Tariffs were the principal mode of protectionism till the 1970s . However, following the successive rounds of the GATT, there has been gradual decline in the Tariff Barriers either on MFN (Most Favoured Nation) basis or through Preferential Trade Agreements. The countries resorted to a form of administered protection known as Non-Tariff Measures (NTM) as tariffs became insignificant. These NTMs can be broadly divided into two categories
- Sanitary and Phyto-sanitary measures (SPS)
- Technical barriers to trade (TBT)
Technical barriers to trade or technical standards are necessary for a range of reasons including environmental protection, safety, national security and consumer information. The WTO, through the Agreements on SPS and TBT has played a significant role in this respect. These are now basic prerequisites for market access embedded in the global trading system.
The Indian engineering industry has already faced a number of such trade barriers globally. Exports to its top destinations comprising the USA, the EU, Japan, China, South Korea, Brazil, ASEAN and Sri Lanka have suffered due to the Standards and Regulations prevalent in these countries. In EU countries, CE certification is required to export electrical and electronic devices. CE certification has not proven to be economical for the small Indian manufacturers and exporters impeding the outbound shipments to the EU.