Nontariff measures: Impact, regulation, and trade facilitation

Like the ebbing tide uncovering rocks on the sea bottom, the progressive reduction of tariffs (currently around 5 percent for industrial countries and 10–20 percent for most developing countries) has revealed the importance of other barriers to trade. Some of those barriers are inherent to doing business across borders: informational costs, dealing in foreign currencies and languages, and so on. These “natural” trade costs are very large: Anderson and van Wincoop (2004) estimate their combined ad valorem equivalent at 36 percent. Some others, however, are inflicted by policy. Th ese policy induced nontariff barriers (NTBs) are very diverse in nature, from regulations that ostensibly address domestic issues (say, public health)—but have an incidental impact on trade—to specific border procedures, such as customs clearance, that may raise trade costs because of the way they are implemented on the ground