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Mangoes, Pineapples and Turtles – Is this how we trade ?

International trade and Polity always goes hand in hand. Only by acknowledging this, we can understand the real motives behind the trade restrictions.

A couple of days ago, we heard the EU’s ban of Indian Exports of Alphonso Mangoes and 4 other vegetables – eggplant, the taro plant, bitter gourd and snake gourd, for an year. The UK’s Department for Environment, Food and Rural Affairs defends the ban saying that, in 2013, several Indian food consignments are contaminated with pests such as fruit flies and other quarantine pests. Though these banned items constitute

This is not the first instance a developing nation was imposed with trade restrictions (non tariff barriers) from developed nations or Groups like EU on silly reasons. Previously, EU laid a restriction on the “maximal size” of pineapples that could be imported from GHANA, especially, when these Pineapples had a sizable EU Market share due to their qualitative and price advantages.

Countries use both tariff and non tariff barriers to protect their domestic markets. Tariff barriers include the custom duties, octroi etc. and non tariff trade barriers are the procedures, quality checks, quota restrictions etc. There are always both domestic and foreign companies that get affected positively and negatively by these restrictions. For example, the UK fruit sellers who are dependent on Indian exports are equally effected by the latest EU ban.

Trade restrictions can be used by any nation to curb the inflow of goods or services. though these they can increase decrease or avoid the inflow altogether. For Eg: Once Japanese have banned the Skiing equipment from France, on the grounds that they are unsuitable for Japanese snow. Ridiculous they may seem but are generally effective.

Non tariff barriers are not a recent phenomena. In 1980’s US banned UK’s Beef citing its contamination due to the prevalent Mad Cow disease, to which UK and Europe reciprocated by banning US beef citing its growth hormones are harmful to humans.
Further US banned Indian garments on grounds they are inflammable. Later it took on Indian fishing shrimps (cinrāṭa) citing Indian fishing standards failed to meet that of US on “the protection of endangered species” (here. Turtles) the ban is only for India and not for other similar nations. Later India fought hard and won at WTO. Quite lovely, how US cares about Indian turtles!

When the cited reasons belong to Safety Health and Environment issues (popularly called SHE issues) they have maximum impact even though the veracity of such claims cannot be proved objectively. Just like the climate politics. One reason behind these bans is Countries and firms equally hate competition and there are corporate lobbyists on both sides pressurizing the governments. Further when a ban affects a sensitive issue like agriculture, its news for Media. Opposition protests and Government is forced to negotiate or give in to other demands. sometimes the Governments does file a complaint with WTO under dispute redressal.

The negotiations also depend on the fuss the ban could create. For example, The issue may not grab such attention, if the ban is about Gems and Jewelry imports from India (though they happen to be the second largest of all the Indian exports) or IKEA products made in India (though IKEA has no direct outlet, India makes half of its products)

An increase in these non tariff barriers is a clear indication that nations are using them as pacifiers. Imposing such bans are giving them a diplomatic leverage during trade negotiations. But these are badly affecting the trade. While it is important to protect one’s domestic markets (the very purpose of any FTA’s existence), it is equally important that it should be done with the right or at least sensible reasons.

There are always alternatives, like increasing duties, imposing quota restrictions etc. but banning on SHE issues could completely cripple the importer’s business to other countries also. This is what EU must understand and our politicians should acknowledge the seriousness.

The world would be a far better place had we conduct ourselves with a little more sanity.
Image courtesy: www.androidpit.com

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