Launching a new database on "non-tariff measures", Ralf Peters explaines what they are, and how they disadvantage developing countries.
Ralf Peters, Chief of UNCTAD's Trade Information Section, has a lot to say on an important topic that few people even think about - a web of international trade rules that determine what goods people can buy, and from where.
Launching a new database on "non-tariff measures" (NTMs) to help both policy makers and producers untangle this web at UNCTAD 14 in Nairobi, Kenya, Ralf explained what NTMs are, and how they disadvantage developing countries.
Q: "Non-tariff measures" -- they sound technical. But what are they?
A: NTMs are policy instruments in two categories. The first consists of traditional trade instruments like quotas, anti-dumping measures and price measures, and these are something we've known about for a long time. The second category consists of technical measures related to product characteristics.
Think about a bottle of mineral water. There are certain requirements for it to be exported: the water has to be free from pesticides, say. Another factor we might think of is labelling. So on the label you find the ingredients, and countries want this label to be printed in their national language by law. This all adds to the cost of trade.
Q: How are the two categories different?
A: The first are designed by intention to restrict trade and keep imports out. The other category usually has non-trade objectives like protecting health and the environment. Therefore, the latter are legitimate as countries have the right to protect health of their citizens. nevertheless, they have implications for trade.
Q: How does this second category affect developing countries?
A: It disproportionately affects them because the requirements for safe food, for example, are the same for all importers.
It is easier, in relative terms, for a U.S. producer to comply with the requirements than for even larger emerging markets like Brazil. But it is very costly and difficult for smaller developing countries to comply with these requirements, particularly Least Developed Countries (LDCs).
LDCs have small companies which have fixed costs. Infrastructure is a problem because LDCs tend not to have the accredited laboratories needed for compliance. They are doubly affected because many NTMs concern the kind of agricultural or textile products that LDCs largely export, as opposed to the manufactured goods that more developed developing countries produce for export.
Q: So NTMs are used as an instrument of trade policy. But are there good reasons to have NTMs?
A: Yes, absolutely. I know that the country where I live, Switzerland, has regulations that mean the toys that I buy are free from certain unhealthy products. For example, I can buy toys made in China for my kids because I know they are safe. And if others do the same, and Switzerland buys more toys from China, then these NTMs have actually increased trade. Indeed, some NTMs are trade-enhancing while many are trade-restrictive.
Q: It's quite a complicated picture. How do you sort it out?
A: UNCTAD has been collecting data on NTMs for many decades. And since 1996, under WTO rules, there has been a growing need for this information.
Under the leadership of UNCTAD and other bodies, a new classification for NTMs was developed so that we now have a common language. Then UNCTAD read the national NTM legislation in different countries to understand what NTMs were in place. We classified the NTMs by product and by restriction.
We did this for about 30 variables for each product, with partners, and we have covered 56 countries amounting to 80% of world trade. We fed all this into a big database, the most comprehensive of its kind, which we launched at UNCTAD 14 in Nairobi.
Q: And who does this database help? Producers who want to export? Importers?
A: It helps producers because you can search by product. If you are an exporter of, say, cut flowers from Kenya, you can look under "Cut Flowers" and see what the requirements are for them in the EU.
It's equally useful for importers because they need "inputs" for producing their own goods. So for Kenya, you would need to know the requirements for importing a tractor which you would need to produce… cut flowers.