Least developed countries lose an estimated $23 billion per year, equal to about 10 per cent of their exports to the Group of 20 (G20) through failure to comply with G20 non-tariff measures, according to new data published by UNCTAD on Tuesday.

Non-tariff measures cover a broad range of legitimate and important policy instruments, including measures to protect the health of a country’s citizens and its environments, too. For example, non-tariff measures may limit the use of pesticides in food.

But as tariffs have fallen to historic lows, non-tariff measures have replaced them as a key brake on faster global trade growth. And the expansion of the middle classes in many countries is expected to increase demand for safer, cleaner products. This, in turn, may require Governments to introduce more non-tariff measures.

“These kinds of measures are becoming increasingly widespread,” said UNCTAD Deputy Secretary-General Joakim Reiter. “For example, measures on the cleanliness and pathogen-free status of food – known as sanitary and phytosanitary measures – cover more than 60 per cent of agricultural trade.”

“Such regulatory measures disproportionately increase trade costs for small and medium-sized enterprises and developing countries, particularly the least developed. We estimate, for example, that the impact of the European Union’s sanitary and phytosanitary measures comes to a loss of about $3 billion for low-income country exports. That’s equal to 14 per cent of their agricultural trade with the European Union.”

But, Mr. Reiter added: “We certainly don’t expect G20 countries to drop all their non-tariff measures, which serve important policy objectives such as health and safety, but we do need to manage this issue better.”

“Non-tariff measures are the new frontier in our quest for greater global trade,” he said, noting that better information would reduce the costs of non-tariff measures. “It’s all about transparency and harmonizing regulations.”

Aiming to enhance transparency on non-tariff measures, UNCTAD also launched on Tuesday a database to list the non-tariff measures of 56 countries, covering 80 per cent of world trade. The database allows policymakers to search by country and product to find out quickly the relevant non-tariff requirements.

“This database will improve countries’ ability to understand the regulatory requirements, helping them to comply more easily and at less cost,” said Guillermo Valles, Director of the Division on International Trade in Goods and Services, and Commodities.

Policymakers can use the database, for example, to harmonize their regulations and accelerate the growth of regional trade.

The African Union has already requested that UNCTAD support them with the Continental Free Trade Area by setting up a similar database. This database will provide the necessary information on non-tariff measures so that negotiators can harmonize their regulations, cutting the costs of trade.

Low-income countries tend to be disproportionately affected by non-tariff measures. Their companies are smaller and so the non-tariff measures, which have fixed costs, become disproportionately more expensive.

Non-tariff measures have a valuable contribution to make in achieving the Sustainable Development Goals, by protecting health and the environment.

“The use of non-tariff measures in the world will increase but this should be done in a smart way, for example by using international standards to a maximum extent,” said Ralf Peters, Chief ad interim of the Trade Analysis Branch. “Use non-tariff measures to protect your citizens, but don’t let them compromise trade because that will block economic growth and job creation.”

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Launch of the largest global Non-Tariff Measures database: TRAINS

On the occasion of its fourteenth Ministerial Conference, UNCTAD launched the largest global database on Non-Tariff Measures during the Ministerial round table ‘Lowering hurdles for Trade: Trade Costs, Regulatory Convergence and Regional Integration’.

TRAINS covers 56 countries accounting for 80 per cent of world trade. It is the most comprehensive NTMs data base containing more than thirty-eight thousand measures.

The information covers a broad range of policy instruments, including traditional trade policy instruments such as quotas or price controls, as well as regulatory and technical measures that stem from important non-trade objectives, related to health and environmental protection (Sanitary and Phytosanitary (SPS) measures and Technical Barriers to Trade (TBT)).

NTMs become increasingly important for policy makers as tariffs have been reduced significantly in trade agreements as well as unilaterally. In fact, the ability to gain and to benefit from market access depends increasingly on compliance with regulatory measures such as sanitary requirements and goods standards. These NTMs represent a challenge for exporters, importers and policy makers. Systematic information about NTMs has been scarce and difficult to obtain.

The objective of the TRAINS database is to increase transparency and understanding about regulations and trade control measures. UNCTAD coordinates the international effort to reduce the transparency gap. Key partners are the African Development Bank, ALADI secretariat (from Latin America), ERIA (ASEAN), ITC, the World Bank and WTO. UNCTAD is also grateful for financial support from Canada, the European Commission, Germany, GRIPS (from Japan), Japan, the Russian Federation and the United States.

