Non-tariff barrier (NTB): Definition, Pros and Cons

Non-tariff barriers (NTBs) are trade barriers that are not in the form of tariffs, but rather take other forms such as quotas, licenses, and regulations that can restrict or distort international trade. Non-tariff barriers can be put in place by governments to achieve a variety of goals, such as protecting domestic industries, regulating the quality or safety of imported goods, or promoting environmental or social goals.

Examples of non-tariff barriers include import quotas, which limit the amount of a particular good that can be imported into a country, and licensing requirements, which require importers to obtain a permit before bringing goods into the country. Other non-tariff barriers include technical regulations, which set standards for the quality or safety of goods, and sanitary and phytosanitary measures, which are used to protect against the spread of animal and plant diseases.

Non-tariff barriers can have a significant impact on international trade, as they can make it more difficult and costly for companies to import and export goods. As a result, reducing non-tariff barriers is often a key goal of trade negotiations and agreements.

There are both pros and cons to the use of non-tariff barriers (NTBs) in international trade. Some of the potential advantages of NTBs include:

• Protecting domestic industries: NTBs can be used to protect domestic industries from foreign competition by making it more difficult for foreign firms to sell their products in the domestic market. This can help domestic companies stay competitive and maintain or increase their market share.
• Regulating the quality or safety of imported goods: NTBs can be used to ensure that imported goods meet certain standards for quality or safety, which can help protect consumers and the environment.
• Promoting environmental or social goals: NTBs can be used to encourage the use of environmentally friendly or socially responsible products or to discourage the import of goods that are produced in a way that is harmful to the environment or society.

However, there are also potential disadvantages to the use of NTBs, including:

• Distorting trade: NTBs can distort trade by making it more difficult or costly for some products to be imported or exported, which can lead to inefficient resource allocation.
• Inhibiting economic growth: NTBs can make it more difficult for countries to access foreign markets and participate in global value chains, which can hinder economic growth and development.
• Increasing consumer prices: NTBs can increase the price of imported goods, which can be passed on to consumers in the form of higher prices. This can make it more difficult for low-income households to afford certain goods and services.
• Provoking retaliatory measures: NTBs can provoke other countries to impose their own NTBs on imports from the country that has implemented the NTBs, which can lead to a trade war.