Module 8

What are NTB, SPS, Role of Standards and Quality and

Packaging issues in international trade … How to find out
with reference to the export product?

Learning Objective
Earlier module on Free trade agreements 1 highlighted the fact that companies look
forward to export opportunities in markets where their country has signed a trade
agreement because it gives them an advantage to supply their goods at reduced import
duties. Companies did so since high tariffs barriers in importing country made exporting
of goods more difficult by increasing the cost to the international customers. However,
towards making a successful export transaction, trading companies should be aware
about challenges it could face while entering the importing country which may be
beyond just tariffs. Such challenges which may restrict trade between countries and are
“not tariffs” are termed as “Non Tariff Measures” for example embargo, import
prohibition, regulations, certifications, stringent quality standards etc. With consumers
demanding more and more information on the products they buy, importing countries
put in place more regulations. Even though these regulations do not necessarily have
trade policy objectives, they may impact Indian exporting companies. Indian trading
units (both exporting as well as importing) may hence be curious enough to understand
following questions to be answered in the session:

• What all can hamper your exports and make your product uncompetitive beyond
tariffs?
• How many types of such barriers exist?
• Do these barriers/standards vary across importing markets?
• Where can you find the import regulations for your product across global
markets?
• How can you ensure protection against an export rejection for your product?
• In a scenario of facing an import detention for your product at a foreign port, is
there a way out for you to still manage successful entry?
• As an importer into India, where can you look into import standards of India?

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Refer Module 7 on Regional Trade Agreements

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Learning Material
Non-tariff measures (NTMs) are generally defined as policy measures other than
ordinary customs tariffs that can potentially have an economic effect on international
trade in goods, changing quantities traded, or prices or both. All measures other than
normal tariffs namely trade related procedures, regulations, standards, licencing
systems and even trade defense measures such as anti-dumping duties etc which have
the effect of restricting trade between nations fall in this category. Some of these
measures could be justified under the provisions or the exceptions provided under the
various multilateral agreements governing international trade.

On the other hand, certain non tariff measures which cannot be justified under any of
these legal provisions are normally termed as non tariff barriers (NTBs). Such trade
barriers are laws or regulations a country enact to protect domestic industries against
foreign competition and hence can decrease market opportunities for Indian exports
and give unfair competitive advantages to products from other countries. Some of the
most prominent ways of application of these barriers result from prohibitions,
conditions, or specific market requirements, government laws etc. that make
importation or exportation of products difficult and/or costly. NTBs also include
unjustified and/or improper application of Non-Tariff Measures (NTMs) such as sanitary
and phytosanitary (SPS) measures and other technical barriers to Trade (TBT).

With the lowering of tariffs across the globe, NTMs have come into prominence with
Members using these measures to erect entry barriers for goods and services. It is
therefore, not surprising that the developed countries with relatively lower tariffs are
the more prolific users of NTMs / NTBs especially to keep out developing country
exports. Taking a look at what you can do to get beyond the roadblocks and on the road
to successful international trade brings out the need to understand various types of
such barriers the trading units could face during their course of doing business beyond
domestic borders.

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 What all kinds of Non-tariff Measure you could face?

TECHNICAL MEASURES

A Sanitary And Phytosanitary Measures This includes measures such as restriction for substances and ensuring food
safety, and those for preventing dissemination of disease or pests along with
all conformity-assessment measures related to food safety, such as
certification, testing and inspection, and quarantine.

B Technical Barriers To Trade Collects technical measures, also called TBT. It refers to measures such as
labeling, standards on technical specifications and quality requirements, and
other measures protecting the environment.

C Pre-Shipment Inspection And Other Formalities Classifies the measures related to pre shipment inspections and other customs
formalities.

NON-TECHNICAL MEASURES

D Contingent Trade-Protective Measures It includes those measures implemented to counteract particular adverse
effects of imports in the market of the importing country, including measures
aimed at unfair foreign trade practices. They include antidumping,
countervailing, and safeguard measures.

