Non-Tarif Barriers to Trade

Non-Tarif Barriers (NTBs) refer to restrictions that result from prohibitions,

conditions, or specifc market requirements that make importation or
exportation of products difcult andor costl!" NTBs also include un#ustifed
andor improper application of Non-Tarif $easures (NT$s) such as sanitar!
and ph!tosanitar! (%&%) measures and other technical barriers to Trade (TBT)"
NTBs arise from diferent measures taken b! 'o(ernments and authorities in
the form of 'o(ernment la)s, re'ulations, policies, conditions, restrictions or
specifc requirements, and pri(ate sector business practices, or prohibitions
that protect the domestic industries from forei'n competition"
*xamples of Non-Tarif Barriers
Non-Tarif Barriers to trade can arise from+
,mport bans
-eneral or product-specifc quotas
.omplexdiscriminator! /ules of 0ri'in
1ualit! conditions imposed b! the importin' countr! on the exportin'
countries
2n#ustifed %anitar! and &h!to-sanitar! conditions
2nreasonableun#ustifed packa'in', labellin', product standards
.omplex re'ulator! en(ironment
3etermination of eli'ibilit! of an exportin' countr! b! the importin' countr!
3etermination of eli'ibilit! of an exportin' establishment (frm, compan!) b!
the importin' countr!"
4dditional trade documents like .ertifcate of 0ri'in, .ertifcate of
4uthenticit! etc
0ccupational safet! and health re'ulation
*mplo!ment la)
,mport licenses
%tate subsidies, procurement, tradin', state o)nership
*xport subsidies
5ixation of a minimum import price
&roduct classifcation
1uota shares
$ultiplicit! and .ontrols of 5orei'n exchan'e market
,nadequate infrastructure
6Bu! national6 polic!
0(er-(alued currenc!
/estricti(e licenses
%easonal import re'imes
.orrupt andor len'th! customs procedures
What are Non-Tarif measures?
Non-tarif measures (NT$s) are 'enerall! defned as polic! measures other
than ordinar! customs tarifs that can potentiall! ha(e an economic efect on
international trade in 'oods, chan'in' quantities traded, or prices or both
(2N.T433,T.T4B7889:)" The detailed classifcation of NT$s b! 2nited
Nations .onference on Trade and 3e(elopment, (2N.T43) identifes and
distin'uishes amon' the (arious forms of non-tarif measures"
The 2N.T43 classifcation of non-tarif measures is taxonom! of all those
measures considered rele(ant in toda!;s situation in international trade" The
classifcation is an e(ol(in' process that should adapt to the realit! of
international trade and data collection needs"
The classifcation comprises technical and non-technical measures, such as
sanitar! or en(ironmental protection measures,TBTs and other traditionall!
used as instruments of commercial polic!, e"'" quotas, price control, exports
restrictions, or contin'ent trade protecti(e measures, as )ell as other behind-
the-border measures, such as competition, trade-related in(estment
measures, 'o(ernment procurement or distribution restrictions"
This classifcation ackno)led'es existence of measures and does not #ud'e
on le'itimac!, adequac!, necessit! or discrimination of an! form of polic!
inter(ention used in international trade" ,t helps exporters )orld)ide to
access transparent, reliable and comparable information and enables
understandin' of NT$s"
The classifcation of non-tarif measures encompasses <= chapters (4 to &),
and each indi(idual chapter is di(ided into 'roupin's )ith depth up to three
le(els"

economic communities in the )orld toda! that has 'ro)n )ithin a (er! short
time" %ince, the treat! of establishment came into force in <999, the re'ion
has )itnessed unprecedented speed in )hich other protocols implementin'
the treat! ha(e been ne'otiated, si'ned and ratifed" The inte'ration
milestones are too close" 5or instance, the *4. .ustoms 2nion and the
.ommon $arket protocols )ere ne'otiated and became operational in 788=
and 78<8 respecti(el!" The *4. inte'ration roadmap also assumes a 9

political federation b! 78<>" The short period in )hich &artner %tates ha(e
completed inte'ration milestones poses (arious implementation obstacles"
5or instance, ?en!an frms doin' business in the *4. ha(e been afected b!
proliferation of NTBs" The proliferation of NTBs in the re'ion is exacerbated b!
inherent polic! 'aps in the implementation of la)s and policies afectin'
business" The stud! undertakes to establish the state of pla! of trade
restricti(e barriers, policies and la)s )hich inhibit the smooth operations of
business entities in the re'ion" 4lthou'h mechanisms ha(e been put in place
to eliminate non tarif barriers in *4., the process has been slo) than
anticipated" 0ther ne) forms of NTBs continue to come up" The stud!
explores the reasons behind the current situation, challen'es faced and
possible remedial measures" 4s per the *4. trade report 78<7, the re'ion has
a combined population of more than <:>"@ million people, land area of <"A7
million sq kilometres and a combined -ross 3omestic &roduct (-3&) of BA@"C
billion" The re'ion bears 'reat strate'ic and 'eopolitical si'nifcance and
prospects to the business communit!" To make
Impacts of trade barriers on Business[edit]
Trade barriers are often criticized for the effect they have on the developing world.
