TWN Info Service on WTO and Trade Issues (May26/06)
12 May 2026
Third World Network

UN: Non-tariff measures now outweigh tariffs as major driver of trade costs
Published in SUNS #10440 dated 11 May 2026

Penang, 8 May (Kanaga Raja) -- Trade policy is becoming increasingly interventionist, with tariffs rising but no longer the primary barrier to exports; instead, non-tariff measures (NTMs) such as regulations, standards and product requirements now account for most trade costs, shaping who can trade, what is traded and to which markets, according to UN Trade and Development (UNCTAD).

In the latest edition of its Global Trade Update, UNCTAD said that for developing countries, this shift creates a dual burden: they continue to face higher tariffs while also struggling to comply with ever more complex rules that determine market access and competitiveness.

According to the UNCTAD report, after years of decline, tariffs re-emerged: In 2025, global tariffs on exports rose significantly - by 10 per cent for developed, 16 per cent for developing and 18 per cent for least-developed countries.

Despite rising tariffs, non-tariff measures (NTMs) impose higher costs on exports for 88 per cent of countries, it said.

This burden falls most heavily on smaller developing countries and least developed countries (LDCs), for which NTM-related export costs are particularly high.

NTMs are policy measures other than tariffs that can potentially have an economic effect on international trade in goods, said UNCTAD.

On the one hand, they include non-tariff barriers (NTBs) such as import licensing requirements, quotas, import prohibitions and export bans.

On the other hand, however, most NTMs are technical measures that primarily aim to protect public health and the environment.

The report said that these essential public policy instruments can nonetheless have substantial trade effects by generating information, compliance and procedural costs. They shape trade, by determining who trades, what is traded and to which markets.

After announcing "reciprocal tariffs" on 2 April 2025, the United States has signed numerous Reciprocal Trade Agreements and framework "deals", it noted.

Other economies, such as the European Union, have also accelerated negotiations of trade agreements to open up alternative markets as access to the United States market becomes more costly.

The report said that while tariffs dominated the headlines, NTMs have long been, and remain, a central pillar of recent trade agreements.

As tariffs declined over much of the past few decades, trade negotiations increasingly shifted toward regulatory and administrative measures that continue to determine effective market access.

NTMs sit at the heart of trade negotiations, reflecting their decisive role in shaping who can trade and under what conditions, it added.

At the same time, the report said governments are increasingly using NTMs to advance objectives linked to economic nationalism and economic security, as both developed and developing economies seek not only to protect domestic industries but also to shape and secure control over key global value chains, underscoring a broader trend toward the strategic use of interdependence.

"Recent United States trade deals focus heavily on easing regulatory and administrative requirements for its exporters."

Most of these include sector-specific provisions on the recognition of United States standards and conformity assessment for vehicles, pharmaceuticals and agrifood products in bilateral trade, it added.

In some countries, the negotiations covered the removal of local content requirements as well as the elimination or simplification of import licenses.

With Indonesia and Malaysia, agreements also covered strategically important critical minerals, with countries agreeing to refrain from imposing any type of export restrictions, the report noted.

Recent European Union agreements with India and Mercosur emphasize mutual recognition and alignment with broader international standards, rather than the recognition of standards of one of the parties.

The global trade policy landscape has shifted towards more interventionism since Covid-19 in 2020, the war in Ukraine in 2022, and again with the United States tariff hikes in 2025, the report reiterated.

"Several major economies have moved away from a strong focus on trade liberalization toward a more distortive use of trade policy to pursue industrial policy objectives, strengthen supply chain resilience and address national security concerns. Subsidies for green transition have also been rising and often promote local content."

The use of sanitary and phytosanitary (SPS) measures, technical barriers to trade (TBT), tariffs and non-tariff barriers have all increased, it noted.

The report said while globally there were more tariff reductions than increases in 2025, the United States' tariff increases quantitatively outweighed other countries' reductions and raised global average tariffs by double digits.

Despite the overall jump in tariff policy interventions in 2025, new NTBs were still almost twice as frequent, it added.

