LDCs\' SDGs: Why NTMs matter

The 2030 Agenda for Sustainable Development, also known as Sustainable Development Goals (SDGs), officially entered into force on January 1, 2016. Designed with 17 broader goals and 169 related targets, it is the collective commitment of the world leaders for building a better world by 2030. The commitment, set within the framework of the United Nations (UN), ranged from ending poverty and hunger of the people, to protecting the plant from degradation, ensuring prosperity for all human beings, fostering peaceful, just and inclusive societies and strengthening the global partnership by 2030.
Beginning of this new development agenda also marks the end of its predecessor, the Millennium Development Goals (MDGs). Initiated in 2000, the MDGs expired in 2015. Progresses in several areas like poverty reduction and enhanced access to education are laudable. Nevertheless, not all the MDGs were met and performance actually remained uneven in many parts of the world. Not a single Least Developed Country (LDC) achieved all the eight MDGs. Moreover, the countries that performed well had already prioritised issues underscored by the MDGs such as poverty, health and education.
Thus, achieving the SDGs is a very big challenge for the Least Developed Countries (LDCs), including Bangladesh, across the world. There are a lot of hurdles on the path to achievement of SDGs. One particular hurdle is the growing trend of Non-Tariff Measures (NTMs) across the world.
NTMs matter: NTMs are a set of rules and regulations or legitimate policy instruments sometimes used to protect health of people and environment of a country.  The measures are applicable to both trade and non-trade issues. The United Nations Conference on Trade and Development (UNCTAD) definition and classifications of NTMs are globally used to determine whether any policy instrument is NTM or not.  In short, NTMs include any measure, regulation, or practice, other than 'tariffs' applied to import.
Most of the NTMs are so-called technical measures-Sanitary and Phytosanitary (SPS) measures and Technical Barriers to Trade (TBT). The World Trade Organisation (WTO) has two separate agreements on SPS and TBT.
Though trade is critical for LDCs, they are continuously facing NTMs in their trading-partner countries and some of the NTMs actually amount to  Non-Tariff Barriers (NTBs). So, it becomes a great obstacle for the LDCs to enhance participation in global trade.
The Organisation for Economic Cooperation and Development (OECD) review report on Aid for Trade (AfT) in 2015, mentioning the above things, pointed out that an increased use of such technical measures in one country implies an increased cost of other countries export as well as trade. The aggregate impact of SPS and TBT measures on trade costs is high particularly for the LDCs, both in terms of the entry costs and technical costs.
It is to be noted that the objective of SPS measures is to protect 'human or animal health from risks arising from additives, contaminants, toxins or disease organisms in food, drink, feedstuff; human life from plant- or animal-carried diseases; animal or plant life from pests, diseases, disease-causing organisms; and a country from other damage caused by entry, establishment or spread of pests.' The objective of TBT is to 'ensure national security requirements; prevent deceptive practices; protect human health and safety; protect animal and plant health; and protect the environment.'  While SPS has legal right to restrain trade to protect health, TBT has legal right to restrain trade on legitimate objectives other than health (or areas covered under SPS). The things are, however, tricky and require very detailed understanding.
A study by the UNCTAD has showed that some 90 per cent of the world trade is affected by the NTMs. It also estimated that LDCs including Bangladesh are losing some $23 billion annually due to failure to comply with NTMs in the developed as well as developing countries. The portion is around 15 per cent of the LDCs' total exports worth $154.38 billion in 2015, according to the WTO statistics. UNCTAD estimation also showed that around 34 per cent of Bangladesh's exports to G20 countries could increase if not affected by the NTMs and traditional tariffs. Of this, around 25 per cent could have increased, if not affected by only NTMs.
So, it is a challenging task to deal with the NTMs - to lessen the negative impact of technical and regulatory measures on the world market. But, incidence of these measures is likely to increase in near future. The complexity of the matter is that one country's policy measures, aiming to improve the wellbeing of their people and protect their environment, amounts to a kind of restriction to other country's growth in trade.  
While Bangladesh is very much vocal about NTMs, imposed by its main trading partners, especially India, the country is also imposing legitimate NTMs in many cases while importing from other countries. Geneva-based International Trade Centre (ITC), in its NTM's business survey on Bangladesh, recently identified that, of the NTMs applied by Bangladesh, on imports, 36 per cent emanate from pre-shipment inspections and customs formalities, 25 per cent from charges, taxes and other para-tariff measures, 22 per cent from conformity assessment and 12 per cent from quality control measures.
Again, United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), in its study titled 'Trade and Non-tariff Measures: Impacts in the Asia-Pacific Region' in 2015, found that TBT Frequency Indicator for Bangladesh was 12 per cent in 2014 while it was 9.0 per cent for Pakistan and 55 per cent for India. TBT Coverage Ratio was also higher for Bangladesh within South Asia. It was 32 per cent against 16 per cent for Pakistan and 81 per cent for India. On the other hand, SPS Frequency Ratio was 3.7 per cent for Bangladesh against 3.1 per cent for Pakistan and 7.5 per cent for India while SPS Coverage Ratio was 3.9 per cent for Bangladesh, 5.4 per cent for Pakistan and 12.2 per cent for India. The UNESCAP study also said: "As would be expected, there is a broad relationship between income levels and the occurrence of SPS measures. Countries with higher income levels generally have more extensive regulatory infrastructures. Indeed, less than 6% of imported products are currently affected by SPS measures in Bangladesh, Nepal and Pakistan."
Moreover, there is very little scope to eliminate technical NTMs, as is possible in the case of tariffs along with NTBs like quota restrictions.
