Non-tariff barriers – the exporter’s nightmare | Looking outwards

As if exporting wasn’t enough of a challenge already, the exporter can easily be ambushed by unexpected traps and pitfalls in the target market. Here’s how to deal with them

WORDS BY: Usha Samsundar

Business Development Consultant – Exports

Published in CONTACT Magazine


 

Ask a group of manufacturers why they haven’t been able to reach their desired level of export growth despite the preferential agreements now in place with extra-regional markets, and someone will mention non-tariff barriers.

Non-tariff barriers have long been considered the villain of the piece. They are one of the key contributors to the gap between where many Trinidad and Tobago exporters actually are, and where they want to be – expanding significantly, even aggressively, into extra-regional markets.

But we must be careful not to use “non-tariff barrier” as an umbrella term to refer to any and all issues which challenge exporters and delay or frustrate their attempts at new market development.

 

Demystifying the terms

Non-tariff measures (NTMs) and non-tariff barriers (NTBs) are impediments to trade. They are the result of actions and policy measures beyond what seems to be reasonable. They are more complex and confusing than they need be. And they are non-proportional to the risk involved.

Defining NTBs and NTMs is challenging because of the scope and complexity of the many items they can cover. For example, an exporter attempts to register product under sanitary and phytosanitary (SPS) regulations in a particular country, and is faced with a flood of onerous and ever-expanding requests for more information, maybe confidential or proprietary information not part of the listed requirements and apparently unwarranted, plus inexplicably lengthy delays as the process drags on. This exporter has stumbled on an NTB.

 

What they are not

The challenging and time-consuming processes associated with sanitary registration and labelling requirements in the Latin American region are not NTBs or NTMs.

Those processes have long been in place there, and the extensive paperwork, the documentation required and the related costs incurred should not come as a surprise. They are just part of the entry requirements for doing business there. The registration process may be a bit cumbersome, but in most cases registrations are achieved once the required paperwork and documentation are supplied.

Other regions or markets that continually challenge our exporters are the USA, Canada, Europe, and the UK, with their stringent requirements for product labelling and packaging, quality standards and certification. All this has been cited as a significant impediment to local exporters trying to doing business, but it cannot be considered an NTB or NTM, because the standards and processes are transparent, well-documented and clearly defined.

 

Inaccurate information

Sometimes incomplete or incorrect information can create misunderstandings that lead exporters to conclude that they are being confronted by an NTB.

In a recent case, an exporter complained to a trade facilitation organisation about an NTB related to the sanitary registration process in a Central American market. After investigating, the said organisation concluded that the exporter had been misled by inaccurate information from point persons they had contracted locally to assist with the registration process.

Getting accurate information from trusted sources about technical and SPS measures is crucial to minimising costly delays and avoiding unnecessary expense.

 

An exporter’s guide to successful market entry

Above all, be proactive, do due diligence, and network.

Obtain as much data as you can on technical and sanitary requirements, and on standards and regulations, through the Enquiry Point on the Trinidad and Tobago Bureau of Standards (TTBS) website, or through the Ministry of Agriculture, Land and Fisheries.

Subscribe to the ‘ePing’ online alert system on the TTBS website: it alerts you with an email when foreign regulators change their requirements.

Access trade facilitation assistance, information and guidance from the various organisations that work closely with exporters, like exporTT, the TTMA, and the TT Chamber of Industry and Commerce. They can recommend legal resources, and advise on how to navigate the market. They can also refer you to other local companies that may already be in the market.

Note that other companies already in the market may be in different industries, and the NTBs and levels of competition may differ by industry, so use the information gained from them as a guide, and not as a blueprint.

 

A call to exporters: dealing with NTBs

To ensure that NTBs do not continue to be a significant barrier to trade expansion, we need to create a comprehensive mechanism for resolution.

At present, exporters seek assistance in one of several ways:  through the Ministry of Trade and Industry (Trade Directorate Division) if there is a trade agreement in place, for example, or by contacting one of the trade facilitation organisations.

This ad hoc arrangement is not an ideal mechanism, since it diffuses information among many different agencies and organisations. There is no central point where complaints can be logged to create a viable database.

We need a more sustainable solution that can help the various stakeholders to understand which markets and industries are the key offenders, in order to focus on those areas.

 

A national committee

One recommendation is to create a national committee to deal with trade issues/NTBs. This initiative could be led by the Ministry of Trade and Industry/TTBS, and bring together the key stakeholders from trade facilitation organisations and the private sector. When a complaint is lodged and found to be valid, this committee could then escalate the issue at the Caricom/Joint Council level, and ultimately to the World Trade Organisation if necessary.

A study commissioned by the Caricom Secretariat in 2014* noted that “trade has become more difficult recently despite agreements being in place because of a perceived surge of protectionist behaviour by import administrations”.

Exporters must therefore demand a solution as a unified group.  We cannot sit idly by, unable to take full advantage of trade liberalisation and the potential for significant export growth, at a time when the country desperately needs it.

 

 

* Caricom Secretariat Report entitled “Identification and Assessment of the Underlying Reasons Affecting Caricom’s Trade Performance Under the Existing Bilateral Trade Agreements with the Dominican Republic, Costa Rica, Colombia, Cuba and Venezuela” (BKP Research and Consulting, March 2014)


 

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