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

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Labeling <strong>and</strong> Packaging Rules The right <strong>of</strong> countries to implement their own labeling <strong>and</strong> packaging requirements for the health <strong>and</strong> safety <strong>of</strong> their people is well established in the WTO Agreement on Technical Barriers to Trade (TBT). 25 Governments use labeling requirements to protect consumers from deceptively labeled products as well as to protect producers against unfair competition. 26 Diverse <strong>and</strong> confusing labeling rules among markets served by the same globally traded agricultural products can hinder free trade. 27 Specific labeling requirements in a given market can restrict trade by differing from generally accepted international labeling norms, creating a burdensome label acquisition <strong>and</strong> approval process, or constructing a perception that one product is inferior to a competing product. 28 <strong>India</strong> amended its Prevention <strong>of</strong> Food Adulteration Rules (PFA Rules) in March 2009 to institute updated labeling rules for imported food products, but it is unclear what effect the new rules, once implemented, will have on foreign exports to the <strong>India</strong>n market. Similar to U.S. rules, <strong>India</strong>n labeling rules require that the packaging list the ingredients used, in descending order <strong>of</strong> their composition by weight or volume; the month <strong>and</strong> year <strong>of</strong> manufacture or packaging; the expiration date; <strong>and</strong> the “best before” consumption date, among other things. 29 Requirements for certain other information, such as recipes <strong>and</strong> other trade or proprietary information, were not included in the updated rules, although U.S. producers <strong>and</strong> <strong>India</strong>n processed food companies have had to confront these possibilities in the past as part <strong>of</strong> a frequently nontransparent <strong>India</strong>n regulatory process that is still moving toward internationally accepted st<strong>and</strong>ards. 30 The administration <strong>of</strong> <strong>India</strong>n labeling laws can also present challenges for foreign food processing companies, who find themselves managing a variety <strong>of</strong> labeling m<strong>and</strong>ates. Issuance <strong>and</strong> enforcement <strong>of</strong> labeling requirements under the PFA Rules are the responsibility <strong>of</strong> the central government, but the labels themselves on occasion may have to be written in the language <strong>of</strong> the locality where the product is ultimately sold. <strong>India</strong> has 16 <strong>of</strong>ficial languages, <strong>and</strong> food processing companies <strong>of</strong>ten will not know which pallet <strong>of</strong> food products will be transported to any specific state. Similarly, the packaging must specify the maximum retail price <strong>of</strong> the product, including any taxes. Some applicable taxes are levied at the state level, raising the same state-by-state shipment problem. 31 Certain other requirements, such as individual container labels for bulk products <strong>and</strong> 25 WTO Agreement on Technical Barriers to Trade, 1995, preamble (“Desiring however to ensure that technical regulations <strong>and</strong> st<strong>and</strong>ards, including packaging, marking <strong>and</strong> labeling requirements, … do not create unnecessary obstacles to international trade; Recognizing that no country should be prevented from taking measures necessary … for the protection <strong>of</strong> human, animal or plant life or health, <strong>of</strong> the environment, or for the prevention <strong>of</strong> deceptive practices, at the levels it considers appropriate, subject to the requirement that they are not applied in a manner which would constitute a means <strong>of</strong> arbitrary or unjustifiable discrimination between countries where the same conditions prevail or a disguised restriction on international trade…”). 26 Organisation for Economic Co-operation <strong>and</strong> Development (OECD), “Analysis <strong>of</strong> <strong>Nontariff</strong> <strong>Measures</strong>,” November 13, 2003, 6 <strong>and</strong> 10. 27 Office <strong>of</strong> the Spokesman, U.S. Department <strong>of</strong> State, “U.S. Concerned That EU’s Biotech Labeling Could Be Burdensome,” July 4, 2003; “Labeling,” American Apparel <strong>and</strong> Footwear Association, n.d. (accessed August 24, 2009); <strong>and</strong> Mattson, Won, <strong>and</strong> Taylor, “<strong>Nontariff</strong> Trade Barriers in Agriculture,” March 2004, 9. 28 OECD, “Analysis <strong>of</strong> <strong>Nontariff</strong> <strong>Measures</strong>,” November 13, 2003, 13. 29 WTO, “Trade Policy Review: Report <strong>of</strong> the Secretariat: <strong>India</strong>,” July 24, 2007, 46. Infant milk substitutes <strong>and</strong> infant foods, bottled mineral water, <strong>and</strong> milk products have other labeling requirements. 30 Industry representative, interview by Commission staff, Washington, DC, April 8, 2009. 31 Government representative, interview by Commission staff, New Delhi, <strong>India</strong>, May 26, 2009. 6-10