E Non-Automatic Licensing, Quotas, Prohibitions Includes licensing, quotas and other quantity control measures, including
And Quantity-Control Measures Other than for Tariff rate quotas.
SPS or TBT

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F Price-Control Measures, Including Additional
Taxes And Charges
G Finance Measures
H Measures Affecting Competition
I Trade-Related Investment Measures
J Distribution Restrictions
K Restrictions On Post-Sales Services
L Subsidies
M Government Procurement Restrictions
N Intellectual Property
O Rules Of Origin 2
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Pl refer Chapter 7 for Rules of Origin
Lists price-control measures implemented to control or affect the prices of
imported goods. Among the examples are those to support the domestic price
of certain products when the import prices of these goods are lower; to
establish the domestic price of certain products because of price fluctuation in
domestic markets, or price instability in a foreign market; or to increase or
preserve tax revenue
Lists the finance measures. It refers to measures restricting the payments of
imports, for example when the access and cost of foreign exchange is
regulated. It also includes measures imposing restrictions on the terms of
payment.
Includes those measures affecting competition – those that grant exclusive or
special preferences or privileges to one or more limited group of economic
operators. They refer mainly to monopolistic measures, such as State trading,
sole importing agencies or compulsory national insurance or transport.
Deals with trade-related investment measures, and groups the measures that
restrict investment by requiring local content or requesting that investment be
related to export in order to balance imports.
Refers to restrictive measures related to the internal distribution of imported
products.
Deals with restrictions on post-sales services, for example, restrictions on the
provision of accessory services.
Measures that relate to the subsidies that affect trade.
Refers to the restrictions bidders may find when trying to sell their products to
a foreign government
Gathers restrictions related to intellectual property measures and intellectual
property rights.
Groups the measures that restrict the origin of products or its inputs.
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 Sanitary And Phytosanitary Measures & Technical Barriers to Trade

Sanitary And Phytosanitary measures that are applied to protect human or animal life
from risks arising from additives, contaminants, toxins or disease-causing organisms in
their food; to protect human life from plant- or animal-carried diseases; to protect
animal or plant life from pests, diseases, or disease-causing organisms; to prevent or
limit other damage to a country from the entry, establishment or spread of pests; and to
protect biodiversity. Note that measures for environmental protection to protect
consumer interests, or for the welfare of animals are not covered by SPS.

Technical Barriers to Trade measures refers to technical regulations, and procedures for
assessment of conformity with technical regulations and standards, excluding measures
covered by the SPS Agreement. A technical regulation is a document which lays down
product characteristics or their related processes and production methods, including the
applicable administrative provisions, with which compliance is mandatory. It may also
include or deal exclusively with terminology, symbols, packaging, marking or labelling
requirements as they apply to a product, process or production method.

India’s farm exports have been facing a series of non-tariff barriers in top consuming
markets, for example, a ban on import of mangoes by EU that was lifted in January
2015. Other examples of market denials are ban on rice imports by Iran and green
pepper by Saudi Arabia. Besides, Vietnam refuses to allow Indian peanuts. China does
not buy non-basmati rice from India but sources the same from Pakistan as well as
Cambodia, Myanmar, Vietnam and Thailand. The proposed US legislation requiring
agriculture imports to be mandatorily inspected and audited by USFDA will increase the
cost of compliance and hurt India’s farm exports.

The EU had banned imports of mangoes, brinjal, snake gourd, taro and bitter gourd
from India in 2014 after fruit flies were found in some consignments. While the ban was
subsequently lifted on mangoes, it continues on the vegetables. The ban on vegetables
continues 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. An average 14,500 shipments are made to the US every year, and the total
alerts on salmonella are around 290 or less than two per cent.

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Indian spices shipped to the US are tested and found salmonella-free to the extent of
98.5 per cent. This is based on import alerts and refusals data published by the USFDA.
Indian black pepper was denied entry to the US due to salmonella from external
material such as mammalian excreta and cow dung. Following this, a memorandum of
understanding was signed between the Government of India and USFDA to have
mandatory inspection of black pepper exported to the US. All the same, USFDA has put
around 200 Indian firms on its red list due to salmonella-infected products since 2009.
Quite a few have been listed this year. The consignment of these companies can be
detained at the customs without physical examination. Of the total, around 70 per cent
are spice companies exporting items such as chilli powder, coriander, turmeric, sesame
seeds, charoli seeds and celery.

