New protectionism versus inclusive trade

SDG indicators

SDG target 17.10: Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization, including through the conclusion of negotiations under its Doha Development Agenda.
SDG indicator 17.10.1: Worldwide weighted tariff-average (Tier I)


SDG target 17.12: Realize timely implementation of duty-free and quota-free market access on a lasting basis for all least developed countries, consistent with World Trade Organization decisions, including by ensuring that preferential rules of origin applicable to imports from least developed countries are transparent and simple, and contribute to facilitating market access.
SDG indicator 17.12.1: Average tariffs faced by developing countries, LDCs and SIDS (Tier I)


SDG target 10.a: Implement the principle of special and differential treatment for developing countries, in particular least developed countries, in accordance with World Trade Organization agreements
SDG indicator 10.a.1: Proportion of tariff lines applied to imports from LDCs and developing countries with zero-tariff (Tier I)

Promote a universal trading system under the WTO

The Addis Ababa Action Agenda (United Nations, 2015) acknowledges that international trade is an engine for inclusive economic growth and poverty reduction. Target 17.10 is of paramount importance to advancing economic growth and fostering global competitiveness as it promotes a universal, rules-based, open, non-discriminatory and equitable multilateral trading system. Market access conditions are an important factor for the effectiveness of trade, and the scale of tariffs are an important determinant of market access.

Do trade reforms lead to economic growth?

Recent research in trade theory suggests that trade reforms which significantly reduce import barriers have on average a positive effect on economic growth, although the economic effect of such trade policies vary across countries (Irwin, 2019). Falvey et al. (2013) report that economic growth is roughly 1.7 percentage points higher after trade reforms than a benchmark (compared to the situation without any trade reforms). Easterly (2019) finds that the positive correlation between a good trade policy and economic outcomes has increased since the 1990s. Piketty notes that free trade and economic openness are ultimately in everyone's interest (Piketty, 2014).

On the other hand, revenues accrued from tariffs may constitute a significant portion of a government’s public revenue, particularly in low-income countries, where the need for coordination of tariff liberalization with other tax policies is of particular importance.

Trade agreements

In 1947, major economies involved in international trade signed the GATT, an agreement through which countries entered into reciprocal and mutually advantageous arrangements aimed at the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international commerce (WTO, 2019a).

Article 1 of the “GATT-94” stipulates that members set their tariffs on a MFN basis in such a way that any advantage, favour, privilege or immunity granted to any product originated in and destined for other countries becomes immediately and unconditionally applicable to all contracting parties (WTO, 2020a).

The conclusion of the “GATT-94” multilateral trade negotiations led to the creation of the WTO, with a clear mandate to develop an integrated, more viable and durable multilateral trading system. The WTO members set a maximum limit for tariffs levied on all agricultural goods and the majority of non-agricultural goods.1

Since then, most economies across the world have negotiated bilateral or multilateral trade agreements with the objective of reducing barriers to trade and promoting exchanges among members. In 1948, when GATT became operational, no formal RTAs existed. Nowadays, practically all countries participate in at least one RTA, with some countries forming more bilateral and regional RTAs than others. According to the WTO Regional Trade Agreements Database, as of 1st June2020, 303 RTAs were in force, as compared to 291 in January 2019 (WTO, 2020c) (Figure 1).

Figure 1. Evolution of regional trade agreements over time
Source: WTO, Regional Trade Agreements Information System (RTA-IS) WTO (2020c).

The proliferation of preferential agreements among key developing countries is significant. The most recent example is the AfCFTA , which entered into force in May 2019. The AfCFTA creates a market comprising more than 1.3 billion people and a combined national income of US$2.5 trillion (United Nations, 2020b).

