No duty barriers

Commerce

Non-tariff barriers are regulations imposed by governments to make it difficult or prevent the importation of certain goods without raising taxes. This, with the aim 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 supply.

They are a form of protectionism that does not use tariffs. Precisely, they are distinguished from tariff barriers in that they are based on taxes, while non-tariff barriers use regulations and strategies other than taxes to make imports more difficult.

Types of non-tariff barriers

There are several types of non-tariff barriers. Some can be drastic, such as a total ban or the establishment of import quotas. The latter consists of setting 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, the barriers can be more subtle such as adopting very demanding quality controls. The same 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 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 pests.

However, sometimes non-tariff measures have the sole objective of giving an advantage to the domestic 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 tariffs have fallen to historic levels around the world. 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 by how much the price of a foreign product increases when the import tax is raised. If the tariff on an item increases by 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 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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