58pc Asia-Pacific trade affected by non-tariff measures: UN bodies

Non-tariff measures or NTMs are now affecting around 58 percent of trade in Asia and the Pacific because of their growing popularity as weapons of trade policy in regional and global trade tensions, according to a new report yesterday.

The NTMs can include government procurement limitations, export subsidies, import restrictions and import and export bans through unilateral or multilateral sanctions, said the Asia-Pacific Trade and Investment Report (ATIR) 2019.

The report was launched in Geneva and at the Bangkok headquarters of the United National Economic and Social Commission for Asia and the Pacific (Escap).

“Meeting these complex and often opaque rules can require significant resources, affecting in particular small and medium-sized enterprises,” according to the report styled “Navigating non-tariff measures towards sustainable development”.

However, the report also noted that NTMs as policy instruments can often be legitimate.

Most of the NTMs are technical regulations, such as sanitary and phytosanitary requirements for food.

The average cost of these measures alone amounts to 1.6 percent of gross domestic product, roughly $1.4 trillion globally.

But they also serve important purposes such as protection of human health or the environment and can even boost trade under certain conditions, the ATIR said in a statement.

“While trade costs associated with NTMs are estimated to be more than double that of tariffs, NTMs often serve important public policy objectives linked to sustainable development,” said Armida Alisjahbana, under-secretary general and executive secretary of UN Escap.

“The key is to ensure they are designed and implemented effectively so that the costs are minimised,” she added in the statement.

“The key is to ensure that while public policy objectives and further, Sustainable Development Goals are met, traders are not unnecessarily burdened and trade costs are minimised,” said Mukhisa Kituyi, secretary-general of United Nations Conference on Trade and Development.

While costly to traders, failure to have essential technical NTMs in place or their poor implementation may have serious detrimental impacts on sustainable development.

For example, the report refers to the lack of NTMs covering illegal fishing and timber trade in many Asia-Pacific economies.

It also points to the high economic costs for the region associated with the African swine fever epidemic, which can be linked to deficient implementation of NTMs.

At the same time, new regulations on trade in plastic waste arising from amendment to the Basel Convention are promising.

The NTMs are often very different between countries, making it difficult for firms to move goods from one country to another.

Regulatory cooperation at the regional and multilateral level and the use of international standards when designing or updating NTMs is therefore important in overcoming challenges related to the heterogeneity of regulations.

Looking ahead, the report also highlighted that trade costs of NTMs can be significantly reduced by moving to paperless trade and cross-border electronic exchange of information.

This could lower costs by 25 percent on average in the region, generating savings for both governments and traders of over $600 billion annually.