Non-Tariff Import Barriers May Be Used As A Weapon To Protect National Security

By Nantoo Banerjee

India’s defence secretary Giridhar Armane’s outburst at the INDUS-X defence summit against China, last week, on the continuing troop face-offs in the Ladakh region exposed, if anything, the ministry’s frustration in dealing with the People’s Liberation Army (PLA) along the Line of Actual Control (LAC). The defence secretary described Beijing as a ‘bully” against whom Indian forces are standing firm along the frontier, after China’s rebuff once again of India’s push to defuse the continuing troop face-offs at Depsang and Demchok in eastern Ladakh in the latest round of military talks between the two sides. The PLA reportedly continues to forward deploy around 60,000 troops with heavy weaponry in western (Ladakh) and central sectors (Uttarakhand and Himachal Pradesh) of the 3,488-km-long LAC and 90,000 soldiers in the eastern part (Sikkim and Arunachal Pradesh). India matches them with “mirror military deployments.”

However, there seems to be no end of the tension in sight. Aramane’s revulsive response to Beijing’s bullying tactics is understandable. But, what remains unclear is the lack of India’s response to the ‘bully’ in the language it understands the best. India must drastically cut down imports from China, using high non-tariff barriers, and further restrict FDI inflows to hurt the PRC economy. China’s economy is already beleaguered by a drastic fall of its global export in 2023, with only Russia and India emerging as the two rare bright spots. India continues to feed China’s economy, directly, and its military might, indirectly, with record imports and trade deficits, year after year.

China needs to be tamed through the trade route by imposing strong nontariff import barriers, alongside the usual tariff barriers, towards a balanced trade. Tariff barriers have limitations. Nontariff barriers are the best. Many countries have followed the trade practice as a highly effective import control measure in the national interest against diplomatically sensitive countries. Decisions about imposing nontariff barriers are generally influenced by the nature of political alliances of a country.

A number of wealthy countries are increasingly imposing nontariff barriers against imports from China in response to the latter’s ongoing global economic aggression. China’s exports dropped 4.6 percent to $3.38 trillion year-on-year in 2023, for the first time in seven years, according to the country’s General Administration of Customs data. This may have influenced China to cut down imports by 5.5 percent to $2.56 trillion. As a result, China’s annual external trade volume fell five percent to 5.94 trillion in 2023. But for the US-led trade embargo on Russia by the West and Japan, China’s global exports would have further contracted. China is the biggest economic beneficiary of the continuing Russia-Ukraine war, helping the country’s massive trade surge with Russia. China’s exports to Russia climbed to nearly 47 percent in 2023, and imports rose by less than 13 percent. Interestingly, China’s heavily export-led trade with India too reached a record high, last year.

According to China’s Charge D’Affaires in Delhi Ma Jia, his country’s bilateral trade with India in 2023 had surpassed the previous year’s level. He said the growth in trade to US$136.2 billion went along with other areas of “improvement” in bilateral ties, pointing to the informal meeting between Prime Minister Narendra Modi and Chinese President Xi Jinping last August. Ironically, for the last 15 months, China kept the post of its ambassador to India vacant. The Chinese military standoff in eastern Ladakh and the massive PLA presence along the LAC continue despite Ma Jia’s claim of “improvement” of bilateral ties between China and India. Maybe, the Chinese diplomat referred to his country’s highly beneficial trade ties making India import more from China despite the increasing border tensions. The PLA has practically surrounded India with its growing presence in the country’s neighbouring countries.

There are limitations to raising import trade tariffs. Under the World Trade Organisation (WTO), when countries agree to open their markets for goods and services, they “bind” their commitments. For goods, these bindings amount to ceilings on customs tariff rates. On the contrary, countries are free to impose non-tariff barriers which can be even a country specific to protect not only the domestic industry but also the national interest. The types of nontariff barriers could be many, including the use of licenses to limit imported goods to specific businesses.

Others include the issue of quotas, embargoes, sanctions, and the use of rigorous customs inspections to severely delay the clearance of imported goods impacting their costs and utility. It may be important to note that countries impose nontariff import barriers to safeguard national security interests. China is known to be a major implementer of nontariff import barriers itself. And, China has long been an interventionist in its Yuan exchange rate against the US dollar to benefit its foreign trade. Currently, China is believed to have imposed import quotas on some 40 different categories of commodities.

To bring China effectively on a discussion table to reduce the border tension, it is time that India uses its trade and investment handle with the belligerent neighbour to give a clear message. Trade and troops stand-off should not be allowed to continue simultaneously. India also needs to be more vigilant on the activities of Chinese nationals staying in India under job visas or tourist visas. Earlier, the government informed Parliament that 81 Chinese nationals were given “Leave India Notice” from 2019 to 2021.

India’s Minister of State for Home Affairs Nityanand Rai said 726 Chinese nationals were placed in ‘adverse list’ for violating visa conditions and engaging in other illegal activities. The minister also said that 117 Chinese nationals were deported between 2019 and 2021. The matter looks rather serious in the context of growing diplomatic and military tensions between the two countries. It may be time for India to take strong and appropriate actions, including implementation of trade barriers, to express its disapprobation of China’s expansionist policies and keeping tensions alive along the LAC. (IPA Service)