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  • NON-TARIFF MEASURES AND TECHNICAL REGULATIONS: THE CHALLENGES OF COMPLIANCE FOR EXPORTERS

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    Non-tariff measures and technical regulations: The challenges of compliance for exporters

     

     
     
    International Trade Forum - Issue 3/2010

    A three-year ITC survey across 30 countries is seeking to identify and understand the major obstacles to trade faced by export businesses in meeting non-tariff measures (NTMs) and technical regulations.

    Exporters and trade policy-makers in developing countries are increasingly concerned about NTMs applied by destination markets. These include a wide range of trade measures that are related to export, including technical regulations and other mandatory standards. They may vary across products and countries, and can change frequently. While many NTMs are applied for legitimate reasons, others can be barriers to trade.

    Many exporters in developing countries lack the information, capabilities and facilities to meet these complex requirements. In addition, compliance with NTMs can reduce export competitiveness by adding extra time and cost to the production of goods. At the same time, many national policy-makers lack a clear picture of the impediments to trade that the business sector faces when complying with these measures.

    In order to better identify and understand the impact of NTMs and other obstacles to trade on businesses, ITC is currently implementing representative company surveys in 10 develop-ing countries.

    Initial findings of the ongoing survey indicate that the impact of NTMs on exporters varies according to the country. For example, in Burkina Faso 70% of interviewed companies reported that NTMs strongly affect their daily operations, compared to only 24% in Hong Kong (China).

    From the perspective of individual com-panies, the survey has also demonstrated that NTMs can be experienced as barriers to trade for a number of reasons, such as the company may not be aware of the requirement; the reg-ulation may be so strict that a company may not be able to comply with the requirement without significant changes to production processes; or the cost to demonstrate compliance may be prohibitive to the company. For example, a company required to test products in a specific laboratory located in a third-party country or obliged to obtain and translate a certain health certificate from a loc al institution faces time-consuming and often costly compliance procedures. These 'procedural obstacles' include a wide range of constraints ranging from administrative burdens and time delays to the lack of legal protection and attitude of officials in the home country, export destination and transit countries. According to preliminary results from the survey in Burkina Faso, more than 50% of the 74 companies interviewed experienced trade barriers linked to domestic challenges. Similar preliminary results were found among other surveyed countries. Other obstacles not directly linked to NTMs related to transportation, the business environment and security.

    Results from a 2008-2009 pilot survey, jointly executed by UNCTAD and ITC, demon-strated that technical measures - including both sanitary and phytosanitary measures and technical barriers to trade - are a major concern for exporters. The survey found that 72% of all companies questioned in six developing countries reported concerns about technical measures. Many of the concerns related to mandatory quality standards about product characteristics or associated production processes. The most burdensome requirements for exporters were the compliance with cert-ification requirements (20%); labelling, marking and packaging requirements (12%); traceability requirements (9%); and tolerance limits for residues and contaminants or res-tricted use of certain substances (8%).

    ITC will implement NTM surveys in some 30 countries between 2010 and 2012 with the aim of identifying and understanding the most challenging NTMs for businesses in relation to products, sectors and export markets at country level. The business perspective on the issue of NTMs is indispensable in the identification and definition of national strategies to overcome obstacles to trade. The understanding of their key concerns and daily challenges with regard to NTMs helps governments better define the needs for concrete action and capacity building - particularly in the area of technical reg-ulations, sanitary and phytosanitary regulations, conformity assessment and related technical assistance.

    ITC is also engaged in a multi-agency framework under UNCTAD's leadership to collect, classify and disseminate regulatory information on NTMs applied by importing countries, both developed and developing, in order to provide exporters and others with easy access to this information.

    Detailed results of the survey will be published in the ITC Flagship Publication 2010 and Country Reports (ITC Technical Paper Series on Non-Tariff Measures) later this year.

    For more information, contact ntm@intracen.org.



     

    NTM Incidence

    By Exporting Company Size, 2010

     

    AFFECTED EXPORTER COMPANIES
    (SHARE %)

    SCREENED EXPORTER COMPANIES
    (NUMBER)

    Burkina Faso 61 100

    Hong Kong (China)

    24 1,701

    Morocco

    32 220

    Paraguay

    64 210

    Peru

    44 588

    Sri Lanka

    57 332

    Note: Results are preliminary as the 2010 NTM surveys are still in progress.

    Note: Figures are based on the reports by exporting companies in Chile (673 reported NTM cases), India (776), Philippines (851), Thailand (1803), Tunisia (810) and Uganda (593). Percentages represent shares of the groups of NTMs in the total number of NTMs, averaged across the six countries surveyed.

    1See also 'Obstacles to Trade from the Perspective of the Business Sector : A Cross-Country Comparison' by Mondher Mimouni, Carolin Averbeck, Olga Skorobogatova, in The Global Enabling Trade Report 2009. World Economic Forum, Geneva, Switzerland, 2009.

    2 Ibid.