Once Were Tariffs: NTBs and “Trade Agenda 2030”

The Government’s new trade strategy, “Trade Agenda 2030”, identifies addressing non-tariff barriers as one of the four major planks for New Zealand trade policy efforts in the coming decade. This is welcome: like a giant global game of Whack-a-Mole, non-tariff barriers are increasingly popping up in key markets as tariffs come down. The Government seems determined to rectify this with new resources to assist exporters facing difficulties.

Trade Agenda 2030 (TA2030) was driven by a recognition that the global trade environment has changed (see our blog on ‘A Trade Policy for Our Times’ here). Getting rid of tariffs remains a priority, of course, particularly for some sectors – but trade is not only (and in many cases not really) about tariffs any more: restrictions outside of tariffs are increasingly coming to dictate how well trade can flow.[1]   NZIER has estimated that, in the APEC region, the cost for New Zealand exporters to comply with non-tariff measures was $5.9 billion a year.[2]

Non tariff measures may be costly but they are not necessarily bad – it’s when they are more trade restrictive than necessary that they become non tariff barriers. Examples of trade-restrictive non-tariff barriers (NTBs) include opaque or burdensome regulatory requirements; slow, costly or downright mind-numbing administrative processes, or even measures that are not based in relevant science or international norms. NTBs can erode margins and make exporting unpredictable; can reduce competitiveness and obstruct supply, and can be magnified along global value chains, making participation in value-adding less feasible. In short, NTBs risk eroding New Zealand’s economic potential and undermining any other market access improvements that TA2030 might deliver.

NTBs are clearly the new frontier for protectionism, and immediate action is needed both to tackle current NTBs and to put in place frameworks that seek to prevent new NTBs, including via trade agreements.   In that connection, the APEC Business Advisory Council (in an initiative launched by ABAC New Zealand) has come up with a set of “cross-cutting principles” to help prevent the creation of new non-tariff barriers – these can be found here.

Business should be a key partner for Government in this area as business is best placed to identify the worst NTBs and to help to develop solutions. We welcome the creation of a one-stop shop for exporters via the Exporter HelpLine on the MFAT website as well as new resources for agencies to tackle NTBs.

Finally, TA2030 talks about non-tariff measures, but NZIBF prefers to draw a distinction between “non-tariff measures” and “non-tariff barriers”. As noted above some NTMs may have legitimate objectives (for example by helping to protect biosecurity or health and safety), but NTBs act as grit in the wheels, and should be addressed.  We think that the distinction is a useful one.

This blog was prepared by Associate Director Stephanie Honey.

 

[1] In recent years the major G20 economies have introduced on average around 20 new non-tariff trade-restrictive measures each month. https://www.wto.org/english/news_e/news16_e/trdev_09nov16_e.htm

[2] http://nzier.org.nz/static/media/filer_public/ac/2d/ac2d99f1-ac0f-4f53-86d3-e1d3d65e096a/wp2016-4_non-tariff_measures_in_apec.pdf

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