Introduction
Non-tariff barriers (NTBs) are regulatory measures other than tariffs that countries use to control the amount of trade across their borders. These measures can include quotas, import licensing, standards, and other regulations that can affect international trade. This synthesis aims to analyze the impact of NTBs on foreign trade based on multiple research papers.
Key Insights
- Reduction in Imports:
- NTBs can significantly reduce imports of affected products, with reductions comparable to those caused by trade defense instruments like anti-dumping duties .
- Sector-Specific Impacts:
- Environmental goods and associated services face various NTBs such as product testing, certification requirements, and customs procedures, which hinder trade.
- Negative Economic Impact:
- NTBs like Sanitary and Phytosanitary Standards (SPS) and Technical Barriers to Trade (TBT) have the largest negative impact on international trade.
- Dual Influence on Domestic Markets:
- While NTBs restrict exports and cause losses for domestic firms, they also drive technical innovation and improve competitiveness in the international market.
- Prevalence and Diversity:
- NTBs are diverse and widespread, affecting a significant portion of non-fuel imports in developed countries. They are particularly prevalent in trade-sensitive sectors like iron and steel, motor vehicles, textiles, and food items .
- Manageability and Adaptation:
- Firms often devise ways to cope with NTBs rather than seeking government intervention, indicating that while NTBs are a problem, they are somewhat manageable .
- Protectionism and Domestic Industry:
- NTBs are used to protect domestic industries from foreign competition, often leading to higher costs for foreign producers and favoring domestic ones .
- Impact on Employment and Wages:
- In the U.S., NTBs have been shown to mitigate the negative employment effects of exposure to foreign competition and positively affect manufacturing wages, especially for unskilled workers.
Conclusion
Non-tariff barriers significantly affect foreign trade by reducing imports, imposing additional costs, and creating obstacles for specific sectors. While they can negatively impact international trade, they also drive domestic innovation and competitiveness. NTBs are diverse and prevalent, particularly in developed countries and trade-sensitive sectors. Despite their challenges, firms often find ways to manage these barriers, and in some cases, NTBs can protect domestic employment and wages. Overall, NTBs play a crucial role in shaping international trade dynamics.