ABAC Cross-Cutting Principles to ensure NTMs do not become NTBs

by | Apr 3, 2017 | Reports & Publications

Remove

APEC BUSINESS ADVISORY COUNCIL

REGIONAL ECONOMIC INTEGRATION WORKING GROUP

ABAC IV, LIMA, NOVEMBER 2016

ABAC Cross-Cutting Principles to ensure NTMs do not become NTBs

The APEC Business Advisory Council (ABAC) is an independent high-level group of business people who advise Leaders of the 21 economies of the Asia-Pacific Economic Cooperation (APEC) area on priority issues for business in the region. ABAC members, meeting in Lima in November 2016, agreed a set of cross-cutting principles that should be used in the design, implementation and assessment of non-tariff measures to ensure that they do not act as barriers to trade.

 Background: non-tariff barriers

While good progress has been made in progressively lowering tariffs in many economies, non-tariff measures are increasingly prominent.   Many non-tariff measures are in place to achieve legitimate goals, such as the protection of human, animal or plant health or safety, transparency or quality assurance, or to regulate a particular aspect of the functioning of the market.  However sometimes non-tariff measures act as non-tariff barriers (NTBs) – either because the way that they are designed or implemented is more trade-restrictive than necessary to meet a legitimate objective, because they are discriminatory, or because they are in fact designed to keep imports out of a market.

NTBs can inhibit trade by adding costs and making imports or exports more difficult. They can be magnified along global value chains and can inhibit participation in such value chains. NTBs come in many different forms and are often particular to products or markets. It is nevertheless possible to derive a set of cross-cutting principles for the design and application of non-tariff measures which would seek to minimise any barriers to trade.

 Information

  • Business needs information about import and other regulations that is clear and readily available, preferably through an online portal;

 Processes

  • Business needs processes for the development of non-tariff measures that are transparent and timely;
  • Affected business (including small producers and MSMEs), both domestic and foreign, should be consulted in the development of standards;
  • The application of non-tariff measures should be timely, predictable and coherent;

 Measures

  • Measures should be transparent, coherent and non-discriminatory;
  • Measures should be based on sound science (in the case of SPS measures), or closely aligned with international norms (for technical measures) such as Codex, ISO and APEC;
  • Measures must not discriminate against imported goods or services;

 Underpinning philosophy

  • Measures must be developed consistent with the principle of “least-trade restrictive”;
  • The emphasis should be on desired or equivalent outcomes rather than prescriptive process or production methods.

ANNEX

A business perspective on non-tariff barriers: Cross-cutting principles

Non-tariff barriers: a source of frustration for business

The modern trade environment does not just involve tariffs at the border, but also increasingly entails a plethora of “non-tariff measures” (NTMs) as part of the trade policy toolkit used by economies to organise and regulate markets. Many of these measures are in place to achieve legitimate goals, such as the protection of human, animal or plant health or safety, transparency or quality assurance, or to regulate a particular aspect of the functioning of the market.

Sometimes, however, non-tariff measures can become non-tariff barriers (NTBs)[1] – either because the way they are designed or implemented is more trade-restrictive than necessary to meet a legitimate objective (whether intentionally or unintentionally), because they are discriminatory, or because they are in fact designed to keep imports out of a market.

NTBs add costs and lower competitiveness for business, raise prices for consumers, distort trade flows and inhibit investment. They can be particularly burdensome for MSMEs and can curtail the ability of all firms to participate effectively in global value chains. These impacts can occur even where cross-border activity is not the target, or where a legitimate policy objective is intended.

The number of NTBs is rising, and their cost burden is growing. It has been estimated that NTMs cost APEC economies some US$790 billion each year, around three times as much as tariffs. Over the last year, trade restrictions among G20 countries rose by an average of 21 new trade-restrictive measures per month; the WTO has likewise reported that the global stockpile of trade-restrictive measures continues to rise. (Within APEC, sanitary and phytosanitary regulations and technical measures are by far the most commonly used NTMs.) This rise in non-tariff forms of protection is particularly concerning at a time of slowing trade, with the WTO recently reporting that trade and output growth are now lower than prior to the global financial crisis.[2]

 What does a “business-friendly” NTM look like?

As economies look for ways to help trade to grow, a principled approach to non-tariff measures, which seeks to tackle the specific problems caused by NTBs across all sectors, could be helpful. The priority for business above all is for a clear, predictable trading environment that minimizes unnecessary burdens.