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 Reasons of SPS/TBT rejections: caution points for Exporters

Type of SPS/TBT restriction Description Case example

Temporary geographic Prohibition of imports of Imports of poultry from
prohibitions for SPS reasons specified products from areas affected by avian
countries or regions due to influenza or cattle from
infectious/contagious foot-and-mouth disease-
diseases: Measures affected countries are
included in this category prohibited.
are typically more of an ad
hoc and time-bound
nature.
Geographical restrictions on Prohibition of imports of Indian mangoes were not
eligibility specified products from acceptable in Japan due to
specific countries or regions fruit fly infestation and lack
due to lack of evidence of of irradiation facility.
sufficient safety conditions to
avoid sanitary and
phytosanitary hazards
Special authorization requirement A requirement that importers An import authorization from
for SPS reasons should receive authorization, the Ministry of Health.
permits or approval from a
relevant government agency
of the destination country for
SPS reasons
Registration requirements for The requirement that Importers of a certain food
importers importers should be item need to be registered at
registered before they can the Ministry of Health.
import certain products: To
register, importers may need
to comply with certain
requirements, provide
documentation and pay
registration fees.
Tolerance limits for residues of or A measure that establishes a (a) MRL is established for
contamination by certain (non- maximum residue limit (MRL) insecticides, pesticides, heavy
microbiological) substances or tolerance limit of metals and veterinary drug
substances such as fertilizers, residues; (b) POPs and
pesticides, and certain chemicals generated during
chemicals and metals in food processing; (c) residues of
and feed, which are used dithianon in apples and hop.
during their production
process but are not their
intended ingredients: It
includes a permissible
maximum level (ML)

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Type of SPS/TBT restriction
Restricted use of certain substances Restriction or prohibition on
in foods and feeds and their the use of certain substances
contact materials
Labelling requirements
Marking requirements
Packaging requirements
Storage and transport conditions
Testing requirement
Description Case example
(a) Certain restrictions exist
for food and feed additives
contained in food and feed. It used for colouring,
includes the restrictions on preservation or sweeteners;
substances contained in the (b) For food containers made
food containers that might of polyvinyl chloride plastic,
migrate to food vinyl chloride monomer must
not exceed 1 mg per kg.
Measures defining the (a) Labels that must specify
information directly related the storage conditions such
to food safety, which should as “5 degree C maximum”;
be provided to the consumer: (b) potentially dangerous
Labelling is any written, ingredients such as allergens,
electronic or graphic e.g. “contains honey not
communication on the suitable for children under
consumer packaging or on a one year of age”.
separate but associated label
Measures defining the
Outside transport container
information directly related must be marked with
to food safety, which should instructions such as handling
be carried by the packaging for perishable goods,
of goods for transportation refrigeration needs, or
and/or distribution. protection from direct
sunlight, etc.
Measures regulating the Use of PVC lms for food
mode in which goods must packaging is restricted.
be or cannot be packed, or
de3 ning the packaging
materials to be used, which
are directly related to food
safety.
Requirements on certain Certain foodstuffs should be
conditions under which food stored in a dry place, or
and feed, plants and animals below a certain temperature
should be stored and/or
transported.
A requirement for products A test on a sample of orange
to be tested against a given imports is required to check
regulation, such as MRL: This against the maximum residue
measure includes the cases level of pesticides.
where there is sampling
requirement
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 Type of SPS/TBT restriction
Certification requirement
Inspection requirement
Traceability requirements
Description
Certification of conformity
with a given regulation that is
required by the importing
country but may be issued in
the exporting or the
importing country
Requirement for product
inspection in the importing
country. It may be performed
by public or private entities.
It is similar to testing, but it
does not include laboratory
testing.
Disclosure requirement of
information that allows
following a product through
the stages of production,
processing and distribution.
Case example
Certificate of conformity for
materials in contact with
food (containers, papers,
plastics, etc.) is required.
Animals or plant parts must
be inspected before entry is
allowed.
For vegetables, disclosure of
information on the location
of the farm, name of the
farmer or fertilisers used may
be required.