Regional trade agreements can serve as an important means of advancing gender-responsive trade policy. In May 2020, UNCTAD released a policy brief (UNCTAD, 2020a) on making trade agreements work for gender equality. An analysis of over 500 regional trade agreements shows that although the inclusion of gender provisions is not new, only 74 agreements refer explicitly to gender issues (Monteiro, 2018). Often these provisions prohibit gender-based labour discrimination (ILO, 1958), referring to fundamental principles and rights at work, such as equal pay for work of equal value (ILO, 2020). The newly adopted ILO Violence and Harassment Convention (ILO, 2019) is expected to become an important reference in trade agreements. Some of the more recent regional trade agreements include a separate chapter to promote gender equality. They list concrete areas of cooperation to promote women’s participation in the economy. So far, however, only a few trade agreements call for the collection of sex-disaggregated data, use of indicators and analysis of gender statistics.

To this end, UNCTAD (2018b) developed a conceptual framework and a set of indicators on gender equality which focus on MNEs and foreign traders. A case study on Finnish data reveals that the gender pay gap tends to be larger in high-paying jobs in foreign multinationals and in enterprises that trade internationally. In Finland, the gender gap is smaller in domestically owned businesses. The UNCTAD research paper (Luomaranta et al., 2020) provides a blueprint, showing how business and social statistics can be linked to enable an analysis of gender inequalities in trade. The results indicate that even for a country with high gender equality, like Finland, trade is still an area where inequalities persist. RTAs could serve as an important tool to advance and monitor gender equality in the economy.

Figure 2. Women’s pay/men’s pay in high paying categories (ISCO 1-3), by enterprise type
(Percentage)

In Finland, the most striking differences between firm types are found in knowledge intensive services, where the ratio of women’s pay to men’s pay in foreign owned multinationals is 7 percentage points smaller than in independent firms.

Making non-discriminatory tariff reforms work for development

Even though most developed countries have pushed for lower tariffs in recent years, there are still many parts of the globe where they remain high. In general, tariffs on imports of both agricultural and non-agricultural products tend to be higher in developing countries. Some of the highest import duties can be found in Africa, where Gambia stands out with an average tariff of 18.1 per cent. The country with the highest weighted average tariff worldwide is Palau at 34.6 per cent. Among major global economies, India imposes a weighted tariff-average of 4.9 per cent while China's average rate is 3.4 per cent. The United States applies a weighted average tariff of 1.6 per cent on its imports, one of the lowest rates worldwide . The weighted average tariff, applied in the EU, was 1.7 per cent in 2018. In LDCs, weighted average tariffs vary from 2.4 per cent (Tuvalu) to 30.3 per cent (Solomon Islands). The lowest weighted average tariffs at zero per cent are recorded in Hong Kong SAR, China; Macao SAR, China and Brunei.2

Map 1. Worldwide weighted average tariff, latest available data (SDG 17.10.1)
(Percentage)
Source: World Bank staff estimates using World Bank (2020b), based on UNCTAD (2020b) and WTO (2020c).

Since 2008, both multilateral and preferential tariffs have been trending downwards. Tariffs on agricultural and natural resources have been reduced both through MFN tariffs and more wide-spread preferential access. According to UNCTAD (2020a) the simple average of the world MFN tariffs for agricultural products in 2018 remained relatively high at around 16 per cent, although they have declined by about 2 percentage points since 2008. Among the countries with the largest levels of agricultural trade, Egypt, Korea, Turkey, and India maintain the highest MFN agricultural tariffs, with simple averages exceeding 30 per cent (WTO, ITC & UNCTAD, 2019).

The simple averages of the world MFN tariffs and preferential tariffs for natural resources in 2018 continued to decline and were below three per cent and one per cent, respectively. The same indicator for manufacturing products averaged about seven per cent in 2018. The proliferation of PTA schemes has resulted in the decline of tariffs in this sector by about one percentage point (see figure 3).

Figure 3. Multilateral and preferential tariff liberalization
(Percentage)
Source: UNCTAD, ITC and WTO calculations based on UNCTAD (2020a), ITC (2020) and WTO (2020d).

