AS RATES of general tariffs move downwards – with the exception of those moving upwards in the current US against China and the EU disputes – one of the main restrictions on widespread trade liberalisation remains the proliferation of non-tariff barriers which are also known as non-tariff measures or technical barriers to trade.
How do they occur?
NTBs can arise in any one of a number of ways, whether through official government policy or through informal action by government and its agencies or through actions of the private sector. On occasion they are subject to independent review but in many cases, they are difficult to address as the parties imposing them have a position which protects them against action. It can be the case that benefits from reductions in tariffs and improvements in trade facilitation are reduced or even eliminated by new or existing NTBs. While NTBs are often a reflection of the “real” world and a product of national interests, they can cause significant damage as their existence is far from transparent and review is difficult.
What is an NTB?
There are a variety of descriptions of NTBs/NTMs or TBTs. According to the Organisation for Economic Cooperation and Development in its OECD Economic Outlook: Sources and Methods, non-tariff barriers refer to all barriers to trade that are not tariffs. Examples of these include countervailing and anti-dumping duties, “voluntary” export restraints, subsidies which sustain in operation loss making enterprises, technical barriers to trade, and obstacles to the establishment and provision of services. Moreover, the term NTB is often used to include certain domestic measures, such as restraints on distribution and non-competitive practices that can also distort trade in the same way as border measures do. Some of these instruments, in particular technical regulations, minimum standards and certification systems regarding health and consumer safety do not ipso facto constitute barriers to trade, as they are generally employed to meet legitimate policy goals. However, there is a perception that, in some circumstances these sorts of policy instruments are being misused.
What is an NTM?
The official definition of NTMs is broad: NTMs are 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. A detailed classification is therefore critical in order to clearly identify and distinguish among the various forms of NTMs. In a 2012 publication entitled Classification of Non-Tariff Measures UNCTAD set out classifications of NTMs, noting that they could change over time and that it did not judge on the legitimacy, adequacy, necessity or discrimination of any forms of policy intervention used in international trade.
Dealing with NTBs
The response to NTBs differs depending on the party which imposes them or the basis on which they are imposed. In a number of World Trade Organisation agreements, their imposition can be allowed based on “national interest”, “health” or “national security” grounds. In a number of cases, countries which seek to impose measures which could be considered as NTBs can provide advance notification pursuant to the international agreements. For example the WTO Agreement on Technical Barriers to Trade and the WTO Agreement on the application of Sanitary and Phytosanitary Measures both provide a mechanism for countries seeking to impose new measures which could be an NTB to give notice of those measures and explain how they are permitted according to those grounds.
Similarly, in the event one country believes the policies of another breach the TBT or SPS (or other WTO agreements) then it can refer the matter to the WTO Dispute Resolution Understanding agreement for resolution according to WTO processes. Those processes involve “consultations” followed by recourse to a panel hearing and then appeal. While the process has been the subject of extensive criticism, it does effect positive outcomes, for example in the recent action brought by Australia against provincial governments in Canada and their actions disadvantaging the retail sale of Australian wines. That dispute appears to have settled amicably at an early stage.
FTAs and NTBs
Further, many free trade agreements allow for the notification of NTBs and require the country imposing the NTB to justify why the NTBs should be allowed or for agreement to be reached on removal of the NTB. In some cases the action only can be by one government against another. In other FTAs the complaint can be brought by a party in one country (known as the investor) against the government of the other country – which is one aspect of the controversial Investor-State Dispute Settlement (or ISDS) mechanism.
Australian response to NTB issues
For a number of years, those in the export and import business were critical of the lack of forums to identify and advance their concerns. The WTO DSU was seen as an impractical means to resolve issues, especially for small and medium enterprises. A variety of commentators and industry associations including the Export Council of Australia through its trade policy recommendations called for more work on the problem and provision of an improved and focussed procedure.
In response, the federal government has taken action in a variety of initiatives notably through the work by the Department of Foreign Affairs and Trade establishing a “Trade Barriers” page. This includes details on what are NTBs, Australia’s action plan on NTBs and how to report barriers to government and seek action.
The Non-Tariff Barrier Action Plan includes a working group of members from industry associations and affected parties, including an ECA representative.
The federal government has otherwise referred to the appointment of 22 agricultural counsellors employed overseas, working with importing countries to remove “technical barriers to trade”.
The recent federal budget also addressed the issue including provision for $29.4m over four years to enhance agricultural export trade, aimed, in part to improve technical market access for exports.
We do not live in a perfect world. There will never be unfettered free trade without tariffs, trade remedies and other restraints.
There are many circumstances in which NTBs are validated and allowed for good reasons. However, situations regularly arise where NTBs exist, whether officially or otherwise which are not permitted or authorised by any agreement or treaty. In those cases, it is important for parties affected to bring them to the attention of relevant government agencies and seek attention to those barriers.
Of course, if pain persists, your friendly neighbourhood trade lawyers can assist.
* Andrew Hudson is a partner at Rigby Cooke Lawyers
This article appeared in the June 2019 edition of DCN Magazine