But are all rejections justified?

In order to analyse whether an export rejection is justified or not, policymakers, traders,

exporters should have an in-depth understanding about the WTO SPS agreement.

Problem Statement
How do you ensure that your country’s consumers are being supplied with
food that is safe to eat — "safe" by the standards you consider appropriate?
And at the same time, how can you ensure that strict health and safety
regulations are not being used as an excuse for protecting domestic
producers?

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SPS Article no. What does the Article say?
Article 1. General The Agreement applies to all the SPS
provisions measures, which may directly or
indirectly affect international trade.
Article 2. Basic rights Members have the right to take SPS
and obligations measures necessary for the protection
of human, animal or plant life or health
provided they are applied only to the
extent necessary to protect human,
animal or plant life or health. This
should be based on scientific principle
and justified by scientific evidences. Are
not applied arbitrarily and not to restrict
international trade.
Article 3. Members shall base their SPS measures
Harmonization on international standards, guidelines,
or recommendations. Codex, OIE, and
IPPC (International Plant Protection
Convention)
Article 4. Members shall accept the SPS measures
Equivalence of other Members as equivalent, even if
these measures differ from their own or
from those used by other members,
trading in the same products. For this
purpose, reasonable access shall be
given to the importing member for
inspection, testing, and other relevant
procedures.
Article 5. Risk Risk Assessment to be made on
assessments and available scientific evidence, relevant
determination of the processes, and production methods
appropriate level of SPS
protection.
Business interpretation for traders
Traders irrespective of the agro product exported should be aware of all
kinds of possible SPS measures
In case you face a stringent or abnormally high SPS import standard in an
export market, you should bring it to the notice of Indian Government who
would then cross check if there is sufficient scientific evidence in the
importing country for the same.
Appreciating that trader would find it difficult to keep track of different
standards across different export markets, these standards have been
harmonized across all WTO members. Hence against a buying enquiry in a
particular market, it is safe to follow CODEX standards for food safety, OIE
standards if you are dealing in animal product like meat or poultry and IPPC
for exporters dealing in plant material.
If the country where you would like to export your product has a different
standard prevailing in their country as that in your own country; then you
have no choice but to follow the importing country standard. However, you
have the liberty to choose your own process towards achieving the same
standard. When can this happen? When two countries have signed an
equivalence agreement wherein our process and their processes are
considered equal as far as both the processes help to reach the same
standard. If this agreement is signed an exporting company shouldn’t bother
to follow the process that many a times importers push them to do. All they
need to do is to ensure that with whichever process they are following, the
final import standard of importing country is achieved.
Countries have a choice to deviate from Codex/OIE/IPPC standards provided
they have sufficient scientific evidence. If the importing country is found to
be deviating from international designated standards, you can question the
risk assessment process.
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SPS Article no. What does the Article say?
Article 6. Adoptions of Members shall take into account the
regional conditions level of prevalence of specific disease or
pests, the existence or eradication or
control programs and the appropriate
guidelines as developed by relevant
international organizations.
Article 7. Transparency Contains provisions on information
procedures concerning publication of
regulations (giving sufficient time before
entry into force for comments and
adoption, particularly to developing
country). Notification procedure for new
or modified SPS measures which deviate
from international standards or
recommendations.
Where do you find these import standards for your product?
www. sustainabilitymap.org/standards
www.cbi.eu
www.ipfsaph.org
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Business interpretation for traders
Whenever there is a disease outbreak
in any country, there are certain
pockets within the country which are
impacted. Hence if your procurement
does not happen from the infected
zone and you are in the position to
prove the traceability until the first
point of source, your products cannot
be detained at the foreign port just
because your country was facing the
disease outbreak.
If countries want to deviate from
international standards, despite
having proved risk assessment, the
import standards cannot be changed
frequently. There is a detailed process
of notification to all members on
changed standards and seeking their
approval in a max time period of six
months duration. Hence exporters
shouldn’t worry about change in
standards during transit period.
Learning Outcomes: Application of Knowledge
Read the case lets below and identify which article under WTO SPS agreement have been violated/referred to

