Explainer
Non-tariff barriers can be more restrictive for trade than actual tariffs. During the second half of the 20th century, multilateral trade rounds drama
What is a non-tariff barrier?
A non-tariff barrier is any measure, other than a customs tariff, that acts as a barrier to international trade.
These include:
- regulations: Any rules which dictate how a product can be manufactured, handled, or advertised
- rules of origin: Rules which require proof of which country goods were produced in
- quotas: Rules that limit the amount of a certain product that can be sold in a market.
Why do they matter?
Non-tariff barriers can be more restrictive for trade than actual tariffs. During the second half of the 20thcentury, multilateral trade rounds dramatically reduced tariffs. In 1949, the US charged an average tariff of 33.9%. Today it is 3.5%. The EU’s is 5.3%, while China’s is 9.5%.
With the exception of a few sensitive products where tariffs remain high, it is non-tariff barriers that are the real impediment to international trade today. A 2009 study of the trade policies of 91 countries found that non-tariff barriers were equivalent to a 12% tariff barrier across the sample. The UN Conference on Trade and Development found non-tariff barriers contribute more than twice as much as tariffs to overall market access trade restrictiveness.
Can these non-tariff barriers be removed?
Trade deals such as the Comprehensive Economic and Trade Agreement (CETA) and the Transatlantic Trade and Investment Partnetship (TTIP) increasingly focus on reducing non-tariff barriers, such as regulation and intellectual property requirements, as well as reducing tariffs.
For example, during the TTIP negotiations, the EU aimed to remove the US’s 1.25% tariff on cars. But more important were the non-tariff barriers, which added 26–27% to the cost of selling cars to the US. The EU’s view was that a comprehensive trade deal, such as TTIP, should reduce these costs to 15%.
What non-tariff measures might apply to the UK’s new relationship to the EU?
Most of the potential new UK-EU relationships will involve new non-tariff barriers to trade with the EU. One of the advantages cited of leaving the EU is the freedom not to adhere to certain EU regulations. But regulatory divergence from the EU may make it harder to trade goods, introducing non-tariff barriers. If the UK signed a free trade agreement, but left the EU customs union, any goods crossing the border would have to meet rules of origin requirements to prove that they did indeed come from the UK – introducing paperwork and non-tariff barriers.
Are non-tariff ‘measures’ the same as non-tariff ‘barriers’?
Technically the two are different, though in practice these terms are often used interchangeably.
Some non-tariff measures are not actually barriers; instead they can increase the volume of trade. For instance, a country might require that all food items have to be labelled in a certain way. While this might introduce an administrative burden (and a cost) on imported goods, it might also give consumers more confidence to buyif they can see that foreign products conform to local standards.
List of non-tariff barriers
The UN Conference on Trade and Development classifies 16 types of non-tariff barrier, ranging from measures favouring domestic industries to intellectual property to measures on plant and animal health:
