Tariff trends mostly downwards, but non-tariff measures increasingly used
Multilateral and regional integration are complementary elements of the global trade system. The Bridgetown Covenant underlined the importance “to strengthen multilateralism and the rules-based, multilateral trading system, with an emphasis on ensuring that the system works effectively for developing countries” -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-. The role of regional integration in advancing cooperation in functional areas is central for “building productive capacitiesUNCTAD defines productive capacities as consisting of the productive resources, entrepreneurial capabilities and production linkages that together determine a country’s ability to produce goods and services that will help it grow and develop -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- and achieving structural transformationStructural transformation or change can be broadly defined as the reallocation of economic activity across three broad sectors, agriculture, manufacturing and services, which accompanies the process of economic growth -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-. It usually refers to the transfer or shift of production factors — especially labour, capital and land — away from activities and sectors with low productivity to those with higher productivity, which are typically different in location, organization and technology -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-. for sustained development” -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Table of contents
Regional trade agreements have not only increased in numbers, but also in depth and scale
RTAsRegional Trade Agreement. Refer to reciprocal trade agreement between two or more partners, not necessarily belonging to the same region. RTA is an exception to the WTO rule of non-discrimination. WTO members are permitted to enter into an RTA under specific conditions. (WTO, 2023a). WTO members are obliged to notify the RTAs in which they participate. All of the WTO's members have notified participation in one or more RTAs (some members are party to 20 or more). Notifications may also refer to the accession of new parties to an agreement that already exists. are a tool to facilitate countries’ engagement in trade, encourage investment and limit trading costs. The number of RTAs in force has increased significantly, from 22 in 1990 to 365 as of March 2024 -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- (figure 1). However, the sharp increases in numbers of RTAs in 1995-2005 and a peak in RTAs in 2021 are largely explained by other issues than the spread of regionalism, the former reflected the economic transformation of Eastern European countries and Balkan countries, and the latter was mainly due to the new agreements signed between the United Kingdom and its partners.
Figure 1. 365 RTAs in force as of March 2024Source: -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Note: Goods, services and accessions to an RTARegional Trade Agreement. Refer to reciprocal trade agreement between two or more partners, not necessarily belonging to the same region. RTA is an exception to the WTO rule of non-discrimination. WTO members are permitted to enter into an RTA under specific conditions. (WTO, 2023a). WTO members are obliged to notify the RTAs in which they participate. All of the WTO's members have notified participation in one or more RTAs (some members are party to 20 or more). Notifications may also refer to the accession of new parties to an agreement that already exists. are counted separately. The cumulative lines show the number of RTAs currently in force (by the year of entry into force).
However, RTAs have become “deeper” over time, increasingly including considerations related to the environment, migration, labour, investment, intellectual property rights, technological innovation, trade in servicesIn the international trade in services context, services are understood as the result of a production activity that changes the conditions of the consuming units or facilitates the exchange of products or financial assets -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-. Following the balance-of-payments classification, trade in services refers to manufacturing services, repair services, transport, travel, construction, telecommunications, computer services, financial services, insurance, intellectual-property related and other business services, as well as personal and cultural services, and government services., and competition policy -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-. Before the 1990s, except in the EUEuropean Union, such agreements addressed typically traditional policy areas, such as tariff liberalization and border issues. While an average PTAPreferential Trade Arrangement (PTA) This includes what WTO refers to as regional trade agreements and also free trade agreements, custom unions, common markets, or enlargement and accession agreements. in the 1970s covered less than ten policy areas, since the 2000s most new PTAs include between 10 and 20 policy areas (figure 2).
Figure 2. In 2021, most new PTAs included between 10 and 20 policy areasSource: -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Note: Number of policy areas covered in an agreement is calculated as the count of policy areas included in a PTA, a maximum number of policy areas being 52.
Tariffs trended downwards in agriculture, manufacturing, and natural resources
Between 2012 and 2022, MFNMost-favoured-nation (MFN) is a status or level of treatment accorded by one state to another in international trade. Under the WTO agreements, countries cannot normally discriminate between their trading partners. -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- . and preferential tariffs registered a slight decline in agriculture, manufacturing, and natural resources. Simple-average MFN and preferential tariffs in agriculture have reduced by about 3 percentage points and 1.4 percentage points, respectively. Simple-average preferential tariffs in manufacturing declined by approximately one percentage point. Tariffs in natural resources trade reduced only slightly, and both in MFN and preferential terms, are the lowest among the three sectors at 2.6 and 1.2, respectively (figure 3). The increase in trade-weighted averages tariffs in some instances are largely explained by retaliatory tariffs imposed by the United States of America and China on each other -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Figure 3. Tariffs on the preferential basis have declined faster than MFN tariffsMost Favoured Nation (MFN) tariffs are a tariff level that a member of the General Agreement on Tariffs and Trade of the WTO charges on a good to other members, i.e. a country with a most favoured nation status -—– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- It applies to imports from trading partners-members of the World Trade Organization (WTO), unless the country has a preferential trade agreement. It is the lowest possible tariff a country can assess on another country.
