The application of NTMs and NTBs

Thursday, 26 May 2011 00:00 -     - {{hitsCtrl.values.hits}}

Non Tariff Measures (NTMs) and Non Tariff Barriers (NTBs) are terms increasingly used as obstacles to entering and retaining export markets. In certain instances, well negotiated agreements providing favourable market access through reduction of tariffs can be made ineffective by the application of NTMs and NTBs.

The International Trade Centre in a business briefing has identified NTMs as a major impediment to international trade and market access. Tariff rates in almost all countries have been gradually declining due to various reasons such as unilateral liberalisation, bilateral, regional and multilateral trade negotiations, resulting in tariffs being rather ineffective in certain instances in controlling imports from other countries.

Tariff liberalisation has resulted in increasing NTMs, which at times are necessary for protection of local industry, but can also be used as a protectionist measure to prevent imports which have special access through tariff liberalisation arrangements.

All NTMs cannot be identified as deliberate barriers to international trade as some of them are deemed necessary to safeguard health and for environmental protection. But some are criticised as deliberate attempts to prevent importers from benefiting from tariff liberalisation.

There is a difference between NTMs and NTBs. NTMs can be legally justified as requirements and regulations applied by countries for import and export, customs procedures and technical regulations. They can be in the form of stringent standards which increase the costs of compliance, technical regulations, sanitary and phyto sanitary regulations, price control measures such as anti dumping actions, etc.

NTBS most often cannot be justified legally, but are effective in blocking imports. At times NTBs can effectively negate the benefits of favourable market access to exporters. An UNCTAD survey in a study of trends between 1996 and 2004 had identified the following as some NTBs of concern to developing countries:

=In accessing markets of developed countries, technical measures and price control measures were the most typical barriers faced by developing country exporters.

=In trade between developing countries, customs and administrative entry procedures, para tariff measures such as import surcharges and other additional charges and other regulatory measures affecting infrastructure and institutions are among constraining trade obstacles

=Products of export interest to developing countries, such as agricultural and fisheries products, electrical equipment, pharmaceutical, textiles and clothing are the most affected by NTBS.

An important factor identified by the study is that NTBs have become significantly less identifiable. Previously, state involvement was through price controls, foreign currency controls; state marketing and import licensing and meant that such barriers to trade were clear. Today, while most of such controls have been lifted, while the present NTBs are inclined to be more arbitrary, qualitative and often non-transparent. The study goes onto state that the lack of transparency for regulating trade between governments has increased the misuse of the system.

Sri Lankan exporters also have to face non tariff barriers at times when exporting to other countries, some of which can be so subtle that identifying them as barriers takes a while. However, close collaboration between the private and public sectors can help to identify and resolve most such issues.

Since such barriers are not always documented, it is up to the exporters who face such stumbling blocks to bring them to the notice of the Government authorities. Many such issues can be and have been resolved through bilateral diplomacy.

What must be borne in mind is that some of the non tariff barriers are not necessarily actions taken by the Government, but might even be the result of internal procedures of various institutions and can be resolved through Governmental intervention.

With regard to issues concerning standards, signing of Mutual Recognition Agreements will help overcome such issues. With regard to various other issues, particularly bureaucratic issues, they can often be resolved through bilateral diplomacy.

(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)

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