notices that must be integrated with the packaging as opposed to affixed using a sticker label, add to processing costs for producers. 32 The scope <strong>of</strong> the labeling rules has unintended effects on certain agricultural products, such as alcoholic beverages, that differ from everyday packaged foods. For example, the U.S. distilled spirits industry has complained about nutritional, ingredient, <strong>and</strong> expiration labeling requirements that it views as inappropriate for spirits products. 33 Processed foods that contain genetically modified (GM) ingredients may face unique issues as a result <strong>of</strong> <strong>India</strong>n labeling laws. Proposals made in 2006 required food packages containing GM ingredients to state that fact on their labels, with a declaration that the product has been cleared for sale in the exporting country. 34 A U.S. food organization noted that the proposals contained no explanation for such individual treatment <strong>of</strong> foods containing GM ingredients <strong>and</strong> that they might penalize U.S. products because the U.S. government does not “clear” food products for sale <strong>and</strong> does not establish any st<strong>and</strong>ards or analytical methods that food processing companies could reference in an attempt to meet the requirements. 35 Implementation <strong>of</strong> these labeling proposals has been deferred indefinitely. 36 Because the GEAC has not approved imports <strong>of</strong> any agricultural products containing GMOs, except for soybean oil, almost all U.S. agricultural products containing GMOs are prohibited in <strong>India</strong> in any case. Bans, Monitoring, <strong>and</strong> Licensing Requirements <strong>India</strong> eliminated import licensing during the early 1990s for all but roughly 3,000 agricultural products <strong>and</strong> consumer goods, placing these items on a “negative list.” 37 For the various categories <strong>of</strong> agricultural goods on the negative list, importation can be prohibited, monitored, or licensed in some form. 38 Bans The <strong>India</strong>n Government, under the authority <strong>of</strong> the 1962 Customs Act <strong>and</strong> following requisite notice in the Gazette <strong>of</strong> <strong>India</strong>, may prohibit the importation <strong>of</strong> any agricultural good for reasons such as a potential market surplus, balance <strong>of</strong> payment issues, or health st<strong>and</strong>ards. <strong>India</strong> currently bans imports <strong>of</strong> beef (because <strong>of</strong> religious sensitivities) <strong>and</strong> related products; live pigs <strong>and</strong> pig meat products; tallow, fats, <strong>and</strong> oils <strong>of</strong> animal origin; <strong>and</strong> poultry from countries reporting outbreaks <strong>of</strong> AI, citing health reasons. 39 Monitoring Once <strong>India</strong> removed its final quantitative restrictions on agricultural imports in 2002, it established a monitoring mechanism (a committee chaired by the Secretary <strong>of</strong> the 32 Industry representative, interview by Commission staff, New Delhi, <strong>India</strong>, May 26, 2009. 33 DISCUS, written submission to the USITC, June 2, 2009. 34 WTO, “Trade Policy Review: Report <strong>of</strong> the Secretariat: <strong>India</strong>,” July 24, 2007, 58. 35 AgBiotech Planning Committee to Assistant Director General (PFA), Directorate General <strong>of</strong> Health Services, Government <strong>of</strong> <strong>India</strong>, n.d. 36 Government <strong>of</strong>ficial, e-mail message to Commission staff, September 22, 2009. 37 Hoque, “<strong>India</strong> Relaxes Restraints on Agricultural Imports,” November 2000, 14 <strong>and</strong> 16. 38 Importation only through state trading enterprises (STEs) is another type <strong>of</strong> negative list restriction <strong>and</strong> is addressed elsewhere in this chapter. 39 WTO, “Trade Policy Review: Report <strong>of</strong> the Secretariat: <strong>India</strong>,” July 24, 2007, 46–47; OECD, Agricultural Policies in Emerging Economies, 2009, 109. 6-11
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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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Regional Variation Geographic <stro
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CCC. “Know India
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CHAPTER 4 Indian A
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For most crops, however, In
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Page 81 and 82: Food processing in India</s
Page 83 and 84: BOX 4.1 The Central Government’s
Page 85 and 86: BOX 4.2 Does the Minimum Support Pr
Page 87 and 88: August 3, 2009, New Delhi announced
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
Page 101 and 102: wholly milled rice and</str
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
Page 121 and 122: CHAPTER 6 Nontariff</strong
Page 123 and 124: foreign sources. 6 For example, SPS
Page 125 and 126: BOX 6.1 Milk and M
Page 127 and 128: BOX 6.2 Wheat—Continued Yet, <str
Page 129: perpetuated continuously. The impor
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
Page 170 and 171: FDI Regulations and</strong
Page 172 and 173: TABLE 8.2 India: A
Page 174 and 175: Food Processing and</strong
Page 176 and 177: There is not necessarily a strong l
Page 178 and 179: 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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