1. Non-tariff measures that can potentially affect trade in goods present the multilateral trading system with a basic policy challenge – how to ensure that these measures meet legitimate policy goals without unduly restricting or distorting trade. The same challenge applies to measures that can affect trade in services.
2. The motivations for using non-tariff measures and services measures have evolved, complicating the policy panorama, but not changing the core challenge of how to manage the tension between public policy goals and trading opportunities.
3. While intra-Asean trade has been soaring around 25 per cent, it is far below what the European Union has achieved, which is at 63 per cent of the total trade in 2015, whereas the North American Free Trade Agreement (Nafta) registered almost 50 per cent of the intra-group trade of its total exports in the same year
AN ECONOMIC PERSPECTIVE ON NON-TARIFF MEASURES
1.Non-tariff measures (NTMs) are often first-best policies to correct market failures. However, as the same NTM used to pursue a public policy objective may also be employed to distort international trade, it can be difficult to distinguish “legitimate” from protectionist motivations for NTMs.
2. Neither the declared aim of a non-tariff measure nor its effect on trade provides conclusive evidence of whether it is innocuous from a trade perspective. However, analysing the nature of these measures – their opaqueness, efficiency and effect on various groups in society – and their political and economic context can provide important insights.
3. Non-tariff measures, including behind-the-border measures, may take the place of tariffs and border NTMs that are disciplined in trade agreements. This raises important questions regarding the regulation of NTMs at international level.
4. Similar issues arise in relation to services measures, which have become increasingly significant in light of the international fragmentation of production processes.
5. Developments such as the recent financial crisis, current debates on climate change and heightened concerns about food safety have led to the increased use of NTMs and services measures in the 21st century, illustrating the difficulties involved in dealing with public policy measures and their impact on international trade.
NON-TARIFF MEASURES AND SERVICES MEASURE
1. Progress is being made on improving the quality and availability of data on non-tariff measures and services measures, but much remains to be done.
2. Available data do not show any clear increasing trend in the overall use of non-tariff measures in the last decade.
3. Technical barriers to trade and sanitary and phytosanitary measures appear to have become prominent, according to official WTO information. This is confirmed by survey data from both developing and developed economies.
4. Procedural obstacles are a particular source of concern for exporters from developing countries.
5. Although there is some evidence that measures restricting trade in services have decreased over time in developed economies, a serious limitation of available data on applied regimes in the services area makes it difficult to distinguish between market access, national treatment and domestic regulation.
TRADE EFFECTS OF NON TARIFF MEASURES AND SERVICES MEASURES
1. The contribution of non-tariff measures to overall trade restrictiveness is significant, and in some estimates NTMs are far more trade restrictive than tariffs.
2. Technical Barriers to Trade/ Sanitary & Phytosanitary Measures (TBT/SPS) measures have positive trade effects for more technologically advanced sectors, but negative effects in agricultural sectors.
3. There is evidence that TBT/SPS measures have a negative effect on export market diversification.
4. The negative effects on trade caused by the diversity of TBT/SPS measures and domestic regulation in services are mitigated by the harmonization and mutual recognition of these measures.
INTERNATIONAL COOPERATION ON NON-TARIFF MEASURES IN GLOBALIZED WORLD
1. WTO rules help to deal with the problem of countries replacing tariffs with non-tariff measures, but the changing nature of trade creates new complexities that call for deeper forms of institutional integration.
2. Countries cooperate on TBT/SPS measures and domestic regulation in services to address information problems and to complement market access commitments.
3. Distinguishing legitimate NTMs from measures designed for protectionist purposes has been the key issue in GATT/WTO dispute settlement concerning NTMs and in establishing new disciplines for domestic regulation in services.
4. The tension between economic analysis and legal practice can inform future efforts to address NTMs in the WTO system in an evolving trading environment.
ASEAN TACKLING TRADE BARRIERS
1. Although the NTMs put in place could be in accordance with the World Trade Organisation rights and obligations or in accordance with the Asean Trade in Goods Agreement (Atiga), these could, nevertheless, have a non-tariff barrier (NTB) effect.
2. NTMs, among others, include restrictive licensing conditions, complex product testing procedures, labelling and packaging requirements and multiple testing requirements. The implementation of NTMs may have an NTB effect on the free flow of goods. This will then effectively contribute to increased costs and delay in the movement of goods.
3. Asean is addressing the NTBs through the Matrix of Actual cases on the NTMs/ trade barrier. Private sector are encouraged to continue using the mechanism by putting up additional complaints to the attention of officials for resolution.
4. The common NTMs and NTBs are among them, non-recognition of halal certification logo, repetitive testing for standards, example for ceramic and iron, and steel products, labelling requirements in the native language of importing country and exports of certain products that require exporters to set up a manufacturing facility.
5. Currently there is no reliable database on NTMs in Asean, the regulations are poorly coordinated across countries, there is a lack of notification of newly adopted NTMs, and slow streamlining procedures and requirements for certificates, permits and licences.
6. While Asean member countries have finished working on eliminating trade barriers, AEC’s top priorities are on trade facilitation, which will minimise trade protection and compliance cost that focus on the use of information and communications technology in cross-border transactions for goods, harmonisation of standards and technical regulations, as well as conformity assessment and to reduce the impact of non-tariff barriers.
THOUGHTS
1. The share of trade in intermediate goods in total trade has increased over the last few decades. How does the fragmentation of production across national borders affect incentives to use non-tariff measures? What are the trade effects of NTMs along value chains?
2. There seem to be increasing complementarities between trade in goods and trade in services driven by global production sharing. How relevant are these complementarities? Do they require a new framework of analysis and new forms of cooperation?
3. It is argued that considerable scope exists for improving domestic regulatory practices. What would be the effect of such improvements on the need for international cooperation?
4. NTMs are a “moving target” and their mix is constantly evolving. Some measures, such as those related to intellectual property protection, government procurement, investment and finance measures, are not covered in this report. What challenges do these measures raise for the WTO?
5. A main theme is regulation aimed at achieving public policy objectives. How much of their regulatory autonomy are national governments willing to delegate to international institutions?
6. The way forward for Asean member countries is to expedite harmonisation and through mutually recognised arrangements. Additionally, Asean has also reactivated the old Asean consultations to solve trade and investment issues or ACT, which are rebranded Asean Solutions for Investment Services and Trade, which is an Internet-based problem solving facility.
(Source: WTO, NST)