Anabel González, Senior Director of the World Bank Group Global Practice on Trade and Competitiveness, at a blog in 'Fin4Dev' last year argued that there is no denying the fact that benefiting from a more open global market is becoming gradually dependent on reforming the imposition of NTMs to reduce or minimise or remove their impact on cutting the trade costs. NTMs can enhance trade costs and also distort trade. Though the WTO acknowledges the rights of the countries to impose trade-related regulations to protect humans, animals and plants, these regulations can be used for trade protection objectives. She also pointed out that there is a big transparency gap that makes it difficult to determine whether any specific NTM serves protectionist aim or not.
That's why, streamlining the cost-enhancing NTMs is now considered an important component of the global development agenda.
Linkage between SDGs and NTMs: There are both direct and indirect links between NTMs and SDGs.  It is already identified by many experts that a large number of NTMs are not only trade policy instruments but also policies for sustainable development. Two experts from UNCTAD, Christian Knebel and Ralf Peters, have discussed on the linkage of SDGs and NTMs at their blog written for International Growth Centre in 2015. They argued that while NTMs are set to the quality standard of the products to ensure sound socio-economic and environmental living conditions (i.e. food safety and environmental protection measures), the main objective of most of the technical measures is to protect human, animal and plant life as well as the environment. In that sense, NTMs directly regulate issues related to sustainable development goals like food security (SDG 2), nutrition and health (SDG 3), protecting endangered species and the environment (SDGs 14&15), ensuring sustainable production and consumption (SDG 12), energy (SDG 7), and combating climate change (SDG 13).  So, there is a scope to adopt these measures in a greater number by many countries to attain SDGs.
For example, SDG-3 is: 'Ensure healthy lives and promote well-being for all at ages.'  Under the goal, there are nine targets along with three supplementary targets.  Target 3.4 is aimed at 'reduction by one third of premature mortality from non-communicable diseases through prevention and treatment and promotion of mental health and well-being by 2030.' Now to achieve the target, a country may set higher standards and strict regulations on importing drugs and medical equipment so that treatment of non-communicable diseases like cancer, asthma or diabetes could be better. Though there is apparently nothing wrong, some problems may also arise. The cost of treatment will increase and it will be difficult for the poor people to get adequate treatment as import cost of drugs and equipment will increase. Higher import cost also put restriction on small and medium suppliers especially from LDCs. Big companies will enjoy comparatively big advantages and they will ultimately supply for rich people. So, the challenge here is not to set better or higher standards, but to set appropriate and balanced standards.      
Christian Knebel and Ralf Peters, in their analysis, also gave few examples. According to them: "NTMs also protect the environment by regulating or prohibiting the trade of hazardous metals, wastes, radioactive materials, car emissions, ozone-depleting substances and other pollutants; and also endangered species. Evidently, such measures are necessary to protect us and our planet. We need these NTMs. It is, however, also rather clear that most of these NTMs restrict trade and therefore economic development."
The two experts also argued that direct and indirect linkages between NTMs and sustainable development are not mutually exclusive as 'most NTMs with direct linkages also create an indirect impact through trade.' One example is a regulation that restricts pesticide residues in food products. While this regulation (NTM) directly contributes to human health and nutrition, by restricting trade it causes reduced income in exporting countries and higher consumer prices in importing countries. "We thus face tough trade-offs between trade restrictions and direct sustainability," they said.
Not elimination, but harmonisation: Removal or full elimination of NTMs is almost impossible. But one significant step to deal with the NTMs is harmonisation of national standards multilaterally or based on international standards, though there is no unified international standard. Already there is a growing trend of harmonising standards and regulatory measures under the framework of bilateral, regional and mega-regional trade agreements. Generally known as 'a documentation providing rules, guidelines or characteristics of any product or production methods', standards are is very much linked with TBT and SPS. The WTO agreements on TBT and SPS, however, don't bind the member countries legally to adopt a unique set of standards. Neither the agreements bar all or some of the member countries do so, adopting some common or regional standards.
A good example is South Asian Regional Standards Organisation (SARSO).  An agreement on establishing the SARSO was signed in August, 2011. It became operational in April, 2014 by establishing a secretariat in Dhaka. The ultimate goal of the regional standards body is 'to achieve and enhance coordination and cooperation among SAARC member states in the fields of standardisation and conformity assessment' as well as 'to develop harmonised standards for the region to facilitate intra-regional trade and to have access to the global market.' So far, SARSO has finalised seven standards and these are now a waiting ratification of member countries. It will, however, take a long time to become a successful regional standards setting organisation as harmonisations of SPS and TBT among the SAARC member countries is a very tough task.
Christian Knebel and Ralf Peters of UNCTAD suggested that participation of LDCs in the international standards setting bodies need to be strengthened. In fact, the LDCs need strong capacity to improve their own standards and also participate in the regional as well as global standards setting process. Otherwise, their voice will continue to be marginalised. LDCs have the lack of technical, financial and administrative capacity in designing and implementing the technical measures necessary to achieve their own SDGs. So, global cooperation under the framework of SDGs is essential to build-up LDCs' capacity to deal with the NTMs.   
UNCTAD has already called for striking a balance between protecting consumers and the environment on the one hand and not restricting trade on the other hand. UNCTAD Secretary-General Mukhisa Kituyi, in a meeting in Geneva on October, said: "Regulations should be designed and implemented in smart ways that maximise non-trade objectives - that is to protect consumers, the environment, plants and animals - while not negatively impacting the movement of goods and services. We have to find a balance between improving smart regulations and the facilitation of trade."
To deal with NTMs, Bangladesh needs to work on improving its own standards setting and implementing procedures. The country also needs to work hard for harmonisation of the technical and regulatory measures along with standards in South Asia. Furthermore, Bangladesh can pitch for harmonisation of LDCs' standards. All these will ultimately facilitate the efforts for achieving the SDGs.

The writer is with FE. [email protected]