non-tariff barriers

Non-tariff barriers are regulations imposed by governments to hinder or prevent the importation of certain goods without raising taxes. This, with the objective of favoring local producers.

That is, they are policies designed to limit the entry of certain goods or services from abroad that compete with the national offer.

They are a form of  protectionism that does not use  tariffs . Precisely, they differ from the tariff barriers  on which they are based on taxes, while non-tariff barriers use regulations and strategies other than taxes to hinder importation.

Types of non-tariff barriers

There are several types of non-tariff barriers. Some can be drastic such as the total ban or the establishment of import quotas. The latter is to  set limits on the entry of a product, depending on the country of origin. For example, licenses can be granted to the entry of coffee from abroad for a maximum of 200 tons, distributed as follows: 150 tons to Colombia, 30 tons to Peru and 20 tons to Ecuador.

However, barriers can be more subtle as the adoption of very demanding quality controls. It also happens if very strict packaging requirements are adopted.

Regulatory framework on non-tariff barriers

The international regulatory framework on non-tariff barriers is detailed in the agreements of the World Trade Organization (WTO). According to this global body, governments can take non-tariff measures only exceptionally.

This is described, for example, in the Agreement on technical barriers to trade or in the Agreement on sanitary and phytosanitary measures. These treaties allow the authorities of the countries to pursue legitimate objectives such as protecting local agricultural production from some pest.

However, sometimes non-tariff measures have the sole objective of giving advantage to the national industry. In this case, they are called non-tariff barriers.

Impact of non-tariff barriers

The impact of non-tariff barriers is especially relevant today. In recent years,  import tariffshave fallen to historic levels worldwide. This, thanks to the increase in bilateral and multilateral trade agreements.

However, governments can still adopt non-tariff measures, with or without sufficient grounds, affecting trade.

An important point to take into account is that the impact of non-tariff measures is not easily measurable. On the other hand, it is easy to calculate how much the price of a foreign product increases when the import tax is raised. If the tariff on an item increases 4%, for example, its cost will also rise by that same percentage.

In conclusion, non-tariff measures are useful to ensure the quality of a product and give the consumer confidence. However, they can also serve as a weapon for governments that seek only to favor a group of local entrepreneurs at the expense of curbing free competition .

 

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