Because rich-country players call most of the shots and set trade policies, goods such as
crops that developing countries are best at producing still face high barriers. Trade
barriers such as taxes on food imports or subsidies for farmers in developed economies
lead to overproduction and dumping on world markets, thus lowering prices and hurting
poor-country farmers. Tariffs also tend to be anti-poor, with low rates for raw
commodities and high rates for labor-intensive processed goods. The Commitment to
evelopment !ndex measures the effect that rich country trade policies actually have on
the developing world.
"nother negative aspect of trade barriers is that it would cause a limited choice of
products and would therefore force customers to pay higher prices and accept inferior
#uality.$%&
Trade barrier obstructs free trade. Before exporting or importing to other countries,
firstly, they must be aware of restrictions that the government imposes on the trade.
'ubse#uently they need to make sure that they are not violating the restrictions by
checking those related regulation on tax or duty, and finally they probably need a license
in order to ensure a smooth export or import business and reduce the risk of penalty of
violation. 'ometimes the situation becomes even more complicated with the changing of
policy and restrictions of a country.
!n the past, many companies relied on spreadsheets and manual process to keep track of
compliance issues related to incoming and outgoing shipments, which takes risks of
potential errors.
intro:-Non-tariff barriers to trade (NTBs) are trade barriers that restrict imports,
but are unlike the usual form of a tariff. 'ome common examples of *TB+s are anti-
dumping measures and countervailing duties, which, although called non-tariff barriers,
have the effect of tariffs once they are enacted.
Their use has risen sharply after the ,T- rules led to a very significant reduction in tariff
use. 'ome non-tariff trade barriers are expressly permitted in very limited circumstances,
when they are deemed necessary to protect health, safety, sanitation, or depletable natural
resources. !n other forms, they are criticized as a means to evade free trade rules such as
those of the ,orld Trade -rganization (,T-), the .uropean /nion (./), or *orth
"merican 0ree Trade "greement (*"0T") that restrict the use of tariffs.
'ome of non-tariff barriers are not directly related to foreign economic regulations but
nevertheless have a significant impact on foreign-economic activity and foreign trade
between countries.
Trade between countries is referred to trade in goods, services and factors of production.
*on-tariff barriers to trade include import #uotas, special licenses, unreasonable
standards for the #uality of goods, bureaucratic delays at customs, export restrictions,
limiting the activities of state trading, export subsidies, countervailing duties, technical
barriers to trade, sanitary and phyto-sanitary measures, rules of origin, etc. 'ometimes in
this list they include macroeconomic measures affecting trade.
types:-
'pecific 1imitations on Trade2
1. !mport 1icensing re#uirements
2. 3roportion restrictions of foreign domestic goods (local content re#uirements)
3. 4inimum import price limits
4. 0ree
5. .mbargoes
Customs and "dministrative .ntry 3rocedures2
6. 5aluation systems
7. "nti-dumping practices
8. Tariff classifications
9. ocumentation re#uirements
10. 0ees
'tandards2
11. 'tandard disparities
12. !ntergovernmental acceptances of testing methods and standards
13. 3ackaging, labeling, and marking
6overnment 3articipation in Trade2
14. 6overnment procurement policies
15. .xport subsidies
16. Countervailing duties
17. omestic assistance programs
Charges on imports2
18. 3rior import deposit subsidies
19. "dministrative fees
20. 'pecial supplementary duties
21. !mport credit discrimination
22. 5ariable levies
23. Border taxes
-thers2
24. 5oluntary export restraints
25. -rderly marketing agreements
Types of Non-Tariff Barriers[edit]
There are several different variants of division of non-tariff barriers. 'ome scholars
divide between internal taxes, administrative barriers, health and sanitary regulations and
government procurement policies. -thers divide non-tariff barriers into more categories
such as specific limitations on trade, customs and administrative entry procedures,
standards, government participation in trade, charges on import, and other categories.
The first category includes methods to directly import restrictions for protection of
certain sectors of national industries2 licensing and allocation of import #uotas,
antidumping and countervailing duties, import deposits, so-called voluntary export
restraints, countervailing duties, the system of minimum import prices, etc. /nder second
category follow methods that are not directly aimed at restricting foreign trade and more
related to the administrative bureaucracy, whose actions, however, restrict trade, for
example2 customs procedures, technical standards and norms, sanitary and veterinary
standards, re#uirements for labeling and packaging, bottling, etc. The third category
consists of methods that are not directly aimed at restricting the import or promoting the
export, but the effects of which often lead to this result.
The non-tariff barriers can include wide variety of restrictions to trade. 7ere are some
example of the popular *TBs.
Licenses[edit]
The most common instruments of direct regulation of imports (and sometimes export) are
licenses and #uotas. "lmost all industrialized countries apply these non-tariff methods.
The license system re#uires that a state (through specially authorized office) issues
permits for foreign trade transactions of import and export commodities included in the
lists of licensed merchandises. 3roduct licensing can take many forms and procedures.
The main types of licenses are general license that permits unrestricted importation or
exportation of goods included in the lists for a certain period of time8 and one-time
license for a certain product importer (exporter) to import (or export). -ne-time license
indicates a #uantity of goods, its cost, its country of origin (or destination), and in some
cases also customs point through which import (or export) of goods should be carried out.
The use of licensing systems as an instrument for foreign trade regulation is based on a
number of international level standards agreements. !n particular, these agreements
include some provisions of the 6eneral "greement on Tariffs and Trade and the
"greement on !mport 1icensing 3rocedures, concluded under the 6"TT (6"TT)..
Quotas[edit]
1icensing of foreign trade is closely related to #uantitative restrictions 9 #uotas - on
imports and exports of certain goods. " #uota is a limitation in value or in physical terms,
imposed on import and export of certain goods for a certain period of time. This category
includes global #uotas in respect to specific countries, seasonal #uotas, and so-called
:voluntary: export restraints. ;uantitative controls on foreign trade transactions carried
out through one-time license.
;uantitative restriction on imports and exports is a direct administrative form of
government regulation of foreign trade. 1icenses and #uotas limit the independence of
enterprises with a regard to entering foreign markets, narrowing the range of countries,
which may be entered into transaction for certain commodities, regulate the number and
range of goods permitted for import and export. 7owever, the system of licensing and
#uota imports and exports, establishing firm control over foreign trade in certain goods,
in many cases turns out to be more flexible and effective than economic instruments of
foreign trade regulation. This can be explained by the fact, that licensing and #uota
systems are an important instrument of trade regulation of the vast ma<ority of the world.
The conse#uence of this trade barrier is normally reflected in the consumers= loss because
of higher prices and limited selection of goods as well as in the companies that employ
the imported materials in the production process, increasing their costs. "n import #uota
can be unilateral, levied by the country without negotiations with exporting country, and
bilateral or multilateral, when it is imposed after negotiations and agreement with
exporting country. "n export #uota is a restricted amount of goods that can leave the
country. There are different reasons for imposing of export #uota by the country, which
can be the guarantee of the supply of the products that are in shortage in the domestic
market, manipulation of the prices on the international level, and the control of goods
strategically important for the country. !n some cases, the importing countries re#uest
exporting countries to impose voluntary export restraints.
Agreement on a "voluntary" eport restraint[edit]
!n the past decade,$when?& a widespread practice of concluding agreements on the
:voluntary: export restrictions and the establishment of import minimum prices imposed
by leading ,estern nations upon weaker in economical or political sense exporters. The
specifics of these types of restrictions is the establishment of unconventional techni#ues
when the trade barriers of importing country, are introduced at the border of the exporting
and not importing country. Thus, the agreement on :voluntary: export restraints is
imposed on the exporter under the threat of sanctions to limit the export of certain goods
in the importing country. 'imilarly, the establishment of minimum import prices should
be strictly observed by the exporting firms in contracts with the importers of the country
that has set such prices. !n the case of reduction of export prices below the minimum
level, the importing country imposes anti-dumping duty, which could lead to withdrawal
from the market. >5oluntary: export agreements affect trade in textiles, footwear, dairy
products, consumer electronics, cars, machine tools, etc.
3roblems arise when the #uotas are distributed between countries because it is necessary
to ensure that products from one country are not diverted in violation of #uotas set out in
second country. !mport #uotas are not necessarily designed to protect domestic producers.
0or example, ?apan, maintains #uotas on many agricultural products it does not produce.
;uotas on imports is a leverage when negotiating the sales of ?apanese exports, as well as
avoiding excessive dependence on any other country in respect of necessary food,
supplies of which may decrease in case of bad weather or political conditions.
