India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC

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exports to <strong>India</strong> have existed for some time, but the elimination or easing <strong>of</strong> NTMs to promote smoother trade flows has occurred only for a few select products. A summary <strong>of</strong> the NTMs facing U.S. agricultural exports to <strong>India</strong> is presented in table 6.1. TABLE 6.1 <strong>India</strong>: <strong>Nontariff</strong> measures facing certain U.S. agricultural exports, 2009 Measure Application Products Sanitary/phytosanitary measures Health st<strong>and</strong>ards Contamination st<strong>and</strong>ards Rules for genetically modified organisms Exceed internationally accepted st<strong>and</strong>ards Inconsistent with international practices Effectively ban imports because <strong>of</strong> burdensome approval process Poultry, swine, dairy Wheat, barley Corn, certain processed foods Fumigation requirements Require destructive or unavailable Pulses, certain fruits treatment processes Quality st<strong>and</strong>ards Exceed internationally accepted st<strong>and</strong>ards Certain processed foods, hides <strong>and</strong> skins, bovine semen Labeling <strong>and</strong> packaging rules Preclude agricultural product distribution Processed foods without m<strong>and</strong>ated disclosures Bans, monitoring, <strong>and</strong> licensing Place restrictions on free movement <strong>of</strong> Beef, poultry, edible oils, requirements imports grains, nuts, corn State trading enterprises Restrict imports to certain statesanctioned Food grains entities Customs procedures Create uncertainty regarding paperwork All <strong>and</strong> valuation Notice <strong>and</strong> comment procedures Hinder information dissemination about All rules affecting imports Corruption Raises costs through payment <strong>of</strong> bribes All Source: Compiled by Commission staff. Following identification <strong>of</strong> the NTMs, Commission staff conducted economic modeling simulations to estimate possible increases in certain U.S. agricultural exports to <strong>India</strong> if the NTMs specifically affecting those products were removed. Using 2007 data, the estimated increase in U.S. agricultural exports would be $187–391 million, the majority <strong>of</strong> which would be from exports <strong>of</strong> wheat. Sanitary <strong>and</strong> Phytosanitary Issues Use <strong>of</strong> sanitary <strong>and</strong> phytosanitary (SPS) restrictions to manage the flow <strong>of</strong> agricultural imports, including those from the United States, has been a consistent tool <strong>of</strong> the <strong>India</strong>n government since the general import licensing system was eliminated in 2001. <strong>India</strong>n SPS measures have substantive <strong>and</strong> implementation shortcomings stemming from several factors: (1) the nontransparent process for issuing SPS st<strong>and</strong>ards; (2) a lack <strong>of</strong> expertise on the part <strong>of</strong> the <strong>India</strong>n government bureaucracy issuing the st<strong>and</strong>ards, which can produce unintended consequences such as overly broad restrictions or unclear benchmarks; <strong>and</strong> (3) unequal enforcement <strong>of</strong> <strong>India</strong>n SPS st<strong>and</strong>ards on domestic <strong>and</strong> 6-2
foreign sources. 6 For example, SPS measures become noticeably less restrictive when <strong>India</strong>n policymakers determine that market shortages require imports. 7 Because <strong>of</strong> these shortcomings, <strong>India</strong>n SPS measures create difficulties for U.S. exporters in building consistent <strong>and</strong> large-scale business relationships with <strong>India</strong>n customers. 8 The WTO agreements, including GATT 1994, recognize the right <strong>of</strong> WTO member countries to maintain animal health <strong>and</strong> food safety measures to protect their animal <strong>and</strong> human populations. The WTO Agreement on the Application <strong>of</strong> Sanitary <strong>and</strong> Phytosanitary <strong>Measures</strong> (SPS agreement) establishes a framework to ensure that these measures are not used as a means to protect a domestic industry from import competition. Article 3 <strong>of</strong> that agreement allows a member to set st<strong>and</strong>ards other than the international st<strong>and</strong>ards, guidelines, or recommendations only when there is scientific justification for doing so, or if scientific evaluation <strong>of</strong> the international st<strong>and</strong>ards, guidelines, or recommendations reveals that they do not afford the level <strong>of</strong> safety the member determines to be appropriate. 