Export standards and export losses: The need for harmonization of standards with special Reference to RTAS
Chakraborty, Atraeyee Sinha
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This paper looks into the effects of quality related export standards imposed by importing country which is an inevitable feature of global trade today. The number of export standards and regulations adopted by different countries has risen significantly over the years. This may be attributed to rising awareness among people towards safer and hygienic products which should be environmentally sound also. But in spite of their necessity, imposing export standards is often looked upon as a means of restricting trade and classified under non-tariff barrier or NTB.As norms and standards usually apply to national and foreign production, they do not correspond to the classical form of protectionism which openly discriminates against imports. But the governments of importing countries have the ability to set standards based on domestic firms' product characteristics or technology capacity. This paper develops a simple model to show how export standards can lead to substantial increase in cost for exporters which leads to substantial loss in volume of trade and sometimes welfare and how the difference in standards in different export markets prevents the exporting firms to accrue the benefits of economies of scale. Differences in product standards and conformity assessment procedures across countries can greatly influence trade volumes and patterns. In this context regional integration can be beneficial and if required the existing Regional Trading Agreements (RTAS) like SAFTA, AFTA should be revisited, reviewed and amended to include stronger provisions for standard harmonization. For SAARC to emerge as a single market and to strengthen the trade position of the region with reference to the global supply chain South Asian Regional Standards Organization SARSO (established in 2011) and Conformity Assessment Board (CAB) should work for speedy harmonization of standards. Harmonization and mutual recognition of standard can be beneficial and can have a significant positive impact on trade within the region and with third countries .Harmonization of standards in RTAS can work as a stimulator for the intra as well as interregional trade.
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