Standards as Enablers of Trade: Insights from Commerce Secretary 2023
In the realm of international trade, standards play a pivotal role in ensuring the quality and safety of products and services exchanged between countries. These standards are essential for protecting consumers, promoting fair competition, and facilitating global commerce.
However, there is an ongoing debate about the potential misuse of standards as non-tariff barriers to trade.
Sunil Barthwal, the secretary of commerce, stated on Thursday that standards for products and services should not function as non-tariff trade barriers but rather facilitate international trade.
According to him, standards should be viewed as non-tariff measures that may assist achieve the best possible outcomes for both producers and consumers rather than as non-tariff obstacles.
At a G20 standards conclave hosted by the Bureau of Indian Standards, Barthwal stated, “If this becomes the right oil for the trade system, I think a lot of trade restrictions will come down in trade and it will help us take the world trade to USD 30 trillion by 2025 and USD 2 trillion by 2030 for India.”
He added that different nations are establishing their own standards, which has an impact on international trade, and he called for harmonisation in the standards ecosystem.
Producers and exporters frequently encounter challenges not from the standards themselves, but rather “from the way they get implemented,” he added. Coherence in the operations of standard-setting organisations and cooperation within the compliance ecosystem are crucial.
Standards are technical specifications that define the characteristics and performance requirements of products and services. They are developed by various organizations, both at the national and international levels, to ensure quality, safety, and interoperability. Standards provide a common language for manufacturers, regulators, and consumers, allowing for the smooth flow of goods and services across borders.
Standards can be categorized into various types, including product standards, safety standards, environmental standards, and quality management standards. These standards help businesses meet customer expectations, improve product quality, and reduce risks associated with their operations.
Non-tariff barriers (NTBs) are restrictions or obstacles that hinder international trade without involving traditional tariffs (import taxes). NTBs can take various forms, such as technical regulations, product standards, sanitary and phytosanitary measures, licensing requirements, and customs procedures. While these measures can serve legitimate purposes, they can also be misused to protect domestic industries from foreign competition.
One of the challenges in international trade is the misuse of standards as non-tariff barriers. This occurs when countries impose overly restrictive or discriminatory standards that go beyond what is necessary to protect health, safety, or the environment. Such actions can stifle competition, limit market access for foreign businesses, and hinder the efficient allocation of resources.
The Commerce Secretary recognizes the importance of standards in facilitating international trade and ensuring product safety and quality. However, the Secretary firmly believes that standards should not be used as a pretext to create unfair trade barriers. Here are some key points from the Secretary’s perspective:
- Transparent and Fair Standardization Processes: The Commerce Secretary advocates for transparent and inclusive standardization processes. Standards development should involve input from all relevant stakeholders, including industry representatives, consumer groups, and government officials. Transparency ensures that standards are based on sound science and not influenced by protectionist interests.
- Harmonization of Standards: To prevent standards from becoming non-tariff barriers, there should be efforts to harmonize standards at the international level. Harmonization means aligning standards across countries to reduce unnecessary duplication and complexity. It allows businesses to comply with a single set of standards rather than facing different requirements in each market.
- Risk-Based Approach: Standards should be based on a rational and risk-based approach. The Secretary emphasizes that standards should be proportionate to the risks involved, avoiding excessive burdens on businesses. This approach ensures that standards are genuinely aimed at protecting public health, safety, and the environment.
- Technical Assistance and Capacity Building: Developing countries may face challenges in meeting stringent standards. The Commerce Secretary believes that providing technical assistance and capacity-building support to these nations can help them improve their standards infrastructure and regulatory capabilities, fostering trade opportunities.
Standards are a crucial aspect of international trade, ensuring the quality and safety of products and services while promoting fair competition.
However, when standards are misused as non-tariff barriers, they can hinder trade, limit market access, and impede economic growth.
The Commerce Secretary advocates for transparent, harmonized, risk-based, and inclusive standards development processes to prevent standards from acting as obstacles to trade.
By promoting these principles, standards can continue to play their vital role in facilitating global commerce and collaboration while safeguarding consumers and the environment.
