14-Oct-2019: Asia-Pacific Trade and Investment Report 2019
Fuelled by legitimate public policy concerns, as well as ongoing trade tensions, the number of non-tariff measures (NTMs) has risen significantly. While NTMs often serve important public policy objectives linked to sustainable development, the trade costs associated with NTMs are estimated to be more than double that of tariffs. As such, they have become a key concern for traders as well as for trade policymakers aiming to ensure that trade can continue to be an effective Means of Implementation of the 2030 Agenda for Sustainable Development.
In this year’s Asia-Pacific Trade and Investment Report, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) has joined hands with the United Nations Conference on Trade and Development (UNCTAD) in examining the links between NTMs and sustainable development, the impact of NTMs in Asia and the Pacific, and how to best navigate NTMs towards sustainable development, building on good practices at the national, regional, and multilateral levels. The Report builds on a multi-year cooperation initiative in this area between ESCAP and UNCTAD, during which our two organizations have collaborated to support data collection in several Asian countries as a basis for evidence-based policymaking.
The Report shows that, based on their intended public policy objectives, almost half of the NTMs in Asia and the Pacific directly and positively address the Sustainable Development Goals (SDGs) such as, for example, those on health, safety and the environment. However, they also add 15% to the price of imports, and can also have a significant impact on investment. Data from private sector surveys suggest that domestic procedural obstacles are the primary reason why NTMs are difficult to comply with by traders. As such, the key is to ensure that, while public policy objectives and SDGs are met, traders are not unnecessary burdened, and trade costs are minimized.
To address trade costs while maintaining the benefits of NTMs, countries need to further enhance cooperation at all levels, as suggested in this Report. At the multilateral level, WTO agreements on sanitary and phytosanitary (SPS) measures, technical barriers to trade (TBTs) and Trade Facilitation should be fully implemented, while international standards that are adapted to countries at different levels of development should be developed and adopted. Regional initiatives should also be actively pursued, such as NTM harmonization and mutual recognition initiatives in regional trade agreements. Digitalization of NTM-related procedures should also be prioritized, as already envisaged under the ASEAN Single Window Agreement and the broader Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific. At the national level, new and existing NTMs and related procedures should be systematically subjected to sustainability impact assessments; this should include effective consultations with the private sector and stakeholders with special needs, including SMEs and women.
This Report will help policymakers in their ongoing quest for trade and investment policies that support the implementation of sustainable development as well as encourage the donor community to provide more capacity-building and technical assistance to member States. ESCAP and UNCTAD will continue to work hand-in-hand in this area, together with other relevant partners.
Key findings- Effects of NTMs:
• Non-tariff measures (NTMs) have increased in the past two decades and are affecting trade as well sustainable development goals (SDGs) in Asian countries.
• NTMs affect 58 per cent of the trade in Asia-Pacific.
• NTMs can have a direct impact on the performance of trading partners. They can also impact issues such as health, safety, environment, climate, public security and peace, which in turn, influence SDGs.
• Around half the Asia-Pacific’s economies have at least one NTM addressing water and energy efficiency and only 10 per cent have measures addressing illegal, unreported and unregulated (IUU) fishing and illegal timber trade.
The implementation of NTMs raises the cost of trade, especially in developing economies. The average cost of these measures alone amounts to 1.6 per cent of gross domestic product, roughly $1.4 trillion globally. The developed economies have a higher standard of NTMs which affects trade of developing economies. In case of Sri Lanka, the country would have needed to invest too much to follow EU standards on IUU. Thus, the cost of investment in NTMs can sometimes be higher than the cost of total trade. This makes NTMs burdensome. NTMs affected foreign direct investment negatively, which slowed countries’ economic activities.
NTMs assure protection of human health or the environment. They can even boost trade under certain conditions. While trade costs associated with NTMs are estimated to be more than double that of tariffs, NTMs often serve important public policy objectives linked to sustainable development.
There appears to be more scope for member states in the Asia-Pacific region to address these aspects of sustainable development through trade measures. But NTMs are quite complex and vary from country to country.
Measures proposed:
1. Ensure that NTMs are designed and implemented effectively so that costs are minimised.
2. Build capacity in developing economies to adapt, coordinate or harmonise the use of international standards.
3. Increase cooperation with developed economies to work out regional mechanisms and develop common guidelines on sustainability impact assessment of NTMs.
4. To address trade costs while maintaining the benefits of NTMs, countries need to further enhance cooperation at all levels.
5. Regional initiatives should be actively pursued, such as NTM harmonisation and mutual recognition initiatives in regional trade agreements.
6. Review current NTMs and ensure that new NTMs are systematically follows and monitored.
Sri Lanka earned a lot of revenue by exporting seafood. But then, the European Union (EU) instituted an import ban on Sri Lankan seafood because of the country’s systematic failure to regulate IUU fishing. This was a type of NTM. On the one hand, the ban helped in conservation of marine resources and encouraged sustainable fishing. At the same time though, fisherfolk in Sri Lanka became poor. The ban led domestic prices to plummet, which in turn, translated into a decrease in fishing.
NTMs allude to technical measures such as sanitary (for protection of human and animal health), and phytosanitary (for protection of plant health), or SPS, and Technical Barriers to Trade (TBT), which are related to environmental and sustainable standards that are set to block or slow down trade instead of regular tariffs or duties.
The Asia-Pacific Trade and Investment Report (APTIR) is a biennial publication prepared by the Trade, Investment and Innovation Division of the United Nations Economic and Social Commission for Asia and the Pacific to provide insights into the impact of recent and emerging developments in trade and foreign direct investment on countries' abilities to meet the challenges of achieving sustainable development.
The theme of APTIR 2019 is Navigating Non-tariff Measures (NTMs) towards Sustainable Development. The Report provides an overview of NTM trends and developments in the Asia and the Pacific region, and explores the relationships between NTMs and the Sustainable Development Goals. It evaluates the impacts of NTMs on trade and investment, based on both quantitative analysis and private sector surveys. The Report highlights the importance of aligning NTMs with international standards, and of simplifying procedures related to these regulatory measures. It also includes a review of good practices for addressing NTMs unilaterally, as well as through multilateral and regional trade agreements. The report closes by offering sets of national-and regional-level policy recommendations for streamlining NTMs for sustainable benefits.