The report said that in addition to clearly restrictive NTBs, technical NTMs related to health, security and the environment have been on the rise for two decades and are more than three times as frequent as all other trade policy interventions combined.

The increasing use of these TBT and SPS measures reflects more complex trade in disaggregated global value chains as well as rising regulatory requirements and consumer demands related to health, safety, environmental protection, and sustainability, it added.

DOUBLE BURDEN

The tariff increases of 2025 affected countries unevenly, hitting many developing countries harder than most developed ones, said the report.

For developed countries, the tariff increase that they face on their exports remains below the tariff increase that countries from East Asia, South Asia and Latin America face, with average tariff rates on exports from Latin America more than doubling.

At the same time, developing countries bear a disproportionate share of trade costs related to NTMs, it added.

Their exports are often more affected because compliance with complex regulations, certification requirements, and associated administrative procedures is relatively more burdensome and resource-intensive for their firms, particularly smaller exporters with limited technical and financial capacity.

For example, when accredited laboratories or certification bodies are unavailable at home, exporters may need to ship products through third countries to confirm compliance with the requirements.

UNCTAD research shows that least developed countries (LDCs) lose about 10 per cent of their exports to G20 markets because of their inability to comply with NTMs compared with other developing countries.

As the use of NTMs continues to expand, the gap between developed and developing regions risks widening further, UNCTAD cautioned.

"Development strategies must thus focus on reducing the costs and challenges of compliance with NTMs. Since most pursue legitimate public policy objectives, they cannot be simply negotiated away."

Instead, the report pointed out that two policy approaches are both effective and politically achievable: enhancing transparency and regulatory cooperation.

It said that by improving access to information and promoting greater alignment or stronger mutual recognition across regulatory systems, these measures can significantly reduce the compliance costs associated with NTMs, particularly for developing country exporters.

The report noted that the lack of transparency in non-tariff measures is a significant obstacle to global trade.

For businesses, particularly smaller enterprises, the sheer volume of regulations and the difficulty of identifying which regulations apply to specific products can be overwhelming, it said.

Regulations on standards, labeling, approvals, and safety often differ across markets. Most NTMs are subject to notification requirements at the World Trade Organization (WTO) but these obligations are not always met.

Moreover, the report said some NTMs that do not require notification, for example, if measures are based on international standards, can still have substantial trade effects.

Ensuring that comprehensive and accessible information on all relevant NTMs is available is therefore essential for traders, it stressed.

The costs of this lack of transparency are significant. Studies suggest that improving transparency can reduce trade costs associated with non-tariff barriers by about 19 per cent. When countries fail to notify measures, the costs are comparable to imposing a 28 per cent tariff.

For smaller companies with limited resources, these hidden costs can be enough to completely exclude them from entering or participating in the global market, the report suggested.

THE MISSING VOICE

The report drew attention to recent data that reveal a striking divergence in how countries engage with the WTO to resolve trade frictions.

Developing countries have become increasingly active, recently overtaking developed nations in both raising and responding to Specific Trade Concerns (STCs), while the participation of LDCs remains minimal, it said.

STCs are important tools through which WTO members challenge or seek clarification of trade measures, such as health and safety standards, that they consider to unfairly restrict their exports.

The absence of LDCs from these discussions suggests they are not yet fully equipped to take advantage of the multilateral system. This "diplomatic silence" prevents LDCs from addressing the very barriers that may stifle their growth, the report emphasized.

"Without active engagement, these economies cannot effectively contest the regulations that could limit their market access. The fact that LDCs are also not targeted by STCs may indicate limited interest by other WTO members in these markets."

This lack of political engagement is closely linked to the LDCs' marginal position in global commerce. Despite decades of international commitments and preferential market access schemes, the LDC share of world exports has remained stubbornly low, recorded at approximately 1.1 per cent in 2024, barely unchanged from the 1.0 per cent share in 2010.

The United Nations Sustainable Development Goal (SDG) 17 sets the specific target for doubling the share of global exports of LDCs to 2 per cent by 2020. Current trends suggest that, even by 2030, this target will remain unrealized, the report warned.