Tariffs applied to exports of LDCs and developing countries are slowly reducing

The average level of customs tariff rates (indicator 17.12.1) faced by developing countries and LDCs illustrates the pace at which the multilateral system is advancing toward the implementation of duty-free and quota-free market access (see SDG metadata) (United Nations, 2020a).

SDG target 17.12 aims to “realize timely implementation of duty-free and quota-free market access on a lasting basis for all least developed countries...”. Recognizing LDCs’ special economic situation, developed countries and other economies3 agreed to grant LDCs duty-free and quota-free preferential market access.

Preferential market access for developing countries has been initiated by most developed countries since the early 1970s under the aegis of UNCTAD (2020c). These unilateral trade preferences called the GSP allow developed countries to apply different tariffs between different groups of trading partners without violating Article I of the GATT requiring non-discriminatory and equal treatment of trading partners.

Trade preferences under the GSP program are granted, not only by the so-called QUAD countries, namely the EU, United States, Japan and Canada, but also by Australia, New Zealand, Norway, Belarus, Iceland, Kazakhstan, Russian Federation, Switzerland, and Turkey.

Figure 4 shows that import tariffs applied by developed countries to products from LDCs registered a slight decline since 2000 and amounted to about four per cent in 2018 . The variations of tariffs faced by LDCs across product groups are considerable. In particular, tariffs for clothing and textiles remained high in 2018 and amounted to 18 per cent and nine per cent, respectively. This could be partly explained by the exclusion of some large Asian exporters from certain preferential tariffs.

Figure 4. Average tariffs applied by developed countries to exports from LDCs, by sector(SDG 17.12.1)
(Percentage)
Source: UNCTAD, ITC and WTO calculations based on UNCTAD (2020a), ITC (2019) and WTO (2019d).

In addition to the GSP scheme and LDCs preferences, many developed countries grant trade preferences to other developing countries, either within the GSP or as a separate program (Klasen et al., 2016). For example, the European Commission’s EBA initiative implements a slightly less preferential GSP+ tariff for vulnerable countries, respecting international conventions on human and labour rights, environmental protection and good governance (European Commission, 2019). Canada, apart from the GPT applicable to developing nations, grants a non-reciprocal CCCT to certain Caribbean nations. This applies also to the Least Developed countries Tariff.

Import restrictiveness differs substantially across countries, and even within the same region. Table 1 presents a matrix of the average tariff levels imposed on trade flows between regions in 2018. Intraregional trade is generally subject to lower tariff trade restrictiveness than interregional trade. However, this is not the case for exports from sub-Saharan Africa and South Asian countries, for which market access often enjoys better interregional trade conditions than for intraregional trade. South Asia and Sub-Saharan Africa face the highest intraregional tariffs , with tariffs of 5.7 per cent and 2.3 per cent respectively, in 2018. A large number of South–South trade flows are still burdened by relatively high tariffs. For example, exports from Latin American countries to the South Asian region face a tariff of about 16 per cent (UNCTAD, 2020c).

North-North tariffs are on average lower than North-South tariffs because of tariff peaks within product groups, which are of significant export interest to developing countries, such as agriculture and apparel. However, low income countries, within product categories, do receive higher preference margins, averaging three percentage points above other countries (World Bank, 2020a). Some countries, such as Lesotho and Afghanistan, receive preference margins as much as ten percentage points.

Table 1. Tariff restrictiveness, matrix by region, 2018
(Percentage)
Importing RegionExporting Region
Developed economiesEast AsiaLatin AmericaSouth AsiaSub-Saharan AfricaTransition economiesWestern Asia and North Africa
Developed economies1.52.31.12.00.51.60.8
-0.4-0.20.3-0.80.10.90.2
East Asia4.31.94.44.13.13.82.8
-1.6-1.40.00.11.11.40.2
Latin America3.37.91.011.31.91.63.1
-0.5-1.8-0.6-2.0-0.50.1-0.5
South Asia9.56.816.25.75.46.66.0
0.1-2.78.6-2.5-0.80.9-1.8
Sub-Saharan Africa7.19.49.49.12.37.16.6
-1.2-1.60.11.5-1.70.20.8
Transition economies3.03.86.44.21.90.94.7
-3.5-4.1-3.9-6.1-1.00.8-3.1
Western Asia and North Africa4.65.44.54.22.59.22.4
0.50.0-1.30.20.48.00.3
Source: UNCTAD (2020c)
Note: Changes between 2008 and 2017 are shown in smaller font.

Tariffs on processed goods tend to exceed those on raw materials or semi-processed goods in many of the largest markets. This tariff escalation, designed to protect high value-added industries, hampers the diversification of exports of developing countries and increases their dependence on unprocessed goods subject to high price volatility. For example, the EU applies a bound rate of zero per cent on imports of cocoa beans, but a 7.7 per cent, and 15 per cent ad-valorem duty on cocoa powder and chocolate crumb containing cocoa butter, respectively (FAO, 2003). Figure 5 shows that middle and low-income countries impose, at over ten per cent, the highest average tariffs on processed goods.

Figure 5. Simple average of MFN tariffs by groups of products, 2017
(Percentage)

The objective to improve market access conditions for LDCs’ exports by giving special and differential treatment to LDCs in accordance with the WTO agreements was not only outlined in SDG target 17.12, but also in SDG target 10.a. The following section will cover SDG target 10.a.

Import tariffs continue to fall, but the progress is slow

Most developed countries grant either full or nearly full duty-free and quota-free, i.e. DFQF market access for LCDs, and an increasing number of developing countries are in the process of extending similar treatment to most imports from LDCs. Australia, New Zealand, Norway and Switzerland provide full duty-free access through preferential LDC schemes. For Canada, Chile, the European Union and Japan, 97 per cent of tariff lines are free of duty for products originating from LDCs. China, Iceland, India, Korea and Montenegro grant duty-free access for LDCs to around 90 per cent or more of their tariff lines (WTO, 2019e).

However, progress on export expansion from LDCs is slow. Despite considerable growth of LDCs’ exports since 2000, their share in world trade in 2019 accounted for less than 1 per cent, whereas the share of LDCs in world population was more than 13 per cent (UNCTAD, 2020e).

Tariff barriers remain an issue in some countries, notably the United States. In 2017, some 60 per cent of LDC exports were dutiable under the United States’ GSP scheme for LDCs, in dollar terms, with a trade-weighted average tariff of over ten per cent (WTO, 2019e).

SDG indicator 10.a.1 shows the extent to which special and differential treatment has been applied through import tariffs.4

LDCs were granted duty-free market access on more than 67 per cent of tariff lines in 2018 (figure 6); the respective share for all developing countries was around 52 per cent. The proportion of duty-free tariff lines to LDCs’ exports has risen from 53.8 per cent in 2010 , an increase of almost 14 percentage points, thus showing the commitment of international community to boost exports from poorest countries. The corresponding increase for developing countries in general amounted to more than 8 percentage points.5

The highest growth of 36 per cent was observed in the zero-duty trade of industrial products, followed by the trade in agricultural products (15.7 per cent) (See figure 6).

More than half of exports from developing countries are now eligible for duty-free treatment

Figure 6. Proportion of tariff lines worldwide with zero duty applied to products from developing countries and LDCs, by product (SDG 10.a.1)
(Percentage)
Source: UNCTAD, ITC and WTO calculations based on UNCTAD (2020a), ITC (2019) and WTO (2019d).

Figure 7 shows that over 60 per cent of agricultural trade in 2018 was duty-free, with 20 per cent of this accounting for duty-free on the MFN basis and the rest under preferential tariffs. Preferential access is important for trade in agricultural products and manufacturing products, for which the remaining tariffs are fairly high, averaging to 20 per cent for agriculture, and around ten per cent for manufacturing products. For natural resources, preferential access is less important, as trade in these goods is largely tariff-free under MFN rates. The remaining tariffs are generally very low, with tariffs averaging 5.6 per cent.

