Chapter 5. Nontariff Measures and the World Trading System

With the success of the GATT/WTO in reducing conventional tariff barriers, much of the recent focus of both regional and multilateral trade agreements has switched to nontariff measures (NTMs), both border and behind-the-border policies. This chapter considers the recent empirical and theoretical literature on NTMs in the world trading system. It provides a set of stylized facts based on available data on NTMs as well as reviewing the key methods used to estimate their trade impact. It considers the theoretical treatment of NTMs in the trade literature with a focus on the rules and institutions that govern NTMs in the world trading system. It discusses some of the major issues regarding international cooperation over NTMs, in particular whether such cooperation should entail deep integration (involving precise legally binding obligations) or shallow integration (which allows countries greater discretion in the setting of NTMs). Finally, this chapter reviews some of the specific features the World Trade Organization (WTO) uses in dealing with NTMs such as national treatment rules and nonviolation complaints, as well as considering policy options beyond the WTO such as harmonization and mutual recognition of standards.