The Financial Express

Preparing national database of NTMs

Preparing national database of NTMs

Global trade is much more affected by Non-Tariff Measures (NTMs) nowadays as tariff has reduced significantly. Countries are adopting more NTMs now and these are generally legitimate policy measures. Nevertheless, NTMs have different impacts on international trade. The official definition, outlined by the United Nations Conference on Trade and Development (UNCTAD), mentioned that NTMs are "policy measures other than ordinary customs tariffs that can potentially have an economic effect on international trade in goods, changing quantities traded, or prices or both." The definition itself indicates that there is a grey zone and in many cases it is difficult to identify NTMs.

Acknowledging the grey area for overcoming the difficulty to identify the NTMs, an international classification system has been developed.  The UNCTAD classification of NTMs comprises technical measures like sanitary or environmental protection measures and also others used conventionally as commercial policy instruments. These include quotas, price control, export restrictions and contingent trade protective measures. These further include measures like competition, trade-related investment measures, government procurement or distribution restrictions.

The two major technical NTMs are: Sanitary and Phytosanitary (SPS) measures and Technical Barriers to Trade (TBT). Currently, these two measures affect around 85 per cent of global trade. The World Trade Organisation (WTO) has two separate agreements on these two NTMs to discipline the imposition of the two measures. SPS is generally related to all measures to protect 'human or animal health from food-borne risks, human health from diseases carried by animals or plants, and animals and plants from pests or diseases.' It doesn't matter whether these are technical requirements or not. TBT refers to all technical regulations and conformity assessment procedures not under the purview of the SPS Agreement. TBT regulations may be adopted for 'national security, the prevention of deceptive practices, the protection of the environment, and the protection of human health for products other than food, drinks and feed.'  The third technical NTM is Pre-Shipment Inspection (PSI) and other related formalities.

Then there are 12 types of non-technical NTMs. These include: contingent trade-protective measures (i.e. anti-dumping, countervailing and safeguard measures), price control, quantity control and finance measures.

All the above mentioned 15 broad classes of NTMs are applicable to import of goods. Importing countries impose these measures to their imports and ultimately affect the exports of other countries.  AS for export, there is only one broad classification and that is termed as export measures. The measures include export licences, restrictions or prohibitions as well as registrations and technical measures such as certification or inspection. Some of these are in many cases counterparts to import related NTMs.  The export measures are generally adopted and imposed by exporting countries and applicable to their exporters. These measures are, as estimated by UNCTAD, the second most frequent forms of NTMs affecting 20 per cent of  global trade.

NTMS VS NTBS: It is also important to differentiate Non-Tariff Barriers (NTBs) and NTMs which is tricky to some extent. NTBs are basically a subset of NTMs and clearly imposed to restrict trade in a distortive manner. That means, a NTM may appear as a NTB if it is used to restrict or discourage import or export of a product with clear discrimination. Again, it is also not easy to identify a NTB. Moreover, before identifying any NTB it is important to identify the NTM first. Not all NTMs are intended to restrict trade, but are taken to protect human, animal or plant life or environment. Though the ultimate objective is to save lives or contain environmental pollution, the measure may easily restrict trade by making it costlier.

NTMs ask for compliance to be eligible for trade. Once a product complies with the requirements set by any NTM, it will be eligible to enter into the market of the country.  Again, some NTMs clearly prohibit, restrict or distort trade with clear explanation of the reasons to adopt such measures. If the measures are adopted to ensure food safety or contain environmental pollution, these are not NTBs as sometime claimed by exporters, importers or government agencies.  When a distortive measure is adopted or introduced clearly to shield domestic industry by restricting import, then it is termed a NTB. NTBs may include internal measures such as production subsidy and many other administrative measures.

DATABASE: UNCTAD classification is now globally acknowledged and most of the countries are classifying their NTMs accordingly. It is important to note that the classification of NTMs does not evaluate the legitimacy or necessity of any of the measures. It simply acknowledges the existence of policy intervention and is designed to set information in a database format.

The latest version (2019) of the classification is available now and the system also helps to prepare a global database of NTMs. Currently, UNCTAD's Trade Analysis and Information System (TRAINS) collects and preserves such data. So it is a kind of global repository of NTMs. The database of TRAINS covers all measures issued by different government agencies.

Nevertheless, collecting NTM data is a difficult task. All countries are not well equipped to collect and compile such data.  It requires comprehensive understanding and continuous monitoring on different types of policy measures and regulations with respect to trade.  It also calls for the need to maintain transparency.

A few years back, three researchers of Bangladesh compiled a dataset of NTMs in South Asia which is a good example of NTM data collection. This kind of exercise, however, needs state-level support to update the database. 

BANGLADESH: International trade of Bangladesh is no doubt affected by NTMs. A report of International Trade Centre (ITC) in 2017 pointed out that around 91 per cent of Bangladeshi exporters are affected by NTMs. Regarding NTMs faced by exporters, it is not always due to higher or stringent standards or other measures set by the importing countries. ITC report, based on survey of around 1,000 business firms, pointed out that non-compliance of different measures due to lack of domestic support and facilities at home also make it difficult for the exporters to deal with the NTMs. For instance, lack of adequate accredited laboratory in the country increases the cost of testing and finally the export.

A big barrier to deal with the NTMs, especially for the importers, is the absence of a comprehensive and readily accessible national database. Though Bangladesh Trade Portal has a lot of information on NTMs adopted and introduced by the country, it is not fully updated and not easily accessible. 

Collecting and updating NTM data requires coordinated effort of different ministries, bodies and agencies of the government related to agriculture, science and technology, food, fisheries and livestock, health, environment etc. It is not the subject of commerce ministry alone. Moreover, it needs continuous work to track the change in the existing NTMs of other countries. A national database is not limited to a country's NTMs but also needs to link the trading partners so that exporter and importers, foreign and local investors can easily find out what measures they need to comply with.

Commerce ministry has, however, decided to launch a database of product-based SPS measures. In this regard, the WTO cell of the ministry has started work with relevant government bodies and private entities. The cell is currently the focal point of SPS in Bangladesh. For TBT, the focal point is Bangladesh Standards and Testing Institutions (BSTI).

The move to introduce SPS database is a welcome initiative. It will help to initiate a comprehensive database of NTMs in near future. Earlier, Bangladesh Tariff Commission (BTC) took an initiative to do such an exercise which was abandoned due to bureaucratic complexities. Nonetheless, the initiative could be revived.

[email protected]








Share if you like