NTMS 101: A brief overview of the nature and effect of NTMS

Courtesy of The Star

Njogu is an aspiring Kenyan farmer. He plans to specialize in tea farming, which he begins to cultivate on a recently leased medium-sized farm in Limuru. After the tea is harvested, it is dried and packaged in a factory for export to the United Kingdom. Njogu is confident that he has met all customs tariffs and other tax regulations as advised and anticipates huge profits. He does, however, learn that his goods have been rejected as being unfit for export. They appear to fall short of packaging and conformity assessment requirements prescribed by the UK and Kenyan governments. Njogu is perplexed because he is unaware of the said conformity assessment requirements. He is not alone in this predicament.

Surprisingly, despite the fact that NTMs affect 90% of global trade, little or no information about them is readily available to the average mwananchi. This lack of transparency has serious consequences for businesses, particularly medium and small businesses (MSMEs). Because of the uncertainty, trade costs go up, which poses a disadvantage to Least Developed Countries like Kenya. Information and compliance costs are examples of such costs. These costs frequently outweigh the value of the underlying transactions, resulting in unprecedented losses for MSMEs.

The term "non-tariff measures" (also known as "NTMs") is used to refer to any policy measures, other than customs tariffs, that may have an economic impact on international trade in goods by altering the quantities traded, the prices, or both. These are mandatory requirements imposed by domestic governments to improve trade control, and they are imposed for four major reasons. NTMs exist primarily to ensure that the highest levels of safety and health are maintained throughout all stages of product manufacturing, processing, and distribution. Furthermore, they contribute to environmental protection and the advancement of sustainable development goals by prescribing the minimum standard required for international trade.

NTMs are mandatory requirements enacted by regulation, such as a decree or relevant law. In Kenya, NTMs are imposed through acts of parliament or subsidiary legislation enacted by cabinet secretaries or local governments carrying out their delegated functions. It is critical to note that these measures are limited to international trade in goods; thus, NTMs have no effect on trade in services. Furthermore, because the trade must be conducted on an international scale, domestic trade is exempt from NTMs. These measures must be implemented through regulations that are as detailed and specific as possible. As a result, any legislation that is repealed will not impart any NTMs.

Additionally, NTMs can be technical or non-technical in nature, such as quotas and price controls. The importance of technical measures, such as sanitary and phytosanitary (SPS) measures and technical trade barriers (TBT), has been highlighted in particular as they seek to protect consumers’ health and safety. These measures apply to a wide range of products, from food and agricultural products to arms and ammunition. According to the United Nations Conference on Trade and Development (hereafter UNCTAD), developed countries regulate more imports than Least Developed Countries (LDCs). Furthermore, countries with higher GDPs regulate a larger portion of their trade. This exaggerates the discrimination experienced by LDCs in comparison to developed countries. Unsurprisingly, the agro-food sector is heavily regulated by NTMS in order to ensure compliance with the safety and health standards established. This clearly depicts the unnoticed impact of NTMS in LDCs, as many low-income countries rely heavily on agriculture for revenue and foreign exchange.

UNCTAD is the UN agency tasked with gathering and disseminating information on NTMS. It does so in collaboration with local governments, which provide it with regulations containing NTM measures that affect international trade. There is a need for the harmonization of these measures into a single system, which UNCTAD is aware of and currently working on. NTMS can presently be found in their database TRAINS, where a large number of NTMS have been collected and registered from various countries around the world.

As discussions among states are underway to combat the discriminatory nature of NTMs, there is a need for Kenyan farmers and businessmen to be adequately informed on such measures. This will at least allow MSMEs to reduce information and legal costs, which often discourage the growth of such businesses.

By Kahungi Natasha Wanjiku 

Editor-in-Chief, UNLJ