Non-tariff barriers – a hidden brake on New Zealand economic growth

Issued by New Zealand International Business Forum (NZIBF) and APEC Business Advisory Council (ABAC).

30 November, 2016 – Excessive red tape, glacial bureaucratic processes and arbitrary new rules in overseas markets are a big – and costly – part of the trade picture for Kiwi exporters of agriculture, food and other products say the NZ International Business Forum (NZIBF) and the APEC Business Advisory Council (ABAC).

Two recent studies throw a spotlight on the burden imposed by so-called “non-tariff barriers” (NTBs) faced by New Zealand firms operating in the Asia-Pacific. The first report was prepared by the USC Marshall School of Business and released by ABAC at the recent APEC meetings in Lima and focuses on the impact of NTBs on food trade in the Asia-Pacific.

The second report has been prepared by the New Zealand Institute of Economic Research (NZIER), and examines the cost of non-tariff measures(NTMs) for business in the APEC region.

“Thanks to free trade agreements, New Zealand exporters are facing lower tariffs than ever before in the region. But they still don’t enjoy a level playing field because of NTBs and costly NTMs,” said Stephen Jacobi, NZIBF Executive Director.

Legitimate NTMs become NTBs when they are more trade restrictive than necessary. NTBs include opaque requirements for labelling and manufacturing processes, arbitrary product standards, and slow and costly Customs and other import procedures.   Specific NTBs in agri-food trade include food safety rules that are not science-backed and a web of conflicting labelling requirements.

“These two reports show how NTBs add costs and complexity for business, undermine supply chains, make food and other goods more expensive for consumers, and in some cases even keep exports out of markets altogether,” said ABAC New Zealand member Tony Nowell, who led the ABAC project. “Given the number of small businesses in the New Zealand economy, it is particularly worrying that NTBs can have a disproportionately harsh impact on the operations of SMEs.”

“NTBs in food trade don’t just make life difficult for business. The APEC region has a population of three billion. Food trade helps to match up food supplies with demand, and contributes to food security. These measures actually undermine people’s ability to access safe, nutritious and affordable food,” said Mr Nowell.

More broadly, the non-tariff measures in place in the APEC region have been calculated by NZIER to cost New Zealand business billions each year.   The NZIER discussion document estimates that Kiwi exporters face NTMs that impose costs of US$5.9 billion each year. While some measures are legitimate, others are blatantly protectionist, the report found.

“The outlook for the world economy is gloomy. Trade growth has fallen to its lowest level since the global financial crisis.   Now more than ever we need to challenge hidden protectionism.   NTBs are particularly noxious because they can be hard to even identify, let alone address,” Mr Jacobi said.

“We need greater transparency in rules, clearer timeframes for administrative processes, and regulations that are designed to avoid impeding trade. Exporters and consumers around our region deserve better,” Mr Jacobi concluded.