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Why are non-tariff measures (NTMs) important?

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 NTMs affect them disproportionately.

unctad.org/NTM

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