Diplomatist Magazine Diplomatist September 2019 | Page 14

SPECIAL REPORT
Figure 2- Tariff rate, applied, simple mean, all products (%)
Source: own elaboration based on World Bank.
is renegotiated, the trade ties could be deepened. Given the
complementarity between both economies, trade relationships
show great potential.
In the case of India, the following trade restrictions are
applied:
• Import Licensing
• Negative Lists
• Testing, Labelling and Certification
• Export Subsidies and Domestic Support
• Entry Requirements
• Anti-dumping and Countervailing Measures
• Export Subsidy Programs
• Implementation of Policies
• Service Barriers
• Other Barriers:
Ø Equity restrictions and other trade-related investment
measures result in an unfair advantage to domestic
companies.
Ø The Indian Government had restricted FDI in sectors like
retail trade and agriculture.
Ø Besides this, there is an unpublished policy that advances
the counter trade.
Ø Several Indian companies both government-owned and
private organize small countertrades.
In the case of Mercosur, according to UNCTAD (2017)
numerous technical and regulatory measures are especially
applied in the food and agricultural sectors. Additionally,
the use of discretionary authorizations and registration
requirements is widespread and deserves scrutiny. Product-
specific barriers affect more than 40% of Brazilian imports,
27% of Uruguayan imports and 19% of Paraguayan imports.
In Argentina, until 2017, the horizontally applied Advanced
Sworn Import Declaration (DJAI) caused controversy and was
disputed at the World Trade Organization (WTO). Combined
with foreign exchange controls, the DJAI was seen as a major
hurdle to trade. In 2017, the new Government terminated the
DJAI and introduced a new import monitoring system.
According to Venezuela, far beyond more over the terrible
economic situation, this country applies a licensing scheme
for a wide range of products that require a certificate that
attests no or insufficient domestic production. Controls of
foreign currency outflows and multiple exchange rates are
connected to this licensing procedure. Furthermore, reference
prices and price bands regulate imports of several products.
The estimated impact of the barriers applied by Mercosur
countries is particularly high in manufacturing sectors,
including the crucial vehicles and machinery sectors. Where
applied, these NTBs cause price increases (of traded goods)
of, at least, 3 to 4%.
The overall impact of technical NTMs far exceeds that
of traditional NTBs. Sanitary and phytosanitary (SPS) and
technical barriers to trade (TBT) measures have price-
increasing effects (ad valorem equivalents, AVEs) of 10% to
15% in Argentina and Brazil, and between 5% and 10% in
Paraguay, Uruguay and Venezuela. Apart from trade effects,
these prices increase the impact on the population as food
consumers. In manufacturing, technical measures have a
lower relevance than outright barriers and do not appear
particularly restrictive in the analysis UNCTAD (2017).
India is going throw several negotiations like Mercosur,
but until now, the number of Free Trade Agreement in force
is very low in both cases.
About the Preferential Trade Agreement between
Mercosur and India, it was signed in January 2004 and
entry into force in June 2009. The purpose of the agreement
is to expand and strengthen the existing relations between
Mercosur and India and promote the expansion of trade by
granting reciprocal fixed tariff preferences with the ultimate
objective of creating a free trade area between the parties.
According to the scope, the number of tariff concessions
is very low, from 10% to 100% for 450 and 452 tariff lines
for each part. India has granted a preference margin of 10%
to 93 products, 20% to 336 products and 100% to 21 goods
(out of 450), and Mercosur has granted a preference margin
14 • Extraordinary and Plenipotentiary Diplomatist • Vol 7 • Issue 9 • September 2019, Noida