symbol

WTO ONLINE TOOLS: UNTCAD Non-tariff Measures (NTM) programme

This is the second installment on a series of posts on WTO Online Tools that will provide information to all types of stakeholders in trade, including government agencies, producers, exporters, importers, service providers and so forth. You can refer back to the first piece written on the ePing tool in August. As of 15 June, around 6800 persons/institutions have registered on ePing, 44% are private sector stakeholders. We urge all interested readers to register as a user and to provide feedback in order to continue to improve the system.

The next tool up for discussion is the UNTCAD Non-tariff Measures (NTM) programme that covers a broad spectrum of measures including but not limited to Sanitary and Phytosanitary (SPS) measures and Technical Barriers to Trade (TBT). NTMs are defined as policy measures, other than ordinary customs tariffs, that can potentially have an economic effect on international trade in goods, changing quantities traded, or prices or both. As a result, NTMs cover a broad range of policies including traditional trade policy instruments, such as quotas or price controls. However, they also comprise technical regulatory measures that pursue important non-trade objectives that relate to health and environmental protection.

Why is this important?

For exporters, importers and policymakers, NTMs represent a major challenge.

For policymakers, NTMs become increasingly important as tariffs have been reduced significantly in trade agreements as well as unilaterally. Indeed, UNCTAD research shows that NTMs have become more restrictive than existing tariffs. Though many NTMs aim primarily at protecting public health or the environment, they also affect trade through information, compliance and procedural costs.

This matters for exporters and importers because the ability to gain and to benefit from market access depends increasingly on compliance with trade regulatory measures such as sanitary requirements and goods standards. Analysis shows that almost 70% of international trade is affected by TBT measures. Compliance with TBT measures invokes a price increase of on average 7% of the product price, which is more than all other NTMs combined. Some price increases are inevitable due to, for example, intrinsic costs of product safety. However, other costs are avoidable, such as information costs due to a lack of regulatory transparency.

The NTM transparency tool

The global NTM transparency initiative aims to address these transparency challenges. The data collection is not based on notifications but on careful reading of regulations in a country and the classification of products affected and measures contained in the regulation.

To this end, UNCTAD identified two avenues to reduce NTM-related trade costs without compromising on public health and environmental protection:

  1. Increase transparency and understanding of NTMs: Comprehensive and comparable information about NTMs is scarce and difficult to obtain. Information costs are high for policy makers and the private sector. UNCTAD, as part of the Multi-Agency Support Team (MAST) Group, led the work to draw up the International Classification of Non-Tariff Measures. Based on the MAST classification, UNCTAD has been collecting data on NTMs since 2012. Today, the data covers over 100 countries, containing more than 65.000 measures.

This data is publicly available under the section Data Dissemination of the NTM Hub.

  1. Promote regulatory frameworks and collaboration:The divergence of NTMs across countries causes trade to become more costly. Yet, these regulations are necessary to meet legitimate public policy objectives. This calls for smart policies that promote regulatory convergence, rather than elimination, to meet public policy objectives without restricting economic development. Indeed, UNCTAD research shows that regulatory convergence can considerably reduce trade costs related to technical NTMs. Because of these reasons, UNCTAD supports regulatory cooperation between countries and good regulatory practices by Member States through its policy work.

For further information on it, please refer to the section Policy Support of the NTM Hub.