Among many other useful functions, TRAINS enables policy makers, companies and researchers to view the incidence and types of NTMs by product. For instance, which labelling is required for exports of canned fruits exported from country A to country B? Researchers can use the data to assess the impact of NTMs on international trade.

The data has been collected from official sources, mainly national laws and regulations. Measures are classified according to the International Classification of NTMs (developed by UNCTAD and the MAST group) at the most detailed level and the Harmonized System (HS) classification at the national tariff line level. It includes links to original documents and descriptive statistics. The data is provided systematically by country, type of NTM, affected product and partner country and has about 30 variables including the source of information, dates, textual descriptions etc. The interface is a version of WTO’s I-TIP, which has been developed by the WTO for notifications.

Available countries: Afghanistan, Argentina, Australia, Benin, Burkina Faso, Bolivia, Brazil, Brunei Darussalam, Canada, Chile, China, Cote d’Ivoire, Colombia, Cape Verde, Costa Rica, Cuba, Ecuador, Ethiopia, European Union, Ghana, Guinea, Gambia, Guatemala, Honduras, Indonesia, India, Japan, Kazakhstan, Cambodia, Lao People’s Democratic Republic, Liberia, Sri Lanka, Mexico, Mali, Myanmar, Malaysia, Niger, Nigeria, Nicaragua, Nepal, New Zealand, Pakistan, Panama, Peru, Philippines, Paraguay, Senegal, Singapore, El Salvador, Togo, Thailand, Tajikistan, Uruguay, United States of America, the Bolivarian Republic of Venezuela, Vietnam.

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Lowering Hurdles for Trade: Trade Costs, Regulatory Convergence, and Regional Integration

Statement by the Deputy Secretary-General of UNCTAD, Joakim Reiter

As tariffs have fallen to historic lows, non-tariff measures are increasingly the more significant hurdles to developing country exporters.

But because many regulatory measures serve primarily non-trade-related purposes, they cannot be readily abolished like tariffs. They often serve a range of public health, labor, or environmental concerns – such as Sanitary and Phytosanitary measures or Technical Barriers to Trade.

They are needed to respond to the concerns of our citizens. And when based on international standards, they can promote trust between nations and a common language between traders.

These kinds of measures are also becoming increasingly widespread. Sanitary and Phytosanitary measures, for example, cover more than 60% of agricultural trade. Technical Barriers to Trade cover almost 70% of world trade.

Such regulatory measures disproportionately add to trade costs of SMEs and developing countries, particularly the LDCs. According to our estimates, for example, the trade impact of the EU’s SPS measures amounts to a loss of about US$3 billion for low-income country exports. That’s equivalent to 14 percent of their agricultural trade with the EU.

Similarly, according to our calculations, the non-tariff measures applied by the G20 countries reduce LDC exports by $23 billion. To put that in perspective, that is more than twice the effect of current tariffs.

Small firms – those that are incidentally most likely to create jobs – are often the most affected. It's no secret that highly technical regulations often deter small firms from global markets.

We must do much to mitigate such effects:

1. We can do more to coach and train small developing-country exporters.

2. we should be better at fostering regulatory convergence, especially at regional level, based on international standards.

3. we must also work at the multilateral level to simplify and improve the transparency of procedural and regulatory requirements.

The ability of developing country exporters to comply with non-tariff measures, and in particular with SPS measures and TBTs, hinges at the very least on the relative clarity of the measure in question.

And even on this basic point, serious hurdles emerge.

Despite the widespread use of non-tariff measures, there remains a significant “transparency gap.”

This is where UNCTAD fills the gap.

In collaboration with several partners, we collect comprehensive data on non-tariff measures. Our hope is that we can bridge the transparency gap and make it easier for developing country exporters to navigate these obstacles to trade.

And it is my pleasure to announce that UNCTAD is launching today, during this session, the largest single global database on Non-Tariff Measures. The database covers 56 countries accounting for 80 per cent of world trade.

In UNCTAD, we aspire to reduce the costs that prevent developing countries from capitalizing fully on the opportunities of greater trade and investment. Non-tariff measures, therefore, is a key priority for us.

Let me stop here, wish you a productive and engaging session and turn over the floor to our moderator, Kevin McKinley of ISO.

Thank you for your attention.