What Are Non-Tariff Barriers To Trade?

With economic nationalism on the rise, import tariffs are a major concern for businesses around the world. But with so much focus on import tariffs, it’s important not to overlook another critical concern: non-tariff barriers (NTBs). 

NTBs are less visible than import tariffs but can be equally challenging when it comes to international trade.

In this article, we’ll explore non-tariff barriers (NTBs) in depth. We’ll look at the different types of NTBs and provide practical strategies to help your business overcome these substantial barriers to trade. 

Wondering how NTBs might affect your business? Learn more with clearBorder’s tailored trade consulting.

The Fundamentals of Non-Tariff Barriers (NTBs) 

Non-tariff barriers (NTBs) are trade restrictions that limit imports or exports, without imposing direct tariffs. While NTBs are often unintentional consequences of government regulations, countries may also unfairly use NTBs as a form of protectionism.

Non-tariff barriers are often less transparent than traditional tariffs and can be more challenging to identify. However, the World Trade Organization (WTO) helps promote transparency in NTBs by requiring member countries to notify trade partners of any new measures that may create trade barriers. 

Types of Non-Tariff Barriers in Global Trade

Understanding the various types of NTBs is essential for companies that want to understand international trade and develop effective strategies to overcome trade barriers. Some common types of non-tariff barriers include:

• Quotas: Restrictions on the quantity or value of goods that can be imported or exported.
• Licenses: Requirements for special permits or licenses to engage in trade.
• Industrial subsidies: Government support for domestic industries, which can distort international competition.
• Technical barriers: Standards, regulations, or certification requirements that can hinder trade.
• Sanitary measures: Restrictions based on health and safety concerns.
• Administrative barriers: Complex customs procedures or documentation requirements that hinder trade.

These barriers make it more difficult to engage with the country that imposes them. These trade barriers increase costs, cause delays, or limit market access for foreign businesses. 

Contact clearBorder for help in overcoming non-tariff barriers affecting your business.

 How NTBs Differ From Tariffs 

While both tariffs and non-tariff barriers can restrict international trade, they differ in their nature and application. 

Tariffs are direct taxes imposed on imported goods, making foreign goods more expensive and less competitive in the domestic market. In contrast, NTBs are restrictions like regulations, standards, or administrative procedures that can indirectly limit or prohibit trade.

NTBs can be more complex and less transparent than tariffs. And adapting products, processes, or documentation to comply with NTBs can also be time-consuming and costly. Through strategies like supply chain diversification and leveraging free trade agreements, businesses can overcome trade barriers, access new markets, and grow their operations.

The Impact of NTBs on International Trade

Non-tariff barriers can have a profound impact on international trade, affecting businesses, consumers, and economies worldwide. NTBs create additional hurdles for imports and exports, which in turn can:

• Increase costs: Complying with NTBs often requires businesses to invest in product modifications, additional testing, or specialised documentation, driving up costs and reducing profitability.
• Limit market access: Some NTBs, such as quotas or licensing requirements, can effectively limit or even prohibit trade, preventing businesses from accessing certain markets.
• Distort competition: On average, imports decrease by 11.8% when a country implements at least one NTB. This can give domestic producers an unfair comparative advantage over foreign competitors, leading to market distortions and reduced efficiency.
• Delay trade: Navigating complex NTBs can lead to longer customs clearance times, causing delays in supply chains and affecting business operations. 

With the constantly shifting global trade dynamics seen, businesses must stay informed of the changing NTBs and their potential impact. 

clearBorder’s expert trade consultants can help you overcome the negative impact of non-tariff barriers.

 Case Studies: How Different Countries Use NTBs 

Countries around the world have long used non-tariff barriers to protect domestic industries, ensure public safety, or achieve other economic or political goals. Here are some examples of how different countries have used NTBs:

• The United States has used import quotas to protect its domestic sugar industry, limiting the amount of sugar that can be imported from other countries. The US Department of Commerce identifies and addresses unfair trade NTBs that restrict US exports.
• The European Commission has strict regulations on genetically modified organisms (GMOs), which can act as a barrier to trade for countries that produce GMO crops.
• India has faced criticism for its complex licensing requirements and administrative procedures, which can hinder foreign companies from entering its market.
• The UK has used sanitary and phytosanitary (SPS) controls to regulate the import of certain agricultural products, such as beef and poultry, to protect public health and the environment.

 Strategies to Overcome Non-Tariff Barriers 

While NTBs can significantly hinder international trade, there are some strategies businesses can use to mitigate their negative effects. To successfully navigate non-tariff barriers in international trade, businesses should:

• Stay informed: Be proactive with changes in regulations, standards, and other NTBs in target markets to ensure compliance and prevent disruptions.
• Adapt products and processes: Modify products or production processes to meet the requirements of destination countries, such as obtaining necessary certifications or adhering to specific technical standards.
• Build strong partnerships: Build strong relationships in multiple countries to diversify trade and lessen the impact of NTBs if one country imposes them. Collaborate with local partners or suppliers who can provide valuable insights into navigating country-specific NTBs. 
• Engage with trade organisations: Work with trade associations or chambers of commerce to advocate for more transparent and predictable trade rules. Trade associations can also provide valuable information on overcoming trade barriers. 
• Seek professional guidance: Partner with experienced trade consultants such as clearBorder. Through clearBorder’s training and consulting services, businesses can learn how to comply with international regulations and overcome NTBs.

 The Future of NTBs in Trade

While efforts to promote free trade and reduce trade barriers may lead to a reduction in NTBs, the increasing desire for countries to protect their domestic interests through tariffs also suggests that NTBs will continue to play a role in global trade.

To prepare for the future, businesses must stay informed about changes in trade regulations and proactively develop strategies to adapt to new NTBs. Partnering with experienced trade consultants, such as clearBorder, can help businesses navigate every aspect of global trade.

Investing in the right partnerships and staying agile in the face of changing trade barriers will be key to thriving in the future of international trade. clearBorder’s expertise in everything from tariffs to export control compliance can help businesses create trade strategies that lead to success in the global marketplace.

Contact clearBorder for help in overcoming trade barriers affecting your business.