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Non-Tariff Trade Barriers Exporters Need to Know
On: January 31, 2022 | By: David Noah | 6 min. read
Becoming a successful exporter is difficult enough without countries imposing barriers meant to keep your products out.
Tariffs are one barrier in the news right now that make exporting your goods more difficult by increasing the cost to your international customers—the opposite of a free trade agreement. But there are also non-tariff barriers that governments can implement that make it difficult for exporters to succeed.
In this article, we’ll look at 14 different types of non-tariff trade barriers and what you can do to get beyond the roadblocks and on the road to successful international trade.
What Is a Non-Tariff Barrier?
According to the U.S. International Trade Administration (ITA), non-tariff trade barriers are laws or regulations a country enacts to protect domestic industries against foreign competition. Non-tariff barriers can decrease market opportunities for U.S. exports and give unfair competitive advantages to products from other countries.
They take the form of restrictive licensing, permitting and other requirements applied at the border; there are also barriers beyond the border, such as unwarranted technical barriers to trade, and sanitary and phytosanitary measures.
Trade barriers negatively impact exports by imposing additional costs on U.S. goods and services that aren't imposed on goods or services in the foreign market, which make the U.S.-made goods less competitive. In addition, limiting the quantity of specific items that can be imported from the United States or imposing additional licenses to import those goods also make them more expensive and less competitive.
14 Types of Non-Tariff Barriers
So what are some common trade barriers small- to medium-sized businesses face in the global market? According to the 2022 National Trade Estimate Report from the USTR, examples of non-tariff barrier include:
- Import policies, including tariffs and other import charges, quantitative restrictions, import licensing, customs barriers and other market-access barriers.
- Technical barriers such as unnecessarily restrictive or discriminatory standards, labeling or technical regulations.
- Sanitary or phytosanitary measures to protect food safety or animal and plant life or health that are unnecessarily restrictive or are not based on scientific evidence.
- Government procurement; for example, “buy national” policies and closed bidding.
- Inadequate patent, copyright and trademark regulations; trade secret theft; and inadequate enforcement of intellectual property rights.
- Services barriers. For example, limits on the range of financial services offered by foreign financial institutions, restrictions on the use of foreign data processing, and barriers to the provision of services by foreign professionals.
- Digital trade barriers. For example, restrictions and other discriminatory practices affecting cross-border data flows, digital products, internet-enabled services and other restrictive technology requirements.
- Investment barriers that limit foreign ownership and restrict access to foreign government funded research and development programs. Technology transfer requirements, export performance requirements, and restrictions on repatriation of earnings, capital, fees and royalties.
- Export subsidies that are contingent on export performance and agricultural subsidies that displace U.S. exports in third-country markets. Local content subsidies that are contingent on the purchase or use of domestic rather than imported goods.
- Government-tolerated anticompetitive conduct of state-owned or private firms that restricts the sale or purchase of U.S. goods or services in the foreign country's markets or abuse of competition laws to inhibit trade.
- State-owned enterprises.
- Concerns with failures by a government to protect internationally recognized worker rights through failure to eliminate forced labore or failures to eliminate discrimination.
- Concerns with a government's levels of environmental protection, unsustainable stewardship of natural resources, and harmful environmental practices.
- Other barriers that encompass more than one category, e.g., bribery and corruption.
A Close-Up Look at Two Non-Tariff Barriers
Let’s take a closer look at two of the barriers listed above: intellectual property and strategic, regulatory and standards issues.
Intellectual property is booming and will soon become the largest market in the world. It’s crucial to be aware of national and international laws and requirements regarding intellectual property. In some cases, that knowledge may be your only fighting chance to ensure you don’t lose what’s rightfully yours.
Being proactive about protecting your intellectual property ensures you don’t lose your brand name, patent or technology. Avoiding trade in countries where you fear your intellectual property will be compromised is a side-step approach—one that doesn’t necessarily guarantee the risk is avoided.
Take China, the intellectual property piracy capital of the world. If you have intellectual property worth stealing, then IP pirates will try to steal it regardless of whether your company ever enters the Chinese market.
Avoiding international trade doesn’t always solve (or skirt) the problem, but it does automatically rule you out from growing your market share in the global arena.
Strategic, Regulatory and Standards Issues
Regulatory and standards barriers include a wide variety of operating practices ranging from bureaucratic delays in processing requests for permits, political squabbles, infrastructure headaches and unethical business practices.
Too often, exporters take the time to go through approval processes here in the United States, but soon find out that the steps they took aren’t acceptable overseas. When attempting to enter an international market, some exporters face unnecessarily cumbersome customs and market-entry procedures. If these procedures are arbitrary and left to the judgment of customs officers, they become barriers to entry.
Similarly, voluminous and complicated document requirements and excessive delays in customs clearance due to human and technical factors serve as non-tariff barriers. For many companies, requirements to provide the same documentation to numerous agencies in one country significantly contribute to the costs of international trade.
How To Address Non-Tariff Barriers
Even if you have firsthand experience with non-tariff barriers, you may not be aware of how straightforward it is to begin solving them. With the help of the ITA, we’ve identified the steps small- and medium-sized businesses can take to successfully attack trade barriers in the global marketplace.
Here’s what you can do to get beyond the roadblocks.
The ITA: Your Resource for Battling Trade Barriers
The ITA helps U.S. businesses increase their global competitiveness by advising and advocating for small businesses interested in international trade. Staff at the ITA are resident experts in advocating for U.S. businesses of all sizes (especially small businesses) and customizing their services to help solve trade dilemmas as efficiently as possible. If you find yourself caught in an unfair international trade situation, the ITA is a valuable resource that can expeditiously help you understand and solve your problems.
How to Connect with the ITA to Battle Non-Tariff Barriers
1. Identify your local export assistance center.
From Anchorage to Las Vegas to Shreveport to Ypsilanti, there’s an export assistance center nearby that’s ready and willing to help you. Here’s a list of domestic offices.
2. Ask questions via email or phone.
Once you know the closest location, you’re ready to seek help. Export assistance centers are staffed by experts who can offer guidance no matter how small or large your trade barrier seems.
3. Register your problem online.
If you’d prefer to submit your barrier online, you can easily do so. If you’re facing trade barriers, including intellectual property rights barriers, you can report the problem online at the ITA website.
Addressing the Export Trade Barriers
Once you’ve reported your international trade barrier, specialists at the ITA mobilize, forming a case team to analyze the problem. They determine which trade agreement can be used as leverage, agree on a strategy and define a successful outcome for the situation.
Next, your team of experts implements the strategy, engaging the foreign government to reduce or remove the specific trade barrier.
Third, the team works with industries abroad toward an optimal solution, escalating the issue as appropriate to attack and eliminate the foreign trade barrier. If these three steps are not successful, the issue may be referred to the Office of the U.S. Trade Representative and/or other government agencies for possible formal dispute settlement action.
While no one wants to find themselves in a situation where they’re battling an unfair international trade barrier, it’s reassuring to know there’s a team dedicated to advocating for the U.S. exporter base. The International Trade Administration’s specialists are constantly on the move to help clients by providing hand-in-glove service to assess solutions and recommend options.
Special thanks to John Andersen, the former Principal Deputy Assistant Secretary for Global Markets for the U.S. Department of Commerce, for his expertise in this series on global trade barriers.
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This article was first published in August 2018 and has been updated to include current information, links and formatting.
About the Author: David Noah
David Noah is the founder and president of Shipping Solutions, a software company that develops and sells export documentation and compliance software targeted at U.S. companies that export. David is a frequent speaker on export documentation and compliance issues and has published several articles on the topic.