Figure 7. Free trade and remaining tariffs, by broad category
(Percentage)
Source: UNCTAD Secretariat calculations based on data from (United Nations, 2020c) and UNCTAD TRAINS data (UNCTAD, 2020b).

The true value of the LDCs’ export competitiveness that is granted by duty free treatment can be in part measured by the magnitude of the preferential tariff margin, that is the difference between the preferential tariff rates applicable to LDCs’ exports and the non-preferential tariff rates. The higher margin indicates the greater market shares of LDCs in preference granting countries. Figure 8 shows that LDCs’ preferential margins are the strongest in low-skill manufactures, such as, clothing, providing a tariff advantage of six percentage points in entering developed countries markets vis-à-vis foreign competitors. Preferential margins are also substantial for textiles and agricultural products (between three and four percentage points).

Figure 8. Preferential tariff margins for LDC exports in developed-country markets, 2017
(Percentage)
Source: UNCTAD calculations based on ITC data in United Nations (2020d).

UNCTAD provides assistance to the LDCs in the elaboration of studies on DFQF market access. To this end UNCTAD produced two handbooks and a database on utilization of trade preferences.(UNCTAD, 2020f)

Free trade is critical to fight COVID-19

The COVID-19 outbreak has put a spotlight on the important role of trade in medical products, and specifically trade in certain critical products for diagnostics and treatment of patients with the new coronavirus disease as well as personal protective equipment (PPE). The taxes governments impose on imported life-saving products, while maintaining a source of government income, may impact the flow of critical medical goods across territories and impair the affordability of these products for hospitals, health-care professionals and low-income patients in their countries.

According to the WTO, the average tariff on COVID-19 relevant medical products was 4.8 per cent (WTO, 2020d). Although this level is lower than the 7.6 per cent average tariff for non-agricultural products, some medical products, such as, protective supplies used in the fight against COVID-19, receive an average tariff of 11.5 per cent, which can go as high as 27 per cent in some countries (see figure 9).

Figure 9. Average MFN applied duty of COVID-19 relevant medical goods, by category
(Percentage)
Source: WTO (2020d).

Weighted average applied tariffs on key COVID-19 products in the developing countries with the highest number of cases are generally above six per cent (see table 2). Personal protection equipment products, such as, aprons, medical masks and protective clothing are subject to tariffs of over ten per cent. For example, Iran, one of the most severely affected countries in the early days of the outbreak, imposes a tariff of 65 per cent on medical masks and 100 per cent on protective clothing (Espitia et al., 2020).

Table 2. Trade-weighted applied tariffs (percentage), last year available
(Percentage)
Importing countriesCase ManagementDiagnosticsHygienePersonal Protection Equipment
Bougies, catheters, drainsFlow-splitter for oxygen supplyHumidifier, non-heatedPatient monitors and pulseRespiratorsVenturi maskEnzymesChlorineHand sanitizersLiquid soapApron, heavy dutyGloves, examination, non-sterileMedical masksNitrile and sterile glovesOther medical headwearProtective clothingProtective googles
Armenia0.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.00.0
Brazil10.713.611.910.513.68.81.07.014.417.117.416.021.935.019.122.617.1
Colombia0.70.30.31.41.20.60.00.30.84.911.914.94.69.313.62.48.8
Ecuador0.04.33.40.04.00.00.00.01.24.817.514.847.612.223.357.823.1
Egypt1.41.91.21.91.91.41.13.76.11.619.78.814.89.911.53.18.4
India5.96.55.56.87.15.98.85.88.47.39.50.48.80.19.47.48.5
Indonesia1.81.52.42.53.12.73.60.92.12.73.31.21.50.42.02.20.6
Iran17.610.018.418.04.09.6104.018.055.045.035.065.057.530.0100.035.0
Lebanon3.51.10.63.62.82.81.70.02.42.04.74.63.34.94.341.14.5
Malaysia0.05.00.00.00.00.00.010.00.00.020.00.010.00.00.00.00.0
Mexico0.10.00.90.00.00.10.10.40.10.96.10.02.19.32.51.96.1
Pakistan7.010.93.42.71.82.619.520.019.720.016.116.519.75.415.220.06.5
Peru0.00.00.00.00.00.00.01.20.20.80.84.91.12.80.55.10.1
Philippines0.21.40.10.00.50.41.02.51.01.80.30.11.30.10.65.10.2
Russia0.00.00.41.00.01.14.86.46.16.16.110.00.19.98.812.14.6
Serbia0.60.20.30.60.30.60.30.00.10.18.60.62.18.32.83.71.6
South Africa0.00.02.80.00.00.00.06.95.04.99.519.916.714.69.013.20.0
Thailand3.20.00.00.00.00.03.81.64.12.91.50.02.10.33.82.50.5
Turkey0.00.50.40.00.00.00.00.00.20.36.20.34.10.51.55.32.4
Low
Medium
High
Very high
Source: Espitia, Rocha, Ruta (2020). “Database on COVID-19 trade flows and policies”.