Cross-cutting problems and possible solutions

Problem Solution
NTBs can be opaque and overly-burdensome in content and application –        Information about NTMs should be readily available

o   preferably through an online portal; national enquiry points are also useful

–        NTM development processes should be transparent, consultative, timely, coherent and non-discriminatory:

o   Established national enquiry points and timelines around regulatory and standards-development processes

o   Processes should provide opportunities for consultation with both domestic and foreign stakeholders, including MSMEs

–        NTM application should be timely and predictable:

o   establish timelines around administrative procedures including import-licence issuing, Customs processing and related activities

NTBs can be arbitrary or unpredictable –        Measures should be based on sound science or closely aligned with international norms such as Codex, ISO and APEC

–        Economies should strive towards regional regulatory coherence and equivalence

NTBs can have a disproportionate impact on imported goods –        Measures should not discriminate against imports;

–        In FTAs, we prefer to see sectoral annexes covering specific product ranges if necessary;

–        We prefer self-certification where possible

NTBs can distort trade, even if aimed at a legitimate goal –        Measures should be developed consistent with the principle of “least-trade restrictive”:

o   efforts should be made to minimise unnecessary costs (for example, in relation to requirements for specific production methods, compliance auditing or traceability) or other restrictions on trade that go beyond what is needed to meet a legitimate objective

–        The emphasis should be on desired or equivalent outcomes rather than prescriptive process or production methods or the means to achieve particular outcomes.

 

 

[1] NTBs include product standards that are not based in sound science or inconsistent with international norms; arbitrary and diverse labelling requirements; divergent or burdensome product registration and certification; food safety and quarantine-related measures that are not based in science; onerous Customs requirements; procedural obstacles such as a lack of transparency and predictability in administrative or regulatory processes, and many other measures that limit import volumes or prices or both (e.g. quotas, import licensing etc.).

[2] WTO, Report on G20 Trade measures (mid-October 2015 to mid-May 2016), 21 June 2016; and WTO, Director-General’s report on trade-related developments, 23 July 2015.  For NTM costs, see Ballingall, J. and D. Pambudi. (2016, forthcoming). ‘The economic cost of non-tariff measures in the APEC region’. NZIER Public Discussion Paper 2016/4.

 

REGISTER WITH TRADE WORKS

Register to stay up to date with latest news, as well as saving and discussing articles you’re interested in.

 

Remove

 

Latest News

NZIBF 2022 Chair Report

ANNUAL GENERAL MEETING 2022 CHAIR’S REPORT I am pleased to present my second report on the activities and achievements of the NZ International Business Forum (NZIBF) for 2022-23, our fifteenth year of operations.  At the outset I would like to thank Members for...

NZ BUSINESS LEADERS AT APEC 2022

New Zealand business will be represented at the APEC Leaders’ Week in Bangkok, commencing 13 November, by members of the APEC Business Advisory Council (ABAC). New Zealand’s three members – Rachel Taulelei, Malcolm Johns and Anna Curzon – supported by Stephen Jacobi...

Submission to MFAT for CPTPP Review

30 September 2022 Phil Mellor Economic Division, Ministry of Foreign Affairs and Trade, Wellington (By email) Dear Phil, Thank you for your email of 1 September, seeking our comments on the three year review of the Comprehensive and Progressive Agreement for Trans...

WHAT’S IN A NAME?

The now widespread use of the term “Indo Pacific” to describe the region to which New Zealand belongs brings a risk of geographical confusion. When did the “Asia Pacific” become the Indo Pacific?   For thirty years or more New Zealand has sought to enhance...

NZ Herald: Turbulence in global trade

Amidst the political topsy turvy of recent weeks came the news that the Government has refreshed its Trade Recovery Strategy.  That’s good news because, for exporters and the global economy as a whole, it’s tough out there. The pandemic is by no means over, there...

Address to World Affairs Forum, 22 August 2022

ADDRESS TO THE WORLD AFFAIRS FORUM AUCKLAND, 22 AUGUST 2022 STEPHEN JACOBI EXECUTIVE DIRECTOR NZ INTERNATIONAL BUSINESS FORUM TURBULENCE IN GLOBAL TRADE Thanks to Greg Thwaite for inviting me to speak to you this evening. It’s good to be back in the habit of meeting...

Trade and Climate Change: State of Play

TRADE AND CLIMATE CHANGE: STATE OF PLAY. A discussion paper prepared for the NZIBF by Adrian Macey, June 2022. Download here. Update: NZ-EU FTA The NZ-EU FTA has been finalised.  Article X.6 of the  trade and sustainable development chapter is on trade and...