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The growing importance of non-tariff measures

06 October 2013

In August 2013, UNCTAD published a review of non-tariff measures (NTMs) and their economic policy implications for developing countries. The analysis notes that “the ability to gain market access depends increasingly on compliance with trade regulatory measures that are beyond the realm of traditional trade policy”. The report highlights the diversity of NTMs, which range from instruments of commercial policy (“e.g. quotas, subsidies, trade defence measures and export restrictions”) to instruments for the pursuit of non-trade-policy objectives (e.g. technical measures linked to food safety, SPS controls and environmental objectives). While these latter measures “often serve a legitimate purpose”, they can nevertheless “have important restrictive and distortionary effects on international trade”.

The UNCTAD report argues that “understanding the uses and implications of these trade policy instruments is essential for the formulation and implementation of effective development strategies.” However, this is not a simple exercise, since the effects of NTMs are difficult to quantify and are often “subtle, indirect and often very case-specific”.

UNCTAD maintains that “restrictive and distortionary effects of non-tariff measures may be systematically biased… against developing countries and more so against low-income and least developed countries,” although in many cases this may be unintentional. Developing countries often have more limited capacities to comply with NTMs “due to a less advanced production process technology, weak trade-related infrastructure and inadequate export services”. In addition, NTMs are most commonly applied in areas where developing countries have major export interests, with NTMs disproportionately affecting agricultural products. The UNCTAD analysis notes that “NTMs are often utilized to reinforce the market restrictions imposed by tariffs”, with NTMs being “generally much more important than tariffs in restricting market access, especially with regard to low-income countries”.

While information on technical measures may be placed in the public domain, it is “often buried in legal and regulatory documents”, making it difficult to access and assess. UNCTAD stresses the importance of quantifying the costs and benefits of NTMs.

Significantly, the analysis notes that “NTMs can have quite diverse effects, depending not only on their type and scope, but also on the economic framework in which they are applied.” The actual impact of specific NTMs is thus determined by the “implementation procedures and administration mechanisms” used.

UNCTAD points out that “non-tariff measures are also becoming a key topic of negotiations not only in North-South, but also in South-South contexts” and that therefore “it is crucial for developing countries to be fully aware of the effects of non-tariff measures, in regard to both market access and import competition.” This is not always the case. The report maintains that, to date, “the analysis related to non-tariff measures has not kept pace with their increasing complexity, resulting in a knowledge gap.”

The UNCTAD analysis includes a discussion on how to improve the transparency of the application of NTMs, in order to reduce costs of and obstacles to trade. It calls for a strengthening of “enforcement rules on existing notification mechanisms (at WTO or at regional level)” and for “global initiatives aimed at collecting and organizing data on NTMs”. It argues, with regard to NTMs, that “a multilateral policymaking process, although difficult, is critical to minimizing their distortionary and discriminatory effects.”

Editorial comment

Developments in 2012–13 have highlighted the growing importance of NTMs to ACP agro-food exports to the EU market – particularly technical measures implemented in pursuit of non-trade-policy objectives (see Agritrade articles ‘ New EU maximum residue levels hit Kenyan vegetable exports’, 28 April 2013, ‘ SPS approval opens US market to Kenyan French bean exports’, 19 August 2013, ‘ Tightening of Citrus Black Spot controls could pose challenges’, 28 April 2013, ‘ Commercial implications of EU SPS requirements hinder development of sma...’,4 May 2013 ). These experiences highlight the point made in the UNCTAD report – that the way that SPS and food safety measures are implemented in practice can carry important trade consequences.

Against this background, there would appear to be scope for the establishment of reporting and monitoring mechanisms for SPS and food safety disputes involving ACP countries, and feeding into an enhanced consultation mechanism on how changes are to be introduced and on the application of SPS and food safety controls. Such a consultation mechanism could then lay the basis for discussions over a possible ACP–EU arbitration mechanism for the resolution of SPS and food safety disputes where these arise.

These mechanisms could be complemented by an ACP initiative in the WTO to establish a binding multilateral mechanism for the resolution of SPS and food safety disputes, in line with the UNCTAD recommendation and the emerging debate on “the right to trade” (see Agritrade article ‘ Calls for “right to development” and “right to trade” to be enshrined in...’, 11 October 2013).

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