.xport #uotas can be set in order to provide domestic consumers with sufficient stocks of
goods at low prices, to prevent the depletion of natural resources, as well as to increase
export prices by restricting supply to foreign markets. 'uch restrictions (through
agreements on various types of goods) allow producing countries to use #uotas for such
commodities as coffee and oil8 as the result, prices for these products increased in
importing countries.
" #uota can be a tariff rate #uota, global #uota, discriminating #uota, and export #uota.
!mbargo[edit]
.mbargo is a specific type of #uotas prohibiting the trade. "s well as #uotas, embargoes
may be imposed on imports or exports of particular goods, regardless of destination, in
respect of certain goods supplied to specific countries, or in respect of all goods shipped
to certain countries. "lthough the embargo is usually introduced for political purposes,
the conse#uences, in essence, could be economic.
"tandards[edit]
'tandards take a special place among non-tariff barriers. Countries usually impose
standards on classification, labeling and testing of products in order to be able to sell
domestic products, but also to block sales of products of foreign manufacture. These
standards are sometimes entered under the pretext of protecting the safety and health of
local populations.
Administrative and bureaucratic delays at t#e entrance[edit]
"mong the methods of non-tariff regulation should be mentioned administrative and
bureaucratic delays at the entrance, which increase uncertainty and the cost of
maintaining inventory.
Import deposits[edit]
"nother example of foreign trade regulations is import deposits. !mport deposits is a form
of deposit, which the importer must pay the bank for a definite period of time (non-
interest bearing deposit) in an amount e#ual to all or part of the cost of imported goods.
"t the national level, administrative regulation of capital movements is carried out
mainly within a framework of bilateral agreements, which include a clear definition of
the legal regime, the procedure for the admission of investments and investors. !t is
determined by mode (fair and e#uitable, national, most-favored-nation), order of
nationalization and compensation, transfer profits and capital repatriation and dispute
resolution.
$oreign ec#ange restrictions and foreign ec#ange controls[edit]
0oreign exchange restrictions and foreign exchange controls occupy a special place
among the non-tariff regulatory instruments of foreign economic activity. 0oreign
exchange restrictions constitute the regulation of transactions of residents and
nonresidents with currency and other currency values. "lso an important part of the
mechanism of control of foreign economic activity is the establishment of the national
currency against foreign currencies.
%istory[edit]
T#e transition from tariffs to non-tariff barriers[edit]
-ne of the reasons why industrialized countries have moved from tariffs to *TBs is the
fact that developed countries have sources of income other than tariffs. 7istorically, in the
formation of nation-states, governments had to get funding. They received it through the
introduction of tariffs. This explains the fact that most developing countries still rely on
tariffs as a way to finance their spending. eveloped countries can afford not to depend
on tariffs, at the same time developing *TBs as a possible way of international trade
regulation. The second reason for the transition to *TBs is that these tariffs can be used
to support weak industries or compensation of industries, which have been affected
negatively by the reduction of tariffs. The third reason for the popularity of *TBs is the
ability of interest groups to influence the process in the absence of opportunities to obtain
government support for the tariffs.
Non-tariff barriers today[edit]
,ith the exception of export subsidies and #uotas, *TBs are most similar to the tariffs.
Tariffs for goods production were reduced during the eight rounds of negotiations in the
,T- and the 6eneral "greement on Tariffs and Trade (6"TT). "fter lowering of tariffs,
the principle of protectionism demanded the introduction of new *TBs such as technical
barriers to trade (TBT). "ccording to statements made at /nited *ations Conference on
Trade and evelopment (/*CT", @AAB), the use of *TBs, based on the amount and
control of price levels has decreased significantly from CBD in EFFC to EBD in @AAC,
while use of other *TBs increased from BBD in EFFC to GBD in @AAC.
!ncreasing consumer demand for safe and environment friendly products also have had
their impact on increasing popularity of TBT. 4any *TBs are governed by ,T-
agreements, which originated in the /ruguay Hound (the TBT "greement, '3' 4easures
"greement, the "greement on Textiles and Clothing), as well as 6"TT articles. *TBs in
the field of services have become as important as in the field of usual trade.
4ost of the *TB can be defined as protectionist measures, unless they are related to
difficulties in the market, such as externalities and information asymmetries between
consumers and producers of goods. "n example of this is safety standards and labeling
re#uirements.
The need to protect sensitive to import industries, as well as a wide range of trade
restrictions, available to the governments of industrialized countries, forcing them to
resort to use the *TB, and putting serious obstacles to international trade and world
economic growth. Thus, *TBs can be referred as a new of protection which has replaced
tariffs as an old form of protection.
biblo:-
http://en.wikipedia.org/wiki/Non-
tarif_barriers_to_trade