Economic Analysis of Non-Tariff Barriers

Abstract

As opposed to a tariff which is a tax imposed on imports, non-tariff barriers (NTBs) are non-tax measures imposed by a domestic government to discriminate against foreign producers and in favour of domestic ones. While tariffs generate revenues, non-tariff barriers can be seen as generating additional costs. The menu of instruments that can be used as non-tariff barriers to international trade is very large.¹ Laird and Yeats (1990, Appendix 4) provide a detailed glossary of non-tariff measures. Table 9.1 follows their exposition. From that list, which is in no way complete, the diversity of non-tariff instruments is immediately apparent. Among the other various economic tools used by governments on an everyday basis we could probably find many more that influence trade in some indirect way, and thus can be classified as non-tariff measures. For this reason it is not possible to produce reliable statistics on the incidence of non-tariff barriers. Estimates made by UNCTAD indicate that for 22 developed countries (DCs) in 1990 non-tariff measures affected 19 per cent of all non-fuel imports (Kelly and McGuirk, 1992, Table 4). This group of countries increased its reliance on non-tariff measures during the 1980s, particularly in the so-called trade-sensitive sectors such as iron and steel, motor vehicles, textile and clothing, footwear, and food items. Out of 20 developed countries, New Zealand, and to much lesser extent Canada, are the only two countries which significantly have reduced their usage of non-tariff barriers since the mid-1980s (Kelly and McGuirk, 1992, Table A8).