposed on Indian agricultural products by some countries. The European Union imposed a ban in 2014 on import of four vegetables (brinjal, snake gourd, bitter gourd and taro leaves) from India. It still continues. This is despite India making it mandatory for exports of all perishable items to the EU to be routed through pack-houses certified by the Agriculture and Processed Food Products Export Development Authority (APEDA) under the vigilance of plant protection inspectors. Another disturbing development relates to 'fake products and counterfeits'. There are instances of fake products infringing upon copyright/trademark of prominent Indian brands and products. On receipt of complaints from Indian companies, Indian officials have taken up the cases of copyright/trademark violations with relevant agencies/authorities overseas. As regards services, it is sad to see the wide-ranging measures restricting the mobility across borders and temporary movement of professionals. Such barriers curb sharing of talent & expertise between different geographies, and stifle innovation. Restrictive measures in this area have been put in place by a large number of countries. Information Technology Here let me give just one specific example. There are issues relating to the US decision to impose higher fees and numerical limits on work visas such as L-1 and H-1B. Obviously, these measures are targeted at the Indian IT industry, which depends on mostly H1B and L1 visas. They discriminate against Indian IT firms having a commercial presence in USA, in comparison with US firms engaged in providing similar services. India's commerce minister, Nirmala Sitharaman, has recently raised deep concerns with the USTR about the sharp increase in USA's non-immigrant visa fees and fresh curbs on movement of professionals being considered by the US. The point is that such restrictions on non-immigrant visas hurt not just the Indian IT industry; they hit American business as well. There are numerous such instances both in services and goods, which illustrate how exports from India are increasingly subjected to discrimination in various destinations. Clearly, dismantling (or lowering) of restrictive measures by our trading partners will help a quick and sustained recovery in exports from India (and for that matter other countries), and boost growth in world trade. Trade barriers have always existed; but recent years have seen them to grow manifold in number and scope. They have now become sophisticated and more restrictive. We cannot let this trend continue, because a rise in trade restrictions is the last thing the global economy could afford at this stage. On the other hand, as the latest edition of 'Global Trade Alert' observed, at a time when trade is no longer growing, the fear is that governments may be more tempted to protect (or even “steal”) market share by accelerated protectionist activities. It will be a disaster! Policy-makers and business across the globe have to work together to prevent and reverse this. Harshavardhan Neotia is president of the Federation of Indian Chambers of Commerce and Industry (FICCI). He is the chairman of Ambuja Neotia Group, which covers the entire spectrum of the real estate industry including housing, hospitality, healthcare and education.