With President Trump now in the White House, tariffs have spiked in use. Recent headlines describe various iterations of economic penalties on specific goods crossing our borders as the Trump Administration deploys them to achieve a variety of purposes.
But there are other dynamics in the mix that also have a big impact on global trade: non-tariff measures (NTMs) and a close cousin, non-tariff barriers (NTBs). Though often more subtle and less transparent than well-defined financial penalties, research from the United Nations Conference on Trade and Development (UNCTAD) indicates that NTMs can sometimes have an even greater impact.
What are non-tariff trade measures?
According to the Corporate Finance Institute (CFI), NTBs are “trade barriers that restrict the import or export of goods through means other than tariffs.”
Although some NTBs might be categorized as NTMs, the latter is a broader — and sometimes more positive — classification.
UNCTAD defines NTMs as “policy measures, other than ordinary customs tariffs, that can potentially have an economic effect on international trade in goods, changing quantities traded, or prices or both.”
The organization notes that some NTMs can serve a positive purpose, since they “also comprise technical regulatory measures that pursue important non-trade objectives that relate to health and environmental protection, such as Sanitary and Phytosanitary (SPS) measures and Technical Barriers to Trade (TBT).”
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Types of NTMs
In an August 2024 Congressional Research Service (CRS) report, Andres B. Schwarzenberg, Specialist in International Trade and Finance, references UNCTAD’s International Classification of NTMs in describing two major types of import-related NTMs: ‘technical” or “non-technical.”
“Technical measures comprise sanitary and phytosanitary measures (SPS), technical barriers to trade (TBT), and pre-shipment inspections,” writes Schwarzenberg. “These NTMs are not necessarily discriminatory because they generally apply to both domestic and imported goods and are often motivated by safety, health, national security, and related domestic policy concerns. …”
In contrast, he describes non-technical measures as those which include “traditional trade policies such as quotas, subsidies, and trade remedies (e.g., measures to address unfairly traded goods).”
Describing them as “closely related to NTMs” Schwarzenberg refers to “procedural obstacles” as “practical challenges related to how NTMs are implemented and/or enforced.” Examples include “understaffed ports of entry, long delays in certification, or lack of adequate information on regulations.”
“Research has suggested that it is often the procedural obstacles associated with NTMs that are most burdensome to exporters, rather than NTMs themselves,” he writes.
Challenges of NTMs
As Schwarzenberg notes, NTMs vary greatly from one country to the next, and since they’re not as clearly defined as tariffs, it can be difficult to estimate associated costs and trade impacts.
“Despite NTMs’ widespread use, many argue the diversity and complexity have prevented a full understanding of their prevalence and effects on trade and economic welfare,” he writes. “NTMs have varied effects that cannot be easily generalized or measured. These effects are often subtle, indirect, and case-specific.”
UNCTAD agrees, saying that although the intent can be positive, NTMs still represent a “major challenge” for exporters, importers, and policymakers.
When describing the challenges for policymakers, the organization says NTMs “become increasingly important as tariffs have been reduced significantly in trade agreements as well as unilaterally” — and that UNCTAD research indicates that “NTMs have become more restrictive than existing tariffs.”
In light of the rapidly evolving tariff dynamics at hand, it will be interesting to see if that continues to ring true.
For exporters and importers, UNCTAD says NTMs pose a challenge since market access increasingly relies on compliance with trade regulations such as “sanitary requirements and goods standards.”
Using the example of restrictions on pesticide residues in food products, the organization underscores its legitimacy to protect human health and nutrition. But also says the requirements place an additional burden on exporters — which may be too much for some.
“As a result, the regulation may restrict trade, leading to reduced income in exporting countries and higher consumer prices in importing countries,” UNCTAD explains. “Smaller exporters and poorer countries voice such concerns in particular because NTMs affect them disproportionately.”
Responding to the rise of NTMs
Schwarzenberg says the expansion of NTMs has resulted in the development of “bilateral and multilateral frameworks” by governments that regulate their use.
Noting that trade agreements typically address different types of NTMs, he says three “relevant” World Trade Organization (WTO) agreements are the:
- General Agreement on Tariffs and Trade 1994 (GATT) — which seeks to “ensure that WTO members abide by trade liberalization commitments and do not reimpose protection through domestic policies (e.g., NTMs) that discriminate against imports”
- Agreement on Technical Barriers to Trade (TBT Agreement) — which “aims to standardize technical regulations and their application”
- Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) — which “requires members to base measures for the protection of human, animal, or plant life or health on international standards”
“Both the TBT and SPS Agreements restrain members from applying standards that are ‘more trade-restrictive than necessary to achieve a legitimate objective,’” writes Schwarzenberg.
He notes that additional WTO agreements — as well as U.S. Free Trade Agreements (FTAs) — also aim to address “various bureaucratic or legal issues that could involve hindrances to trade, such as rules of origin, subsidies, public procurement, investment, intellectual property rights (IPR), import licensing, customs valuations, and pre-shipment inspections.”
Strategies to address NTMs
Underscoring both the pros and cons of NTMs, UNCTAD says it has identified two strategies that strike a balance by reducing related costs without compromising on public health and environmental safety.
1. “Increase transparency and understanding of NTMs”
Describing the difficulties in obtaining “comprehensive and comparable information about NTMs,” UNCAD says that as part of the Multi-Agency Support Team (MAST) Group, it led in helping draw up the International Classification of Non-Tariff Measures.
“Based on the MAST classification, UNCTAD has been collecting data on NTMs since 2012,” the organization explains. “Today, the data covers over 100 countries, containing more than 65.000 measures. This data is publicly available under the section Data Dissemination of the NTM Hub.”
2. Promote regulatory frameworks and collaboration
Noting that the “divergence of NTMs across countries causes trade to become more costly,” UNCTAD both acknowledges the need for regulations to “meet legitimate public policy objectives” while also calling for “smart policies that promote regulatory convergence, rather than elimination, to meet public policy objectives without restricting economic development.”
The organization says its research indicates that “regulatory convergence can considerably reduce trade costs related to technical NTMs,” which is why it supports “regulatory cooperation between countries and good regulatory practices by Member States through its policy work.”Further information is available in the section Policy Support of the NTM Hub.
