A contrast of the Practice of the U.S and Europe on Non-Tariff Trade Barriers Essay
A contrast of the Practice of the U.S and Europe on Non-Tariff Trade Barriers
The number of non-tariff trade barriers aimed at restricting the free flow of goods in trade have increased considerably in the last few years. This is despite this practice being widely criticized as it hampers trade and competition. Non trade barrier have been defined as the “non science based sanitary and phyto sanitary (SPS) standards, customs procedures, government monopolies and lack of transparency in regulations (US. Consulate General Press Releases)
The United state and the European Union have enjoyed a dynamic and fruitful trade and economic partnership in the recent past, making it the largest economic partnership globally and also the most crucial in the international economic system. This interaction though has not been without its major hiccups and momentous tensions. Such conflicts as the Doha Ronald Talks and the commercial aviation have helped heighten this tension. The United States and the European have placed non tariff trade barriers against each other as well as the rest of the world putting a stiff restriction against market access. It is such barriers that will remain the interest of this paper which will seek to contrast the non-tariff
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The agriculture sector has been the most talked about in all economic conventions covering trade barriers, they have also been the source of conflict defining the transatlantic relations. These revolves around the idea of the prospective governments shielding their “farmers from the full effect of market forces” (Raymond 10)
One of the major culprits behind trade barriers to the United States agricultural goods entering the United States is the common Agricultural Policy (CAP) incepted in 1962 by the EU. CAPS operations revolve around the need for free flows of agricultural goods across the countries that are members of EU, giving EU goods preferences over Imports and also the establishment of a system to oversea the “common financing of agricultural programs” (Raymond 11). According to the United States Department of agriculture “the U.S may be losing $4.97 billion exports because of questionable regulations” (Silvia and Tian 235). The barriers that hinder the entry of the United State agricultural goods to Europe have been identified by Sylvia and Tian (240) to be “market access, market expansion and market retention barriers.” These would be import bans among others. The most affected of agricultural products is the animal products, and processed foods which with most European countries demand regions inspection measures. In 1996 for example such barriers included “the EU bans on hormone-treated beef, poultry and possible ban resulting from a dispute regarding US test procedures” (242). The EU for example legislated against GMOs demanding that they be labeled as such; this has significantly reduced the amount of corn exported to Europe.
The United State through congressional act has imposed legislative restrictions against agricultural products emanating from Europe. At the turn of the century, the European Union outlined a number of questionable barriers erected by the United States that contravened the World Trade organization principles. Unlike European countries that have been banning organic food the United States has been criticized largely for introducing barriers that specifically target the European farmers so as to protect its farmers. It has for example banned products that use pesticide that have been linked to cancer. It also causes delays that are unwarranted in the process of labeling imports, resulting to heavy losses in case of perishable goods. The United States also has introduced labeling standards that do not conform to the usual International Standards, such inconsistencies result to increased extra cost to importers (O.E C.D. 24)
Aerospace industry has also of late been embroiled in a row over the subsidies introduced by the prospective governments towards their companies. This conflict centers on the subsidy growth to the Airbus Industries. European countries such as France, Spain and the United Kingdom have been subsidizing the production of airbuses. This hence has granted their companies undue advantage which is extended even to the airspace as they give preference to their own airlines discriminating against the competitors. The European Union maintains that this has been necessary as their companies cannot compete on an equal ground with the US aviation industry that has benefited from years of immense research by the Military. The European Union is accused of capital infusion and other forms of assistance that has helped it gain undue advantage over others. Whereas the European Union members bails out their airlines whenever they land into financial crisis the United States has been extending subsidies to its key airline, Boeing, on the pretext that it’s a key company whose financial instability is likely to have wide and far reaching ramifications to its economy in terms of job losses (Petersmann 17).
The United States has also resulted to protectionism in the steel industry just like most European countries do for agricultural products. President George Bush in 2003 introduced a 30% tariff on all steel imports apart from those of Canada and Mexico. Most European countries do not have non tariff trade barriers placed on steel but their companies on the receiving end from the unfair practices from the United States which has introduced punitive and restrictive legislations to protect its local companies (Joseph 13).
The United States has placed a myriad of non-tariff trade barriers on most manufactured goods that emanate from the European Union. Such barriers include the requirements that these goods have to conform to particular regulations and standards. The American Automobile Labeling Act has been pointed out as a major impediment on the importation of cars to the United States by European companies. The United States refuses to accept the certification of good by the European Union believing that it is not a valid customs union. Such barriers are further aggravated by the existence of numerous institutions that are required to be satisfied for imported goods to be allowed access to the market. States and municipal institutions have their own standards that have to be met before certification such requirements lack in clarity, uniformity and consistence.
Indeed a contrast of the United States and Europe not tariff trade barriers reveals that both have varied restrictions to good entering their market. Europe targets agricultural goods emanating from third countries and such goods have to be appropriately labeled if they are organic. Animal products from third countries in Europe have to undergo a rigorous process that increases the cost of production and reduces competition with the local producers. On the other hand the United States has introduced restrictions through issuing standards and labeling requirements that do not conform to the usual international standards.
Raymond J. Ahearn. Tariffs: Trade Conflict and the U.S.-European Union
Economic Relationship. April 11, 2007. retrieved on October 13, 2008 from
Silvia Weyerbrock and Tian Xia, 2000. Technical Trade Barriers in US /Europe Agricultural Trade. University of Delaware. Agribusiness, Vol 16 No. 2, 235 -251.
Joseph M. Grieco. Cooperation Among Nations: Europe, America, and Non-tariff Barriers to Trade.Cornell University Press, 1990, 33-45
Organisation for Economic Co-operation and Development, Indicators of Tariff and Non-tariff Trade Barriers. Organization for Economic Co-operation and Development, 1997; 23-46
Ernst-Ulrich Petersmann, Mark A. Pollack. Transatlantic Economic Disputes: The EU, the US, and the WTO. Oxford University Press, 2003; 13-19