A recent report from the forest industry has drawn attention to the increasing prevalence of non tariff barriers (NTBs).
NTBs are the next frontier for trade policy. As tariffs are brought down through comprehensive trade agreements, governments tend to make greater use of non tariff measures (NTMs).
NTMs and NTBs are not the same thing. NTMs can be instituted for a range of public policy reasons – to protect human health, the environment or biosecurity. NTMs only become NTBs when they are more trade restrictive than necessary.
Some governments use NTMs/NTBs for protectionist reasons. When the measures apply only to imported products, or differentiate between trading partner, you can be fairly sure something is rotten in the state of Denmark.
Other NTBs are notoriously difficult to identify and even more to address. Compulsory standards, often not based on international norms or legitimate science; technical regulations requiring amendments to the way products are manufactured; testing regimes which require labyrinthine procedures; product approvals requiring inspection of individual premises – all these are examples of NTBs which frustrate New Zealand exports.
The forest industry is by no means alone in this. The food industry faces a large number of NTBs given that it deals with perishable products, traded across long supply chains. Manufacturing is also highly affected.
Other countries occasionally accuse New Zealand of maintaining NTBs. Our strict biosecurity regulations, applied for good reason, are often cited. Our regulations prohibiting the commercialisation of trout are less easily able to be defended.
What can be done about NTBs? Trade agreements like TPP seek to put in place new disciplines around the way regulations are made and thus restrict the scope of NTMs. The ability for trading partners to express their views on proposed measures before they are implemented is a case in point. That’s why the Government is saying that the greater benefit from TPP will come from addressing NTBs rather than reducing tariffs.
It’s also important for business to work closely with the Government to identify these NTBs. That’s why the work of the forest industry is welcome. Another example is the annual report published by the horticulture industry.
On the new frontier of trade policy we need all players to lend their shoulder to the wheel.
This post was prepared by Stephen Jacobi, Executive Director of the NZ International Business Forum.