Non-tariff measures—mainly involving product-safety and environmental requirements—shape which products can reach markets. Unlike a tariff, which can be passed on to consumers as higher prices or absorbed through lower profits, a standard used as a trade barrier can cut off trade entirely, at least for a while.
Technical non-tariff measures have overtaken tariffs as the dominant drag on trade. Between the establishment of the World Trade Organisation in 1995 and 2021, the standard tariff rates that WTO members apply to one another fell by nearly half. Governments, however, switched to non-tariff measures, offsetting much of the decline in tariff rates.
Non-tariff measures now affect 90% of global trade by volume, six times the share three decades ago. More than half of the more than 20,000 standards established over the past seven decades did not exist before the turn of this century. In 2024 the WTO received nearly 6,500 notifications of technical barriers and new health and safety rules covering trade in food, animals and plants—a tenfold increase from 1995.
High-income economies remain the biggest implementers of non-tariff measures. Developing countries export a larger share of products subject to these measures—food and agricultural commodities, in particular. Exporting countries must now comply with four times as many technical regulations on average as was the case three decades ago. Countries often tighten technical regulations shortly after surges in imports, suggesting the real purpose of many such measures may be to shield domestic producers.
Certification of compliance can cost an exporter $425,000—a prohibitive sum for most firms. Developing countries lack the vast system of auditors and testing facilities necessary to make certification affordable. Ethiopia, for example, has fewer than 100 auditors for standards related to the International Organisation for Standardisation (ISO); Germany has 12,000. German firms face certification costs ranging from $3,000 to $11,500.
In the 1920s America's Division of Simplified Practice, established by Herbert Hoover when he was commerce secretary, served as a neutral broker for voluntary industry standards. Working through trade associations, it had implemented 173 Simplified Practice Recommendations by 1939. By increasing compatibility, standards cut waste and freed up capital for innovation.
South Korea built its entire economic strategy on a foundation of quality standards. To compete abroad in the 1960s, the government built high-quality national infrastructure, encouraged the private sector to develop voluntary standards and then ramped up participation in international organisations like the ISO and the International Electrotechnical Commission.
The standard shipping container—spanning about 40 feet on the long side and eight on the other two—did "more than all trade agreements in the past 50 years put together" to boost globalisation, according to The Economist. Its inventor, Malcolm McLean, turbocharged its global adoption by authorising the ISO to distribute the patent free.
"Every man has his price. Mine is $3.95."