Improving the business environment for trade: Tackling non-tariff measures

24 September 2012
ITC News

During the past decades bilateral and multilateral trade agreements have led to a reduction in tariff-related barriers to global trade. But during the same period the world has experienced a steady rise in the number of non-tariff measures (NTMs).

These NTMs can provide major challenges to local, regional and global trade in both goods and services as many companies struggle to comply with an increasingly complex web of polices and at times opaque technical standards. Today NTMs are among the biggest barriers to international trade.

Many, if not most, NTMs are applied for legitimate reasons, such as to protect consumers. But even these well-intended NTMs can have negative consequences for enterprises' ability to trade, in particular in developing countries with a modest supportive infrastructure.

Less known is the fact that many barriers to trade in developing countries are domestic, and to a large extent a direct result of poor infrastructure and poor or adverse regulations. Hence, many of these barriers to trade are within control of the governments themselves - they hold the key to expanding exports from their countries.

Identifying barriers to trade and ensuring transparency in NTMs are therefore a precondition to taking action at both the national and international level. Pinpointing NTMs and understanding their effect on trade are key steps towards addressing the challenges posed by their proliferation.

Over the past few years, ITC has been systematically addressing NTMs. From 2007 to 2009, ITC was part of an international working group, initiated by UNCTAD Secretary-General Dr. Supachai Panitchpakdi, to establish a contemporary classification of NTMs. Based on this work, ITC has implemented an NTM programme covering 20 countries. Funded by the United Kingdom Department for International Development, this programme identifies barriers to trade as seen from a business perspective and provides advice to governments on how to overcome and reduce them.

As a result of this programme, policymakers, trade support institutions and enterprises are now better able to understand where compliance with NTMs can pose difficulties and how to overcome them.

Equally important, the programme has used the responses of the enterprises to provide trade negotiators and policymakers with the evidence necessary to decide on where best to take action. These actions can be supported through technical assistance programmes conducted by ITC and other organizations to address quality management, trade facilitation or sector competitiveness issues.

International action through the harmonization or mutual recognition of standards is another important means to assist countries in overcoming technical barriers to trade. One such initiative is the Standards and Trade Development Facility (STDF), a partnership between the World Trade Organization, Food and Agriculture Organization, World Organization for Animal Health, World Bank and national institutions, which supports developing countries in building their capacity to implement international sanitary and phytosanitary standards. Sri Lanka and Burkina Faso have both participated in ITC's NTM programme and have subsequently requested support from the STDF.

This edition of International Trade Forum identifies various kinds of NTMs and introduces the work being carried out to mitigate them.

ITC's NTM programme is not a magic wand that can bring down the barriers to trade in the immediate future. But it has indeed contributed to the recognition that for developing country economies to expand, NTMs have first to be identified and then remedies put in place. For this to happen on a larger global scale, a more substantial effort and greater cooperation are needed, both at the national and international level. Understanding and overcoming barriers to trade will not only benefit individual countries, it will also contribute to getting global economic growth back on track.