To improve the integration of the most vulnerable countries into global trade, the international community must move towards concrete technical support and capacity building. LDCs require specialized assistance to navigate the complex landscape of NTMs, especially SPS and TBT regulations, it suggested.

"Differences in regulations across countries increase the costs of producers and traders as they need to comply with varying requirements. Even if countries pursue a similar safety level, regulations can be very different."

The report cited the well-known example of poultry, stating that in the United States, producers are allowed to use antimicrobial washes, such as chlorine, to reduce bacteria during processing.

In contrast, the European Union places greater emphasis on hygiene throughout the production chain, such as stricter farming and handling practices, and does not permit chlorine-treated chicken for sale. This has resulted in limited market access.

Another example cited by the report is electrical products where a device is approved for sale in one country but often needs additional testing and certification before it can be sold in another country, even if the underlying safety objectives are broadly similar.

Smaller exporters from developing countries often face similar challenges because different countries impose varying requirements on issues like pesticide residues, packaging, labelling, and certification.

Even when the underlying goal, such as food safety, is the same, farmers may need to adjust production methods, undergo separate inspections, or obtain new certificates for each destination market.

For small-scale producers, these additional steps can be costly and time-consuming, making it harder to access regional or international markets, the report pointed out.

It said regulatory convergence where countries align their domestic rules with each other or with international standards could reduce the costs associated with NTMs by between 15 and 30 per cent, without jeopardising safety objectives.

Ideally, international standards could be widely applied. For agri-food, Codex Alimentarius, International Plant Protection Convention (IPPC) and World Organisation for Animal Health (WOAH) develop recommendations for technical regulations based on scientific evidence, it noted.

However, it said many countries support those recommendations but either over-regulate, i.e., add additional requirements, or under-regulate, i.e., miss out on recommended measures, or both.

LDCs frequently face a double-edged sword regarding standards. Many LDCs currently under-regulate, which creates a barrier to exporting to wealthier regions that demand strict compliance with international norms, or even impose additional requirements.

However, raising domestic standards to meet global requirements can be challenging: while it can open foreign markets, it may also increase domestic production costs, potentially reducing the competitiveness of domestic goods, including in their own markets, UNCTAD suggested.

A primary reason for this disconnect is that international standards often do not reflect the specific economic and technical realities of developing countries, it said.

It said that current data shows a significant participation gap in the international bodies that write these rules.

"Ensuring that developing countries have a seat at the table when standards are drafted is essential to create a global trading system that is both safe and inclusive."

SOUTH-SOUTH TRADE

The report also found that South-South trade has experienced dynamic growth in recent years, as developing countries increasingly trade with one another.

Yet, a major obstacle remains: transparency around trade rules is often weak. Exporters frequently struggle to find clear, up-to-date information on trade-related regulations applied in other developing countries, it said.

"The result is uncertainty, delays, and higher costs; barriers that disproportionately affect smaller firms trying to enter new markets."

The report underlined that stronger regulatory cooperation among developing countries could unlock real gains.

Aligning product requirements or mutually recognizing certifications would reduce duplication and speed up trade flows, it said, citing the African Continental Free Trade Area (AfCFTA) as an example.

The average ad valorem equivalent costs of technical measures in the agri-food and manufacturing sectors are 12.8 and 1.8 per cent, respectively. The low average impact of technical measures in manufacturing is due to their relatively low incidence, said the report.

Where measures are applied in manufacturing, the average cost is 5.4 per cent. Even a mild form of regulatory cooperation, where the number of measures that each country applies does not change but the types of measures were more aligned, would reduce between 30 and 40 per cent the costs in both sectors, it added.

The report stressed that transparency and stronger regulatory cooperation are practical, achievable goals in South-South trade agreements.

UNCTAD said by investing in clearer rules and closer cooperation, developing countries have a real opportunity to turn South-South trade into a more powerful engine of growth.

Without greater transparency and regulatory cooperation, NTMs risk eroding the benefits of decades of tariff liberalization, it concluded. +