Case 1: Stringent testing methods

Bhoomi Fruits and Vegetables Pvt. Ltd was a traditional exporter of vegetables to European markets of
Netherlands and Germany. The pesticides used in cucumber were Triazophos and in curry leaves Triazophos
and Monocrotophos. The testing method used to detect these pesticides was High Performance Liquid
Chromatography Mass Spectroscopy (HPLC MS) which had sensitivity at levels of 10 ppb. Despite the fact that
EU standards of MRLs were much stringent than CODEX, the company complied with the European standards
and had a stable business until 2014. In 2015, EU specified test by HPLC which has sensitivity to a level of .2
ppb. The additional equipment means incurring expenditure of around Rs 1.5 crores (US$ 3.5 Million) per
equipment with this cost increase being proportionately reflected in each test carried out. It was due to these
cost implications, India and other developing exporters could not comply to testing of the said chemical. As a
result of which, a rapid alert against Bhoomi exports was raised against three consignments subsequently.
Developing countries demanded for sensitive HPLCMS from EU along with the technical assistance.

Case 2: Reduced limits of Aflatoxins in Peanuts in EU

The EU Commission has specified tolerance limits for aflatoxin contamination in peanuts and also the testing
methods to be used. The levels are 10 ppb. The Codex Alimentarius Commission had proposed a maximum limit
of 15 ppb. A report by the Joint European Commission Food Association (JECFA) mentions that aflatoxin
contamination of foodstuff is very low among the EU nations and only a few members of the population suffer
from hepatitis B, a precondition for liver damage by aflatoxins. The report estimates that the risk at 20 ppb is
0.0041 cancer cases per 100 000 persons annually. For 10ppb it is 0.0039 cases. This shows that the change in
standard from 20 ppb to 10 ppb reduces the estimated risk of cancer by approximately two cancer cases per
billion people annually.

Case 3 : Rejections of Indian Apples from different origins in Australia

SreeNanda exports having its branch in New Delhi as well as J&K (another province/state in India) had
traditionally been an apple exporter to Australia. In 2008, Bio security Australia (BA) banned imports of apples
from countries where firelight was present. SreeNanda exports contended that firstly commercially packed
apples were not the pathway for fire blight. Secondly, in November 2003, Australia had lost the case with Japan
on the same issue due to the absence of scientific justification. Thirdly, while fireblight was present in some
cases from apples originating from Himanchal Pradesh in India, the presence of fireblight in regions like J&K
with low temperatures was not possible. Hence the import bans, if applied should be region specific instead of
banning the country altogether leading to a financial burden to the exporters.

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Review of learning outcomes
By the end of the session you have learnt

• Ignorance is no more a bliss. An exporter would completely vanish out of market if the
company is repeatedly found out to be non compliant. Hence awareness about what can reject
his exports across different markets becomes essential.
• This tool can also be used to evaluate whether the rejections that has been made by importing
country is logical and scientific or SPS is applied as trade protectionist barrier which can and
should be brought to the notice of Ministry of Commerce via APEDA.
• Every possible source where you can find out the import standard requirement in importing
country.
• Fall back option in case of absence of any specific notification from the importing country

Suggested Readings
1. https://www.tradebarriers.org/measures
2. https://www.wto.org/english/tratop_e/sps_e/spsund_e.htm
3. The WTO Agreement on Sanitary and Phytosanitary Measures: A Commentary (Oxford
Commentaries on GATT/WTO Agreements) 1st Edition, Publisher: Oxford University Press; 1
edition (May 5, 2009) ISBN-10: 0199563861, ISBN-13: 978-0199563869
4. WTO: Technical Barriers and SPS Measures, Volume 3, of Max Planck Commentaries on World
Trade Law, Rüdiger Wolfrum, Peter-Tobias Stoll, Anja Seibert-Fohr,
Publisher: Martinus Nijhoff Publishers, 2007
ISBN: 9004145648, 9789004145641

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