Brexit: Non Tariff Measures (NTMs)

Non-tariff Measures (NTMs) are the government-imposed factors which could inhibit imports and exports by means other than tariffs.  A key example are the sanitary and phystosanitary (SPS) measures which specify the animals and plant health standards necessary for a product being imported into the EU (such as a ban on hormone-fed beef or chlorinated chicken) and which provide legitimate reason to decline certain imports.

In practical terms NTMs are a barrier to trade because they add cost into the system, and the expression ‘Non-tariff Barriers’ is often used interchangeably, however non-tariff barriers can also be defined as “measures that have a protectionist and discriminatory intent, for example where they are excessive, dissimilar and not justifiably related to equivalent measures elsewhere.” (International Trade Centre, 2016), and could be summed up as ‘unreasonable gold plating’.  Some of this remains within the EU, where individual countries implement EU legislation but with greater obligations or requirements than were intended by the EU.  This is rarely popular with farmers either who worry that higher national standards than are found in the wider EU make them less competitive.

Examples of non-tariff measures increasing cost include fees, certification costs, veterinary costs, agent’s fees.  Also important are potential additional costs incurred because of product deterioration – for instance if a fresh product is delayed at a port, haulage waiting time, and the need to keep extra stock in the system.

Most supply chains have worked hard to eliminate costs wherever possible.  For this reason the UK works on the basis of ‘Just in Time’ in sectors such as manufacturing – this reduces the costs of maintaining a large stock (capital tied up, storage costs, etc) and is facilitated by the current ability to rapidly move goods throughout the UK and EU because we are part of the Single Market with the EU.  If the future trading arrangement with the EU means we leave the single market then Non Tariff Measures/Barriers will become increasingly significant.

Non-tariff Barriers are the factors which could inhibit imports and exports by means other than tariffs.  A key example are the sanitary and phystosanitary (SPS) measures which these specify the animals and plant health standards necessary for a product being imported into the EU (such as a ban on hormone-fed beef or chlorinated chicken) and which provide legitimate reason to decline certain imports.