Non-tariff Measures
What are non-tariff measures?
Non-tariff measures are policy measures other than customs tariffs that can potentially affect traded goods by changing their quantities, prices, or both. They often aim to protect public health or the environment, and may imply information, compliance, and procedural costs. These measures apply to either imports or exports and are classified into 16 categories. The United Nations Conference on Trade and Development (UNCTAD) provides a full list of NTMs and their definitions.
What are different types of non-tariff measures?
Below is a table of three broad categories of NTMs as categorized by UNcTAD. The first two apply to importers, or buyers, and the last applies to exporters, or sellers. It is important to note that some of these NTMs, such as quotas and trade-related investment measures, are prohibited under World Trade Organization (WTO) rules except for specific circumstances. For more details, please see the WTO’s General Agreement on Tariffs and Trade (GATT).
| Technical measures on imports | |
| A | Sanitary and phytosanitary (SPS) measures: These include measures to restrict substances, ensure food safety, and prevent the dissemination of diseases or pests. (See SPS guide) |
| B | Technical barriers to trade: These relate to product, technical, or quality requirements. They also include measures on labelling and packaging. (See TBT guide) |
| C | Pre-shipment inspection and other customs formalities: These involve other technical measures. |
| Non-technical measures on imports | |
| D | Contingent measures: These include antidumping, countervailing, and safeguard measures. |
| E | Licensing and quotas: These also cover quantity controls and other related restrictions. |
| F | Price control measures: These affect the prices of imported goods. |
| G | Finance measures: These restrict payment of imports and terms of payment (see guide). |
| H | Competition measures: These grant privileges to one or more economic operators. |
| I | Trade-related investment measures: These impose local content or export conditions on investment. |
| J | Distribution restrictions: These regulate the internal distribution of imported products. |
| K | Restrictions on post-sales services: These restrict, for example, the provision of accessory services. |
| L | Subsidies and other forms of support: These include financial transfers to enterprises, individuals, or households. |
| M | Government procurement restrictions: These restrict bidders from selling products to a foreign government. |
| N | Intellectual property: These involve restrictions or rules related to intellectual property rights. |
| O | Rules of origin: These are criteria involving the origin of products or their inputs, which can affect whether these are subject to restrictions, duties, or other measures. (see guide) |
| Exports | |
| P | Export-related measures: include export quotas and other export prohibitions. |
Why are NTMs a barrier to MSME trade?
Like duties and charges, NTMs entail additional costs that businesses have to bear when complying with trade-related procedures. Meeting standards and certification requirements, for example, can involve significant investment by a business to ensure a product meets safety or environmental regulations, in particular when such requirements are not properly informed. While NTMs hinder the ability of small and large firms alike to trade, the smaller ones are often more affected. A survey conducted by the International Trade Centre (ITC) has revealed that more than half of the small businesses surveyed across 23 countries reported being affected by NTM-related trade obstacles, compared to around two-fifths of large firms. Some of the reasons that make NTMs obstacles for small businesses to trade include time constraints, poor transparency, administrative burdens, and discriminatory behavior by officials.
What should policymakers consider?
Policymakers can play a role in partnering with business support organizations to assist small businesses in complying with NTMs imposed both at home and abroad. The ITC’s SME Competitiveness Outlook 2016, “Meeting the Standard for Trade,” proposes eight areas where policymakers can take actions to reduce burdensome procedures resulting from NTMs. These areas include access to information, firm capacity, technical infrastructure, public-private partnerships, border obstacles, and international mechanisms.
Where can policymakers access more resources?
- International Classification of NTMs – 2019 version: The United Nations Conference on Trade and Development (UNCTAD) provides a taxonomy of NTMs typically applied by countries. Visit the UNCTAD website.
- ITC Program on NTMs: The ITC assists countries in increasing trade transparency by identifying non-tariff obstacles that exist in business sectors. It does so by conducting NTM business surveys, undertaking regulatory mappings, and providing policy guidance on follow-up actions in response to NTMs. Visit the ITC website.
- NTMs to Trade: UNCTAD has conducted a study to analyze the utilization, methods of quantification, and impacts of NTMs, showing the implications of these measures for developing countries. Visit the UNCTAD website.
Where can policymakers access good practices or national examples?
- ITC Series on NTMs: The ITC conducts country-level surveys that identify business obstacles and bottlenecks posed by NTMs, providing insights on areas for policy actions. Visit the ITC website.
- Country and Region Experiences with Streamlining NTMs: The World Bank has compiled experiences that developing countries have had in reforming processes related to NTMs to advance trade facilitation objectives. Visit the World Bank website.
- Trade Obstacles Alert in the ECOWAS Region: The ITC has partnered with the Economic Community of West African States (ECOWAS) to design a website that identifies trade barriers encountered by businesses in the region to facilitate the monitoring and removal of burdensome procedures. Visit the ECOWAS Trade Obstacles Alert.
- Streamlining NTMs in the Association of Southeast Asian Nations (ASEAN): The Economic Research Institute for ASEAN and East Asia has identified areas where countries from East Asia and the Pacific can further improve progress in removing NTMs that affect intra-regional trade. Visit the ERIA website.
