Non-tariff barriers have for long been an issue of discussion at platforms that liberalise trade flows among nations. The World Trade Organisation (WTO) has also witnessed several such discussions. Though this important aspect that hampers global trade has received attention from negotiators, there is no structured process to address it.
The problem that countries have faced in sorting out this issue is that many of the regulations and standards that may be mentioned as non-tariff measures are needed to ensure that high standards are applied in the domestic market to protect human, animal and plant health.
Therefore, it is a significant development that the WTO in its World Trade Report for 2012 plans to focus on this issue. The report “Looking Beyond International Cooperation in Tariffs” would not just look at regulations that impact trade in goods, but services regulations as well.
This would be a good beginning to put together an analysis of global non-tariff measures for discussion to ensure transparency for exporters across countries. WTO envisages that there would be an increase in the number of regulations in goods and services to meet the higher levels of standard that people would expect from products in the market.
This would be very evident for food products. There are some very legitimate measures that countries adopt – the Sanitary and Phyto-sanitary Measures (SPS) – to regulate the market for food products. The number of notifications has been on the rise due to the increasing living standards of people across the globe.
For instance, in 2011 over a 1,000 SPS notifications were issued by the member countries of the WTO. This means that nearly 100 notifications were issued every month. Of this the most important component has been the notifications on pesticide levels and food additives for different products.
More From This Section
Though the WTO report will put together data and analysis to understand how non-tariff measures hurt global trade, the trade body has also identified some challenges to the preparation of this report. According to the WTO, challenges appear to crystallise around four dimensions: transparency mechanisms, space for public policies, regulatory convergence and governance structures.
Each of these will have to be studied to understand the potential impact on trade. One aspect that requires important attention is space for public policies. It is important to note that when WTO frames regulations, it has to keep in mind that its member countries are at different levels of development. Therefore, some of the developing and least developed countries that are trying to build policies for sustaining or increasing growth rates are not put under pressure.
At the same time, policy should not end up creating a huge divide among countries, with developed countries adopting standards that are difficult or expensive to meet for exporters from developing countries, thereby excluding them from the market. This balance will be critical.
One major issue for exporters from developing countries has also been the increase in private standards. This may not be a matter of debate among the negotiators since it is not under the purview of the WTO. The report to be published, however, should take cognisance of this issue as well.
It may be slightly easier to put together a document for goods, but it would be a mammoth task to identify regulatory barriers that hurt export of services between countries. The WTO, too, accepts that services regulations remain opaque and, therefore, documenting them would be difficult. However, given the fact that services exports are slowly increasing, there is a need to ensure that trade in this segment remains fair and transparent. The protection of domestic industry at the cost of foreign suppliers should be checked so that developing countries can export their products to developed country markets.
When the WTO team works on this important document, it will surely receive lots of data that have been put together by industry and academics over the years. However, it is possible that most of the data may be concerning policies in developing and least developed countries since business in the developed world has been looking and funding this kind of work to put pressure and open markets in emerging countries.
However, business and governments in the developing and least developed countries have not been able to work on this aspect very seriously. Therefore, it will be important for the WTO to take a balanced view and conduct some research of its own to ensure that the report brings a balanced viewpoint.
The author is Principal Adviser with APJ-SLG Law Offices