Source: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-, -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- and -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Agricultural trade is largely free from tariffs due to preferential access and reciprocal concessions, while the remaining tariffs are fairly high (almost 20 per cent) (figure 4). Preferential access remains significant for trade in manufacturing products, where the tariff on non-free trade averaged almost 10 per cent in 2022. For natural resources, preferential access is less important, as trade in these goods is largely tariff-free under MFN rates, and the remaining tariffs are generally very low (about 6 per cent).
Figure 4. Two thirds of international trade is free of tariffs in 2022, but the remaining tariffs are still highSource: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-, -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- and -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Globally, overall tariffs rates have remained unchanged in recent years. In 2022, in developing economies, the recorded levels ranged from 5 per cent for countries benefiting from MFN status to 3 per cent for those with preferential statusTrade preferences, such as lower or zero tariffs, which a member may offer to a trade partner unilaterally. (figure 5). The lowest levels of tariffs were observed in the EU for both measures, with the worldwide weighted tariffs averaging 0.6 per cent for countries with preferential status and 1.3 per cent for countries with MFN status.
Figure 5. Worldwide weighted average tariffs are highest in LDCs and lowest in the European Union, 2022Source: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-, -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- and -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Although tariffs are generally low, high tariffs are in place for some agricultural products, apparel, textiles, and tanning. For example, tariffs above 15 per cent are applied on more than 8 per cent of global trade in food (which make 29 per cent of the products in this group) (figure 6). Similarly, about 9 per cent of the value of international trade in apparel and more than 16 per cent in tanning are subject to tariffs of 15 per cent or more. Tariff peaks for food products are often observed in developing countries of South Asia and Africa.
Figure 6. Tariff peaks concentrated on products exported by developing economies, 2022Source: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-, -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- and -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
The tariff treatment provided by developed economies to exports from LDCs has remained relatively unchanged since 2015
In 2022, import tariffs (including preferences) and MFN tariffs applied by developed countries to all products from developing economies stood at 1.3 per cent for all products, 0.4 percentage point lower than in 2015, ranging from 7.3 for clothing and 6.4 per cent for agriculture to 0.8 for industrial products.
For LDCs, import tariffs (including preferences) and MFN tariffs applied by developed countries remained stable since 2015 and amounted to 2.4 per cent and 5.7 per cent, respectively. Tariffs varied across product groups, ranging from 5.7 per cent for clothing to 0.4 per cent for industrial products for countries that benefit from preferential status. MFN tariffs were lower for developing economies (2.5 per cent) than for LDCs (5.7 per cent). Compared to developing economies and LDCs, SIDSSmall island developing states (SIDS) were recognized as a distinct group of developing countries at the Earth Summit in Rio de Janeiro in June 1992. More information on UNCTAD official page. faced the lowest tariffs on all products, 1.5 per cent (figure 7).
The decline of tariffs for SIDS was also less pronounced, compared to other groups, amounting to 0.2 percentage points in the import tariffs (including preferences) and 0.1 percentage points in the MFN applied tariffs since 2015. In 2022, average import tariffs (including preferences) and MFN tariffs for clothing stood at 2.3 per cent and 11.6 per cent, and for agriculture – at 3.6 per cent and 7.2 per cent, respectively.
Figure 7. Trade-weighted average tariff faced by developing economies are the highest in clothing and agriculture, 2022Source: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-, -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- and -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
In 2022, LDCs were granted duty-free market access on 62.9 per cent of tariff lines1, the share which remained relatively constant since 2015. In contrast, the share of exports of developing economies as a group entering duty free has increased by almost 6 percentage points and amounted to 55.2 per cent of tariff lines2. The highest proportions of duty-free exports from LDCs, excluding oil, were found in trade in agricultural products (72 per cent) and industrial products (68.8 per cent).As for developing economies, 56.1 per cent of their exports of agricultural products and 57.6 per cent of industrial products entered the world markets duty-free. In 2022, duty-free access was granted to 74.3 per cent of product lines of SIDS, an increase of 12 percentage points from 2015. SIDS enjoyed duty-free access into developed economies’ markets for 73.2 per cent of their exports of agricultural products, 75.9 per cent of industrial products, and 72.5 per cent of textiles.
