Non-tariff Barriers, Regulatory Governance and Competitiveness

With the success that has come from relentless focus on reducing tariffs over the last 70 years in the context of successive rounds of multilateral trade liberalization and via FTAs, it is now widely recognized that the biggest impediments to international trade are non-tariff barriers.

Most countries attempts to dismantle these barriers have either been focused on their trading partners and thus supporting their export interests or focused on removing these barriers domestically with a view to improving regulatory governance and thus increase competitiveness. This research stream seeks to explore the linkages between these as well as provide policymakers with concrete and proven pathways to dismantling Non-tariff Barriers (NTBs) both domestically and in their trading partners. 

Rationale

Governments are increasingly focused on ways to reduce NTBs that constitute significant barriers to their exporters, something that is evidenced by the increase in Specific Trade Concerns being raised at the World Trade Originzation (WTO) TBT Committee, but also the attention these measures are getting in Free Trade Agreements (FTAs) in annexes to TBT chapters and in chapters dedicated to regulatory coherence. In addition to this, there has been a significant push in advanced industrialized countries to improve regulatory governance by enacting reforms that reduce both the burden on businesses specifically as well as the presence of “friction” (regulatory inefficiencies) in the economy generally. This has received a lot of attention at institutions like the World Bank, OECD, WTO and UNCTAD. In addition to this is the fact that the biggest obstacle to developing country exports is the lack of National Quality Infrastructure (NQI). This is something that major donors such as the EU, USAID and to a more limited extent AusAid have been trying to address through trade-related technical assistance projects and Aid-for-Trade funding. This research agenda seeks to pull together these diverse approaches and “join the dots” between these different but intricately related issues.

Research agenda

We will address five research questions from the outset of this project to guide any future research conducted under this stream. The five research questions are as follows:

• What are the largest domestic impediments to enacting regulatory reform, for example lack of political direction; regulatory capture by entrenched interests; bureaucratic inertia? How can international cooperation and economic integration be harnessed to overcome these impediments?
• Have regulatory cooperation initiatives and MRAs between trading partners had a noticeable impact on reducing the incidence of NTBs affecting trade flows between these same trading partners and if so, in which sectors; if not, why?
• Are FTAs the best way to promote regulatory cooperation, reduce NTBs and secure an increase in the prevalence of MRAs or is there a better way?
• How effective has Trade-Related Technical Assistance (TRTA) been towards improving NQI in developing countries?
• Have there been any noticeable long-run positive spill-over effects from TRTA efforts to improve NQI by generating corresponding improvements to the level of regulatory governance in recipient countries? If yes, what are the linkages and how to strengthen them; if not, how can the creation of such spill-over effects be supported?

Our objectives

The objectives of this research program are:

• To provide theoretically sound, evidence-based and practically useful proposals for trade policy makers, government ministries and agencies; 
• To help governments strike the correct balance between legitimate (non-trade) policy objectives and minimal trade restrictiveness in the design and application of policies, laws, regulations and measures that have an impact on trade flows;
• To support an improvement in the quality of regulatory governance and enhanced economic competitiveness (through the removal of unnecessary regulatory restrictions)
• To help governments in developing countries improve their NQI infrastructure, regulatory governance and thereby achieve both better export competitiveness and economic growth.