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, such as Sanitary and Phytosanitary (SPS) measures and Technical Barriers to Trade (TBT).
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.
Take the example of a regulation that restricts pesticide residues in food products. This NTM seeks to address a legitimate public policy objective to protect human health and nutrition. At the same time, however, it puts additional requirements on firms in exporting countries to comply with it. Some of them may decide that exporting is no longer profitable. As a result, the regulation may restrict trade, leading to reduced income in exporting countries and higher consumer prices in importing countries. Smaller exporters and poorer countries voice such concerns in particular because NTM affect them disproportionately.
Understanding the uses and implications of NTMs is essential for the formulation and implementation of effective development strategies to meet the Sustainable Development Goals. To this end, UNCTAD identified two avenues to reduce NTM-related trade costs without compromising on public health and environmental protection:
- 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. There is a great need to develop a better understanding and transparency of NTMs. 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.
- Promote regulatory frameworks and collaboration: The divergence of NTMs across countries causes trade to become more costly. This poses major challenges to trading companies, which need to comply with country-specific product and process requirements. 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.