As reported by Evenett (2020), before the pandemic, 78 governments taxed imports of soap at rates of 15 per cent or more. Fifteen nations currently implement non-tariff barriers on imports of protective equipment and twenty-three impose non-tariff barriers on imported disinfectant. Customs duties on imports of key medical supplies, used to fight the coronavirus pandemic, could affect the movement and accessibility of these products and exacerbate the spread of the coronavirus. The author called on countries to eliminate unilateral tariffs and implement “a tariff-and-aid initiative that sweeps away the barriers which impede medical supplies reaching locations where they are desperately needed.”

The World Bank (2020c) has published a list of trade policy do’s and don’ts in response to COVID-19. The do’s include measures to facilitate trade by reducing tariffs to zero on COVID-related medical products and food products and removing quantitative restrictions and export taxes (World Bank, 2020b). Some developing countries affected by COVID-19 have started implementing import reforms. For instance, Pakistan introduced tax and import duty exemptions for medical and testing equipment, while Brazil eliminated tariffs on medical and hospital products. Zimbabwe waived duties on COVID-19 materials, and Zambia suspended excise duties on imported ethanol for use in alcohol-based sanitisers. Although these policy changes are temporary, this is a step in the right direction in addressing the COVID-19 health crisis.

The rising importance of non-tariff measures

NTMs, often impede imports more than border duties. Trade costs associated with NTMs are estimated to account for as much as 1.6 per cent of global GDP, or US$1.4 trillion (United Nations, 2020b), more than double that of ordinary customs tariffs. For intra-African trade, the average import-weighted tariff is almost 7 per cent, while the ad-valorem equivalent cost of non-tariff barriers is estimated to be 14.3 per cent (UNECA, 2020). In order to help African governments monitor and eliminate NTMs which impede trade flows, UNCTAD and the African Union jointly developed an on-line platform - NTBs reporting, monitoring and eliminating mechanism (African Union, 2020), which became operational on 13 January 2020. African countries could gain US$20 billion each year by tackling NTMs, such as, quotas, excessive import documents or unjustified packaging requirements, at the continental level – far in excess of the $3.6 billion they could save by eliminating tariffs (Vanzetti et al., 2018).

NTMs, as policy instruments, can be either directly or indirectly linked to sustainable development. Direct linkages include policies that have an immediate impact on social and environmental issues and help achieve SDGs: food security (SDG 2); nutrition and health (SDG 3); protect endangered species and the environment (SDGs 14 and 15); ensure sustainable production and consumption (SDG 12); energy (SDG 7); and combat climate change (SDG 13). On the other hand, indirect linkages may arise from trade policies that influence trade, which in turn can restrict economic growth and create negative spill over effects on sustainability objectives (UNCTAD, 2019d).

