1. Definition of Non-Tariff Barriers
Non-tariff barriers (NTBs) are measures imposed by a country to restrict imports without resorting to tariffs.
2. Categories of Non-Tariff Barriers to Trade in Vietnam
Regulations on quality standards and environmental protection
Vietnam has established technical standards for a wide range of goods, including:
- National Standards Regulations (TCVN).
- ISO 14000 Quality Management System.
- Legal documents related to human health and environmental protection.
Sanitary and phytosanitary regulations
Vietnam requires imported food to meet hygiene and food safety standards, which include testing for pesticide residues, heavy metals, and food additives.
Agricultural products, food items, and animal or plant products must comply with quarantine regulations to prevent the importation of diseases, pests, or harmful agents to health and the environment.
Quantitative restrictions (Import bans)
These measures are applied to protect public morals, human health, natural resources, national security, etc. Goods that fall under the import prohibition list typically include items that are harmful to health or the environment.
Currently, Vietnam regulates these restrictions in Section II, Appendix I of the List of Goods Prohibited from Export and Import, issued along with Decree No. 69/2018/ND-CP.
Import licenses
Certain goods imported into Vietnam require an import license from relevant authorities to ensure compliance with safety, health, and environmental standards.
The process of obtaining an import license can be time-consuming and costly, increasing the financial burden on businesses and prolonging clearance times.
The list of goods requiring an import license in Vietnam is provided in Appendix III of Decree No. 69/2018/ND-CP.
Read more about the list of goods under the management responsibility of the Ministry of Industry and Trade here.
Import quotas
Import quotas limit the quantity of specific goods allowed into Vietnam within a certain period. However, in line with trade liberalization trends, countries, including Vietnam, have gradually eliminated quota mechanisms.
In Vietnam, the list of goods managed under import tariff quotas is stipulated in Article 11 of Circular No. 12/2018/TT-BCT.
Pre-clearance inspections
This measure is relatively common for goods imported into Vietnam. Goods must undergo pre-clearance quality inspection registration to qualify for customs clearance.
3. Non-Tariff Barriers’ Effects on businesses
Positive effects on domestic businesses
- Protection of domestic industries: Non-tariff barriers (NTBs) help limit the influx of foreign goods into the domestic market, providing opportunities for local businesses to grow and reducing competition from imports.
- Ensuring consumer safety and health: NTBs, such as technical standards, food safety, and animal and plant quarantine regulations, protect consumers by preventing the import of substandard or harmful products.
- Environmental protection: Countries often apply controls on goods that may cause pollution or harm the environment, such as the regulation of waste imports or goods containing hazardous chemicals.
Negative effects on import-export businesses
NTBs present several challenges to businesses:
- Increased costs and time: Complex procedures or stringent technical requirements can raise operational costs and prolong distribution timelines.
- Difficult market access: Vietnamese exporters face stringent technical standards and quarantine regulations in foreign markets.
- Risk of trade defense measures: Vietnamese goods may be subject to anti-dumping or countervailing duties, affecting their competitiveness.
- Lack of information on measures: Many businesses, especially small and medium-sized enterprises (SMEs), struggle to meet NTB requirements.
- Domestic regulatory barriers: Complicated or overlapping import regulations create difficulties in sourcing materials for production and exports.
4. Solutions to address non-tariff barriers
Businesses can proactively respond to NTBs through the following strategies:
- Enhancing compliance with international standards: Keep up-to-date with technical standards, quarantine regulations, and the requirements of foreign markets.
- Promoting digital transformation: Applying digital technology in customs management and import-export procedures helps save time and reduce costs.
- Diversifying export markets: Avoid relying on a few large markets to reduce risks when facing trade barriers.
- Leveraging the role of the Vietnam Business Associations: Associations can support businesses in accessing updated information and advocating for the removal of NTBs. In other words, they act as representatives to protect businesses’ rights.
- Strengthening international cooperation: Vietnam should utilize free trade agreements (FTAs) to minimize barriers and expand market access.
- Improving product quality: Invest in technology and production processes to meet international standards and create a competitive advantage.
5. Conclusion
Non-tariff barriers are measures that do not involve taxes but significantly impact import-export activities. These barriers pose challenges that require businesses to actively respond to them.
We hope that this article by UNI will offer helpful insights for businesses to improve their export-import operations.
The latest information about customs situation will be continuously updated in the customs newsletter of UNI CUSTOMS CONSULTING. We invite businesses to stay informed!