9 International Health St<strong>and</strong>ards <strong>India</strong>n import st<strong>and</strong>ards regarding organic contaminants <strong>of</strong>ten either exceed widely accepted international norms without providing a recognized scientific justification or exceed <strong>India</strong>n st<strong>and</strong>ards for the corresponding domestic product. <strong>India</strong> continues to ban imports <strong>of</strong> U.S. poultry <strong>and</strong> swine products because <strong>of</strong> the presence <strong>of</strong> low-pathogenic avian influenza (AI) in the United States. These imports are approved for entry into markets where low-pathogenic AI is not present, such as <strong>India</strong>, under internationally accepted health st<strong>and</strong>ards in the World Organization for Animal Health (OIE). 10 Despite numerous requests for a scientific justification for the AI bans, <strong>India</strong> has not provided an explanation that the United States, Canada, <strong>and</strong> the European Commission accept as compatible with OIE guidelines. 11 Also, <strong>India</strong>’s st<strong>and</strong>ards for dairy imports with regard to hormones <strong>and</strong> certain bacteria are more stringent than its domestic dairy st<strong>and</strong>ards (box 6.1). 6 Government <strong>of</strong>ficial, interview by Commission staff, New Delhi, <strong>India</strong>, May 4, 2009; government <strong>of</strong>ficial, interview by Commission staff, New Delhi, <strong>India</strong>, May 26, 2009; <strong>and</strong> industry representative, interview by Commission staff, Mumbai, <strong>India</strong>, June 1, 2009. 7 Government <strong>of</strong>ficial, interview by Commission staff, New Delhi, <strong>India</strong>, June 2, 2009; industry representative, interview by Commission staff, New Delhi, <strong>India</strong>, June 4, 2009; <strong>and</strong> industry representative, interview by Commission staff, Gurgaon, <strong>India</strong>, June 5, 2009. 8 Government <strong>of</strong>ficial, interview by Commission staff, New Delhi, <strong>India</strong>, June 2, 2009; industry representative, interview by Commission staff, New Delhi, <strong>India</strong>, June 4, 2009; <strong>and</strong> industry representative, interview by Commission staff, Gurgaon, <strong>India</strong>, June 5, 2009. 9 Agreement on the Application <strong>of</strong> Sanitary <strong>and</strong> Phytosanitary <strong>Measures</strong>, art. 3, para. 3. The SPS agreement explicitly recognizes three relevant international organizations that develop <strong>and</strong> review accepted st<strong>and</strong>ards, guidelines, <strong>and</strong> recommendations: the OIE, which focuses on animal health (the organization changed its name to the World Organization for Animal Health in 2003, but is still widely known by its former French acronym, OIE); the Codex Alimentarius (Codex) Commission, which focuses on food safety; <strong>and</strong> the International Plant Protection Commission. Agreement on the Application <strong>of</strong> Sanitary <strong>and</strong> Phytosanitary <strong>Measures</strong>, art. 3, para. 4. The Codex Commission was created in 1963 by the Food <strong>and</strong> Agricultural Organization <strong>of</strong> the United Nations (FAO) <strong>and</strong> the World Health Organization (WHO) to develop international food st<strong>and</strong>ards, guidelines, <strong>and</strong> codes <strong>of</strong> practice. 10 USTR, 2009 National Trade Estimate Report on Foreign Trade Barriers, 2009, 239; WTO, “Trade Policy Review: Report <strong>of</strong> the Secretariat: <strong>India</strong>,” July 24, 2007, 47. 11 USTR, 2009 National Trade Estimate Report on Foreign Trade Barriers, 2009, 239. 6-3
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United States International Trade C
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U.S. International Trade Commission
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Abstract This report describes <str
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TABLE ES.1 India:
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U.S. agricultural products face str
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U.S. Foreign Direct Investment U.S.
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CONTENTS Page Abstract ............