Today, a considerable number of NTMs are regulatory measures, which respond to a public demand for protection against environmental and health hazards (UNCTAD, 2019a). Technical NTMs, such as TBT, which includes labelling, standards on technical specifications and quality requirements, as well as all conformity-assessment measures, affect more than 30 per cent of product lines and almost 70 per cent of world trade (figure 109). Sanitary and phytosanitary measures, which typically prevail in agriculture, affect almost 20 per cent of world trade, followed by price control measures which affect about 15 per cent of world trade.

Figure 10. NTMs in world trade, by type and broad category, 2018
(Percentage)
Source: UNCTAD secretariat calculations based on data from (UNCTAD, 2020b).
Note: The frequency index is defined as the percentage of HS six--digit lines covered; and coverage ratio is defined as the percentage of trade affected.

In LDCs and developing countries, about 40 per cent of imports are subject to NTMs , this is "less than half as much as in developed countries (figure 11). NTMs in developing countries and LDCs are less diversified than in developed countries. On average, developing countries use two different NTMs on any regulated product, and LDCs one, compared to four in developed economies.

Figure 11. NTMs in world trade, by development status, 2018

The COVID-19 crisis has shown the importance of trade policy in fighting the current pandemic. The impact of NTMs barriers on trade of medical goods is of particular importance during the current health crisis. Governments have been challenged to find the right balance between the need to import medical supplies and protective equipment against the loss of tariff revenues associated with them. In order to facilitate the trade of essential medical supplies, for example, the EU and China have employed ”green lanes” for fast customs clearance of medical supplies. In March 2020, Brazil introduced new legislation that simplifies the customs clearance process for articles used to combat the spread of COVID-19. Argentina streamlined the import clearance process of certain critical medical products, and Iran removed an import ban on ethanol, used to produce sanitiser (Baldwin and Evenett, 2020).

In spite of the positive steps undertaken by many countries to facilitate the import of medical products, some nations still employ non-tariff policies that limit imports of medical consumables (Evenett, 2020). For example, 12 nations discourage imports of medicine: India has four non-tariff policies, followed by Russia (three) and Indonesia (three). Indonesia also has the most non-tariff barriers against foreign soaps – two are import licensing requirements and one is an internal tax that targets imported goods.

Statistics for NTMs are still incomplete. As of today, TRAINS (UNCTAD, 2020b) database developed by UNCTAD in partnership with several regional and international organisations is the most complete collection of publicly available data on NTMs at the HS-based tariff line level (HS six-digit). As of 2018, UNCTAD has collected comprehensive and comparable NTMs data covering 109 countries and containing more than 65,000 measures.

Notes

  1. According to WTO, for non-agricultural products the product coverage of tariff binding by developed country members was 100 per cent, while that of developing country members was around 73 per cent (WTO, 2019c).
  2. Data are classified using the Harmonized System of trade at the six- or eight-digit level. Tariff line data were matched to the SITC revision 3 codes to define commodity groups and import weights. To the extent possible, specific rates have been converted to their ad valorem equivalent rates and have been included in the calculation of Weighted mean applied tariff. Import weights were calculated using the UNSD’s Commodity Trade (Comtrade) database. Effectively applied tariff rates at the six- and eight-digit product level are averaged for products in each commodity group. When the effectively applied rate is unavailable, the most favoured nation rate is used instead.
  3. Following the WTO Hong Kong Ministerial Decision in 2005 (WTO, 2015).
  4. Limitations of this indicator include the following: (i)Tariff-based measures are only a part of trade limitation factors. (ii) Inability to comply with rules of origin criteria limits the utilization of preferential treatments. (iii) Using data on zero-tariff lines assumes full utilization of benefits. (iii) Low MFN tariffs mean that duty-free treatment is not always preferential (United Nations, 2019).
  5. Proportion of total number of tariff lines applied to products imported from least developed countries and developing countries is presented in per cent, corresponding to a 0 per cent tariff rate in HS chapter 01-97. This indicator allows observing on how many products developing countries and LDCs will have free access to Developed countries markets (see SDG metadata (United Nations, 2020a).

References

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