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.

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Background

Trade policy measures have shifted. The difference between trade policy, narrowly defined, and domestic regulations is increasingly blurred, and the ability to gain market access increasingly depends on compliance with trade regulatory measures.

Many such non-tariff measures (NTMs), such as sanitary and phytosanitary measures and technical barriers to trade, are also directly linked to the Sustainable Development Goals. A Multi-Agency Support Team group has developed the taxonomy – the international classification of NTMs – that has become a common language in the international trade community, including for Governments, regional and international organizations and researchers. Several members of the Multi-Agency Support Team group are also involved in the collection of data on NTMs.

What non-tariff measures are and why they are important

NTMs cover a broad range of policies, including traditional trade policy instruments, such as quotas or price controls, and regulatory and technical measures that stem from important nontrade-related objectives with regard to health and environmental protection. NTMs have become increasingly important for policymakers as tariffs have been significantly reduced, unilaterally and in trade agreements. The ability to gain and benefit from market access increasingly depends on compliance with trade regulatory measures such as sanitary requirements and goods standards, yet such NTMs represent a challenge for exporters, importers and policymakers. Many NTMs such as sanitary and phytosanitary measures and technical barriers to trade are directly linked to the Sustainable Development Goals. However, NTMs disproportionately negatively affect lower-income country trade.

Transparency on non-tariff measures needed

The Trade Analysis Information System, the largest global database on NTMs, will be launched at this meeting. This database – covering 56 countries accounting for 80 per cent of world trade, and containing more than 38,000 measures – is the most comprehensive database on NTMs, and its objective is to increase transparency in and understanding of regulations and trade control measures as, to date, systematic information on NTMs has been scarce and difficult to obtain. UNCTAD coordinates international efforts to reduce the transparency gap in NTMs.

Multi-Agency Support Team and non-tariff measures classification

The common language of the international trade community in this area is the international classification on NTMs, which was developed by the eight international organizations noted above, along with State observers.

The two-day Expert Meeting on Non-tariff Measures (NTMs) and Productivity, Non-Tariff Measures and Openness (PRONTO) will revise and further develop the classification, bringing together senior trade and development experts, policymakers, trade negotiators, academics and other stakeholders to examine challenges and progress made in the common understanding of NTMs and transparency. The event will be combined with a PRONTO meeting on NTMs. The PRONTO project is a collaborative research project on regulatory barriers to trade supported by the European Commmission.