Non-Tariff Measures: Effects on International Trade

Empirical evidence suggests that some non-tariff measures are legitimate trade policy instruments, but some of these measures can have negative effects on trade and resilience.

Consequently, such non-tariff measures may reduce the ability of trade to mitigate the effects of shocks. 

That is the view of Victor Stolzenburg, a research economist in the Economic Research and Statistics Division of the World Trade Organization (WTO).

For example, during the Covid-19 pandemic, port-of-entry requirements, i.e. the requirement that specific goods can only be imported through certain ports, combined with a lack of investment in port infrastructure, exacerbated the effects of the crisis in some cases. 

Definition of non-tariff measures: these are trade restrictions that do not directly involve the imposition of tariffs on imports and exports, but can affect international trade in various ways.

Non-tariff measures

Jan Hoffmann, head of the Trade Facilitation Section of the United Nations Conference on Trade and Development (UNCTAD), believes that diversification of supply chains involves the use of more ports, improved transport and logistics, and the introduction of trade facilitation measures. 

Following some simulations carried out at the beginning of the Covid-19 pandemic, UNCTAD noted that trade costs increased significantly and, in particular, containerized shipping costs, which had contributed to inflation. 

According to UNCTAD, small island developing states (SIDS) appear to have been the hardest hit by the Covid-19 crisis, and the sectors hardest hit by these shocks had been «deep» supply chains. 

Hoffmann said that, taking the example of high-tech products, where linkages between supply chains are generally very deep, the pandemic demonstrated that even the smallest variations in freight and transportation costs in intermediate inputs have an impact on the price of the final product, and that any interruption or disruption of these supply chains can have upstream effects.

Stolzenburg and Hoffmann shared their views at a WTO meeting.