Non-tariff measures, or NTMs, have long distorted global trade and have been an anathema to the process of multilateral or bilateral negotiations for opening up markets. The latest report from the World Trade Organisation (WTO) shows several NTMs are based on the WTO Agreements on Sanitary and Phytosanitary Measures (SPS) or Technical Barriers to Trade (TBT).
While several of these measures are rightly used to protect public health, the report says that NTMs can also be utilised by political incumbents to protect domestic producers.
One area that has witnessed a proliferation of NTMs is the food sector. Food safety measures, the WTO report states, have proliferated as a tool to respond to challenges arising from the need to protect animal, plant and human life. This has led to a rise in NTMs across continents. As a result, various approaches to mitigate possible negative trade impacts, such as harmonisation of standards as well as equivalence and commitment to a set of rules, are receiving widespread attention among the members of the multilateral body.
The report states that the WTO data on notifications show an increasing use of TBT/SPS measures since the mid-1990s. The rise in the incidence of TBT/SPS measures is reflected in an increase in the number of specific trade concerns raised by WTO members in the TBT and SPS committees. SPS measures used by countries include quarantine requirements, restricting entry through a few ports to enforce measures and fixing minimum residue levels that have to be based on scientific risk assessment.
The WTO report, quoting from the evidence from surveys conducted by the International Trade Commission (ITC), suggests that TBT/SPS measures are the most burdensome for developing countries’ exporters. In 2010, close to 50 per cent of the NTMs perceived as burdensome by exporting firms were TBT/SPS measures.
Ninety four per cent of specific trade concerns regarding SPS measures and 29 per cent of those regarding TBT are related to agriculture. Evidence from WTO disputes also shows a greater number of citations of the SPS and TBT agreements in cases involving agricultural products than in other cases, the report said.
An important objective of the SPS agreement has been harmonisation of standards to help countries make trade easier, but the mutual recognition agreements have proved challenging to negotiate.
Also, given the different standards prevalent due to differing levels of development in different countries, harmonisation of standards has been very difficult to practise. The Codex Alimentarius Commission, which, for instance, helps harmonise standards across countries, only has recommendatory status — which means that in several instances countries chose to have a higher or lower standard. What is really important for countries is to ensure that they move towards harmonisation using the international benchmark like Codex so that trade can be enhanced despite the myriad of regulations across the globe.
On a positive note, the WTO report states that while regulatory standards restrict trade in agricultural products, the existence of standards often has a positive effect on trade in manufactured products, especially in high-technology sectors.
NTMs have been part of trade for many years. Though countries across the globe have been bringing down tariff barriers through regional and bilateral trade agreements, besides WTO negotiations, they have been unable to tackle NTMs successfully.
The only sector that tried to address the issue has been the auto sector. It used to hold a regular dialogue on Geneva to address this issue. However, there is a need for some important initiatives from countries across the world.
The report identifies several challenges for international cooperation, and the WTO more specifically, and then suggests some steps to tackle the issue.
First, it seeks to improve transparency in the adoption of non-tariff measures. The WTO hopes that the newly created WTO database I-TIP (Integrated Trade Intelligence Portal) will help improve transparency. Second, it calls for more effective criteria to identify why a measure is used. Third, it states that an increase in global production chains seeks deeper integration and regulatory convergence. Finally, it lays stress on capacity building as being vital to improving international cooperation. A combination of these measures is needed to boost trade.
The writer is Principal Adviser with APJ-SLG Law Offices