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CONTENTS―Continued Chapter 6 <str
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CONTENTS―Continued Figures 1.1. <
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ACRONYMS AND TERMS AAY Antodaya Ann
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ACRONYMS AND TERMS—Continued RGGV
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TABLE 1.1 India: A
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FIGURE 1.1 India:
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India’s central
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Despite their weak economic pr<stro
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Approach Current India</str
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Bibliography Birner, Regina, Surupt
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World Bank. Agriculture for Develop
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FIGURE 2.1 India:
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TABLE 2.1 India: A
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FIGURE 2.3 India:
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premium); (2) India</strong
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include government export restricti
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TABLE 2.3 India: A
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FIGURE 2.6 India:
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Exports by Major Trading Partner <s
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CHAPTER 3 Domestic Consumption Over
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TABLE 3.2 India: P
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more likely to have been exposed to
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BOX 3.3 Indian Con
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TABLE 3.3 India: T
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are expected to see income growth <
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Food Preferences India</str
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Page 73 and 74: CCC. “Know India
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Page 79 and 80: The Farm Sector soybeans 29 —but
Page 81 and 82: Food processing in India</s
Page 83 and 84: BOX 4.1 The Central Government’s
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Page 89 and 90: known as zamindars, have doubled or
Page 91 and 92: that the PFA Act was strictly enfor
Page 93 and 94: ———. Bharat Nirman: A Time-Bo
Page 95 and 96: Organisation for Economic Co-operat
Page 97 and 98: CHAPTER 5 TARIFFS Overview
Page 99 and 100: sensitive. They include vegetable f
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Page 103 and 104: The Indian governm
Page 105 and 106: India also reporte
Page 107 and 108: Reference Prices Reference prices,
Page 109 and 110: Landing Fees <stro
Page 111 and 112: Simulated Effects
Page 113 and 114: and nuts” by $0.
Page 115 and 116: 5-19 TABLE 5.4 India</stron
Page 117 and 118: Bibliography Acharya, Keya. “Thor
Page 119 and 120: Indian Express.com
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Page 127 and 128: BOX 6.2 Wheat—Continued Yet, <str
Page 129 and 130: perpetuated continuously. The impor
Page 131 and 132: notices that must be integrated wit
Page 133 and 134: import corn under the TRQ is too bu
Page 135 and 136: Customs Procedures India</s
Page 137 and 138: Corruption Interests within <strong
Page 139 and 140: TABLE 6.2 India: E
Page 141 and 142: Bibliography American Apparel <stro
Page 143 and 144: Mattson, Jeremy W., Won, W. Koo, <s
Page 145: ———. 2009 National Trade Esti
Page 148 and 149: TABLE 7.1 India: C
Page 150 and 151: First Point of Sal
Page 152 and 153: Private mandis Som
Page 154 and 155: approximately 65 million households
Page 156 and 157: 7-10 TABLE 7.2 India</stron
Page 158 and 159: poor communications infrastructure
Page 160 and 161: limited popularity with farmers bec
Page 162 and 163: The lack of infras
Page 164 and 165: found that 39 percent of</s
Page 166 and 167: Bibliography Banerjee, A. Dairying
Page 168 and 169: Tiwari, Shri Rajendra Kumar. “Pos
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TABLE 8.2 India: A
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Food Processing and</strong
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There is not necessarily a strong l
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For processing of
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BOX 8.3 Restrictions on Foreign Joi
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Under certain circumstances, FDI ca
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commenced. States tend to be quick
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Bibliography Bahn, Niti, an
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International Center for Alcohol Po
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Structure of the <
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BOX 9.1 The UPOV System for Plant V
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that the public sector in I
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Whether this situation will soon ch
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The U.S.-India Bus
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eggplant, which began field trials
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Maskus, Keith E. “Intellectual Pr
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APPENDIX A REQUEST LETTER
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The Honorable Sham L. Arano
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cprice-sewell on PRODPC61 with NOTI
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APPENDIX C HEARING WITNESSES
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ORGANIZATION AND WITNESS: Tuttle Ta
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Summary of Views <
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advertising and pr
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highest in the Asia-Pacific region.
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to U.S. exports to India</s
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transparent sanitary regulations th
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hotel and catering
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Western Pistachio Association 26 In
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APPENDIX E POTENTIAL FOR U.S. AGRIC
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E-4 TABLE E.1 India</strong
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APPENDIX F INDIAN AGRICULTURAL PROD
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TABLE F.1 India: A
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FIGURE F.1 India:
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is in nonirrigated areas with yield
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Consumption India
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efrigeration. This characteristic i
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70 percent of tota
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eportedly preferred in southern <st
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Cotton During MY 2003/04-2007/08, <
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Government of <str
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APPENDIX G UNION AND STATE/UNION TE
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certain agricultural goods in the p
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Bibliography Chaulan, Shri U.K. “
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Simulation Framework The effects <s
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Producers determine the optimal sup
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Applied ad valorem tariff equivalen
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We considered the possibility that
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Estimation of <str
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Bibliography Anderson, Kym, Mariann
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