Trade regulators must strike a delicate balance

06 October 2016

Regulators must strike a delicate balance between protecting consumers and the environment on the one hand and not restricting trade on the other, a top UNCTAD official said on Wednesday at a meeting on trade regulations.

With global trade set to grow at its slowest pace since 2009, some analysts now see new opportunity for trade growth in the more efficient application of health, environmental and other regulations, commonly known as non-tariff measures (NTMs).

"Regulations should be designed and implemented in smart ways that maximize non-trade objectives – that is to protect consumers, the environment, plants and animals – while not negatively impacting the movement of goods and services," UNCTAD Secretary-General Mukhisa Kituyi said.

"We have to find a balance between improving smart regulations and the facilitation of trade," he said.

As tariffs have fallen to historic lows, NTMs have continued to grow. They now affect some 96% of global trade.

"When I was trade minister of Kenya, the introduction of traceability requirements for flowers and vegetables entering the European market was a nightmare," Dr. Kituyi said.

"Most producers were small-scale women's groups, and to ask these groups to comply with traceability for certification purposes represented a very dramatic barrier to market access," Dr. Kituyi said.

One growing concern is that NTMs disproportionately affect the kinds of agricultural and textile goods produced in the poorest countries.

"We found that the inability of Least Developed Countries to comply with NTMs from G20 countries cost them an estimated $23 billion a year," he said, adding that removing these measures could boost LDC exports by 15%.

Despite the growing prevalence of NTMs, researchers and policy makers still lack data and common definitions. A new NTM database, launched by UNCTAD and six other bodies in July 2016, helps to fill these gaps.

The database classifies NTMs by both product and restriction. It now covers 57 countries amounting to over 80% of world trade. It will also benefit producers.

An exporter of cut flowers from Kenya, for example, can look under "Cut Flowers" to learn about import requirements into the European Union.

A professor from the University of Sussex, Alan Winters, said the next challenge will be to aggregate the data and to look more closely at how different measures affect trade in specific sectors.