Non-tariff barriers now cost more than tariffs for most countries: UNCTAD

Non-tariff measures now impose higher trade costs than tariffs for 88 per cent of countries, while developing economies are simultaneously being hit by rising tariffs and mounting compliance burdens, according to a new report by the United Nations Conference on Trade and Development (UNCTAD).

The report also found that improving transparency around trade regulations alone could reduce trade costs linked to non-tariff barriers by nearly 20 per cent.

In its May 2026 global trade update titled Invisible Barriers: The Costs of Non-Tariff Measures, UNCTAD warned that the global trading system is increasingly being shaped by regulatory restrictions, technical standards and geopolitical trade interventions rather than traditional tariffs.

“Tariffs have risen, but compliance with non-tariff measures (NTMs) remains the greater cost for most countries’ exports,” the report said.

NTMs emerge as dominant trade barrier

NTMs include technical barriers to trade, sanitary and phytosanitary standards, import licensing systems, quotas, conformity assessments and export restrictions.

While many are introduced for legitimate objectives such as food safety, environmental protection and public health, UNCTAD said they increasingly function as major determinants of market access and trade competitiveness.

The assessment found that NTMs now generate higher export costs than tariffs for 88 per cent of countries globally, based on UNCTAD calculations using International Trade Centre MacMap and UNCTAD TRAINS data.

UNCTAD said the global trade regime is undergoing a structural shift in which technical regulations, certification rules, import licensing requirements and regulatory standards are increasingly shaping who trades, what is traded and which markets remain accessible.

The analysis comes amid rising trade fragmentation following the Covid-19 pandemic, the Russia-Ukraine war and sweeping tariff actions initiated by the United States in 2025. Governments are increasingly using trade regulations not only to protect domestic industries but also to pursue industrial policy objectives, strengthen supply-chain resilience and secure strategic sectors such as critical minerals and green technologies.

Data compiled from World Trade Organization (WTO) notifications and Global Trade Alert interventions showed that technical barriers to trade, sanitary and phytosanitary measures, tariffs and other non-tariff barriers have all increased sharply over the past two decades.

Even though tariff reductions globally still outnumbered tariff increases in 2025, the scale of US tariff hikes outweighed reductions elsewhere and pushed up average global tariffs by double-digit levels, the report said.

At the same time, newly introduced non-tariff barriers were “almost twice as frequent” as tariff increases in 2025.

Developing countries face “double burden”

UNCTAD said developing economies are facing a “double burden” as tariff hikes combine with expensive compliance requirements linked to NTMs.

Global tariffs on exports increased sharply in 2025 — by 10 per cent for developed countries, 16 per cent for developing countries and 18 per cent for least developed countries (LDCs).

The impact has been especially severe for exporters in Latin America, East Asia and South Asia, where trade-weighted tariff costs rose faster than in developed economies. Average tariff rates on Latin American exports more than doubled, the report said.

At the same time, firms in poorer economies face disproportionately high costs in meeting foreign regulatory standards involving product certification, testing, packaging, labelling and safety approvals.

UNCTAD noted that exporters in many developing countries often lack accredited domestic laboratories or certification agencies, forcing them to route products through third countries to secure compliance approvals for overseas markets.

The document estimated that LDCs lose around 10 per cent of their exports to G20 markets because they are unable to comply with non-tariff measures at the same level as other developing economies.

UNCTAD warned that as the use of NTMs expands further, the gap between developed and developing economies risks widening unless poorer countries receive stronger technical support and regulatory capacity-building assistance.

Transparency failures raise hidden trade costs

A major concern highlighted in the report is the lack of transparency surrounding non-tariff regulations.

UNCTAD said many countries fail to fully notify trade-related measures to the WTO, leaving exporters uncertain about applicable rules, standards and compliance procedures.

The report cited studies estimating that improving transparency could reduce trade costs associated with non-tariff barriers by around 19 per cent. Failure to notify trade measures can generate costs comparable to imposing a 28 per cent tariff.

For smaller firms with limited technical and legal resources, these hidden compliance costs can effectively block access to international markets.

“Improving transparency is often described as a low-hanging fruit,” the report said, pointing to existing platforms such as the TRAINS database and the Global Trade Helpdesk that aim to improve access to regulatory information.

Trade deals increasingly focused on regulatory alignment

The report highlighted that recent trade agreements are increasingly centred on regulatory cooperation and standards recognition rather than conventional tariff cuts.

Following the announcement of “reciprocal tariffs” by the United States on April 2, 2025, Washington signed several bilateral trade arrangements with countries including Malaysia, Indonesia, Bangladesh, Cambodia, Ecuador, Argentina and Taiwan.

Many of these agreements included provisions involving recognition of US standards and conformity assessments for automobiles, pharmaceuticals, medical devices and agricultural products.

For instance, agreements with Malaysia and Indonesia included commitments involving critical minerals and provisions against export restrictions. The Indonesia arrangement also involved removal of local content requirements and import licensing barriers for US goods.

Meanwhile, the report noted that European Union negotiations with India and the Mercosur bloc have focused more on mutual recognition and alignment with international standards rather than unilateral adoption of EU rules.

LDCs remain marginalised

The report also pointed to the limited participation of LDCs in WTO trade diplomacy. While developing countries have increasingly used WTO mechanisms known as Specific Trade Concerns (STCs) to challenge restrictive trade measures, LDC participation remains minimal.

STCs allow countries to seek clarification or object to regulations they believe unfairly restrict exports.

The May 2026 update said the lack of participation reflects weak technical and institutional capacity within LDCs and limits their ability to defend market access interests.

It noted that LDCs accounted for only around 1.1 per cent of world exports in 2024, barely above the 1 per cent share recorded in 2010. This leaves the United Nations Sustainable Development Goal target of raising LDC export share to 2 per cent still far from being achieved.

Regulatory cooperation could sharply cut costs

The report argued that stronger international regulatory cooperation could substantially reduce trade costs without undermining safety or environmental standards.

It estimated that aligning domestic regulations with international standards or mutually recognising certifications could lower NTM-related trade costs by between 15 and 30 per cent.

It cited sectors such as agriculture, where exporters often face multiple and conflicting requirements related to pesticide residues, packaging and food safety standards across markets.

UNCTAD referenced the long-running dispute between the United States and the European Union over chlorine-washed chicken as an example of how differing regulatory systems can restrict trade despite similar safety objectives.

Using the African Continental Free Trade Area as an example, the report estimated that stronger regulatory cooperation could reduce technical measure-related trade costs by 30 to 40 per cent in both agriculture and manufacturing sectors.

The report concluded that without greater transparency and regulatory cooperation, non-tariff measures risk eroding decades of gains achieved through tariff liberalisation.

“By investing in clearer rules and closer cooperation, developing countries have a real opportunity to turn South-South trade into a more powerful engine of growth,” according to the UNCTAD report.