Non-tariff barriers

Quick definition: measures to limit imports without charging a fee, duty or, such as technical requirements, health and safety regulations.

Synonym: Non-tariff restrictions

What is a non-tariff barrier?

A non-tariff barrier is the application of trade measures designed to limit import and export of a country or continent. This practice is the result of a political decision whose reasons and motives vary according to the different cases. This policy can be adopted in case of health and safety risks, as well as, in the event of non-conformity of goods or their packaging. Protectionist measures regarding the local economy are also among the reasons given to justify the trade barrier.

As its name indicates, the non-tariff barrier excludes all financial barriers, such as customs duties. It is not a ban in the strict sense of the term but rather highly dissuasive criteria of conformity with regulation standards or other specific conditions. These policies are governed by the WTO (World Trade Organization) and the GATT (General Agreement on Tariffs and Trade) in order to avoid any abuse on the part of states and governments. Despite a certain tolerance for their application, these measures must remain exceptional for they have major consequences on the economy of a nation or region.

Authorization of one or many non-tariff barriers is accepted under specific circumstances. To attest their legitimacy, competent administrations can refer to different legislation texts, for example, agreements on health and phytosanitary measures and those pertaining to technical obstacles.

The different existing non-tariff barriers

The effectiveness of these methods depends on each situation. It is the reason why there are different non-tariff barriers to be applied, where appropriate, as vectors of economic (and political) action:

• Import and export quotas: this limitation of goods exchange over a variable period applies for the quantity of goods or an upper limit of their value;
• Licenses: these authorizations for trade in a given territory can be of intermittent nature (with restrictions) or general (without restrictions);
• Standards: impose conformity with specific quality standards. They are applicable for security reasons and health risks linked to usage or consumption of the goods concerned. They serve as a warranty of standards for consumers;
• Embargos: working along similar lines as quotas, however, embargos ban trade with a country in order to impact its economy with regards to imports and exports. If deemed necessary, they may be generalized across these two aspects of international trade;
• Administrative restrictions: the sheer weight of the formalities and response waiting times generates a stagnation of goods in the charter zone, which indirectly leads to prohibitive maintenance costs;
• Upper limits in currency conversion: this applies to businesses and private actors, aimed at limiting trade with a given partner.

Examples and practical applications

Legitimacy of application of the non-tariff barrier

The application of a non-tariff barrier results from a political decision. This decision can be substituted for a modification of customs duties. Justifications may sometimes appear vague regarding secondary interests, which could in themselves, explain application of the trade barrier. These sanctions have an impact on the economy of a nation or a region of the world, therefore, they could act as a response to a geopolitical problem. However, a non-tariff barrier may also result from protectionist measures whose legitimacy may be questionable, hence the necessity to govern this type of practice via international organizations and agreements.

Non-tariff barriers in figures

Most non-tariff barriers or measures concern agricultural products.

The most taxed products are dairy products with an average of 187% tax on dairy products in South Korea and 248 % in Canada for international dairy products.

Regulatory basis

Agreement on the application of sanitary and phytosanitary measures or the “SPS” agreement

Agreement on technical obstacles for trade - WTO