Figure 8. Share of products enjoying duty-free market access substantially increased for SIDS, but declined for LDCsSource: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-, -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- and -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
The importance of non-tariff measures rising
NTMsNon-tariff measures (NTMs) are policy measures other than ordinary customs tariffs that can potentially have an economic effect on international trade in goods, changing quantities traded, or prices or both such as technical barriers to trade, price-control measures, etc. -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- often impact trade more than border duties. Their effects on international trade and economic welfare are varied, and can be both negative or positive. Knowledge gaps on NTMs still exist, despite significant progress made by UN Trade and Development in data collection, - UNCTAD TRAINSTrade Analysis and Information System database -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- has a coverage of about 90 per cent of global trade, - and the existing WTOWorld Trade Organization notification mechanisms.
Technical NTMs, such as TBTTechnical barriers to trade (TBT) are measures referring to technical regulations, and procedures for assessment of conformity with technical regulations and standards., affect more than 30 per cent of product lines and almost 70 per cent of world trade (figure 9). The agricultural sector, where most of world agricultural trade is subject to SPSSanitary and phytosanitary measures (SPS): Any measure applied: (a) to protect animal or plant life or health within the territory of the trade partner from risks arising from the entry, establishment or spread of pests, diseases, disease-carrying organisms or disease-causing organisms; (b) to protect human or animal life or health within the territory of the trade partner from risks arising from additives, contaminants, toxins or diseases causing organisms in foods, beverages or feedstuffs; (c) to protect human life or health within the territory of the trade partner from risks arising from diseases carried by animals, plants or products thereof, or from the entry, establishment or spread of pests; or (d) to prevent or limit other damage within the territory of the trade partner from the entry, establishment or spread of pests -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-. and TBT, is more regulated than manufacturing and natural resources.
Figure 9. International trade highly regulated through technical barriers to tradeTechnical barriers to trade (TBT) are measures referring to technical regulations, and procedures for assessment of conformity with technical regulations and standards., 2022Source: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-, -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- and -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Note: The frequency index is defined as the percentage of HSThe Harmonized System (HS) is an international nomenclature developed by the World Customs Organization, which is arranged in six-digit codes allowing all participating countries to classify traded goods on a common basis. Beyond the six-digit level, countries are free to introduce national distinctions for tariffs and many other purposes. 6-digit lines covered. Coverage ratio is defined as the percentage of trade affected.
Non-tariff measures increasingly used as a tool for climate action
According to a new report by UN Trade and Development and ESCAPUnited Nations Economic and Social Commission for Asia and the Pacific -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-, only 2.6 per cent of all NTMs are related to climate change mitigation -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-. However, they are highly concentrated on the most traded goods, such as cars and vehicles, machinery, fuels, household appliances and electronics, wood-based products, and plastics, covering overall 26.4 per cent of global trade (figure 10).
Figure 10. Climate change-related measures target the world’s largest traded and most CO2Carbon dioxide (CO2) is a colourless, odourless and non-poisonous gas formed by combustion of carbon and in the respiration of living organisms -—– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-. intensive sectors
Source: UNCTAD calculations, based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Note: Trade is calculated as the sum of imports and exports and the average between 2017 and 2021.
The South Asian, North American, East Asian and Pacific, and European and Central Asian countries apply climate change-related measures to about 30 per cent or above of their imports (figure 11). While the import coverage share of African countries and Middle East is low, this is mainly explained by their fewer imports of CO2 intensive goods. The Sub-Saharan African countries exhibit the second highest share of climate change related NTMs, which demonstrates the regulatory efforts of these countries to climate change action.
Figure 11. South Asian countries record the highest share of climate-related NTMs in their importsSource: UNCTAD calculations, based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Notes
- Limitations of this indicator include the following: tariff-based measures are only a part of trade limitation factors; inability to comply with rules of origin criteria limits the utilization of preferential treatments; using data on zero-tariff lines assumes full utilization of benefits; low MFN tariffs mean that duty-free treatment is not always preferential). -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- - Proportion of total number of tariff lines applied to products imported from LDCs 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 how many products from developing countries and LDCs have free access to markets in developed countries.
References
Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.
Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.
Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.
Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.
Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.