Non-Tariff Measures and Barriers


Yüce Dural B.

in: International Economics I, Prof.Dr. Elif UÇKAN DAĞDEMİR, Editor, ANADOLU UNIVERSITY PUBLICATION, Eskişehir, pp.159-180, 2024

  • Publication Type: Book Chapter / Chapter TextBook
  • Publication Date: 2024
  • Publisher: ANADOLU UNIVERSITY PUBLICATION
  • City: Eskişehir
  • Page Numbers: pp.159-180
  • Editors: Prof.Dr. Elif UÇKAN DAĞDEMİR, Editor
  • Anadolu University Affiliated: Yes

Abstract

In contemporary economic policy, countries increasingly prioritize the integration of their economies into the global marketplace, seeking to enhance international economic relations and achieve deeper integration into the world economy. To pursue these objectives, nations often intervene in foreign trade to safeguard their domestic economies. During the first half of the 20th century, as foreign trade expanded rapidly and became increasingly complex, non-tariff restrictions emerged as a significant instrument of foreign economic policy. This shift was marked by substantial reductions in customs tariffs achieved through multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT). The preference for non-tariff restrictions over traditional customs duties can be attributed to two primary factors. Firstly, the advent of GATT after World War II diminished the role of customs duties, which had previously served as the principal means of trade protection. During these negotiations, average customs tariffs were reduced from approximately 40% to as low as 7%. Secondly, the decision-making process regarding customs tariffs is complex both domestically and internationally. In many countries, tariff increases require parliamentary approval. Additionally, any adjustment to customs duties necessitates concessions through negotiations with other member states, as stipulated by GATT and the World Trade Organization (WTO). Consequently, increasing customs duties covertly is not feasible. In contrast, non-tariff barriers can be implemented with greater ease and less procedural complexity. The gradual reduction of customs duties proved insufficient for fully liberalizing foreign trade. Consequently, standards, technical regulations, and conformity assessment processes, when utilized for purposes beyond their original intent, have emerged as new barriers to international trade within the liberalized trading environment.

Non-tariff restrictions encompass all measures used to regulate foreign trade, excluding customs tariffs. While these measures predominantly aim to restrict imports, they are also employed to promote exports and other foreign exchange-earning activities. The predominant non-tariff measures employed in contemporary trade policy include import quotas, export subsidies, voluntary export restraints, regulations on public procurement, domestic content requirements, product standards, anti-dumping measures, countervailing duties, and labor standards. Despite substantial reductions in customs tariffs as mandated by the WTO, countries continue to impose restrictions on foreign trade through both tariff and non-tariff barriers. While NTMs can be justified for reasons such as protecting health, safety, or the environment, they can also be used as protectionist tools to shield domestic industries from foreign competition. When NTMs are used excessively or in a discriminatory manner, they can undermine the principles of free trade by making it more difficult and expensive for foreign products to enter a market. This can lead to trade disputes and reduce the overall efficiency and benefits of international trade.