Tariff and Non-Tariff Barriers are concepts that describe government-induced restrictions on international trade, designed to make imported goods less competitive than domestic products. A Tariff Barrier is a fiscal act, specifically a customs duty or tax, levied by a country on imported goods, which directly increases the product's landed cost. Examples include ad valorem tariffs (a percentage of the value) and specific tariffs (a fixed charge per unit). Non-Tariff Barriers (NTBs) are non-monetary restrictions, such as regulations, standards, or procedures, that limit trade without charging a tax. Common NTBs include import quotas (a hard limit on quantity), licensing requirements, and technical standards related to health or safety.
The modern framework for reducing these barriers originated with the General Agreement on Tariffs and Trade (GATT), a multilateral contract signed on October 30, 1947, and effective from January 1, 1948. The GATT was created as a direct response to the widespread protectionism of the 1930s, which had contributed to a collapse in world trade. Its primary objective was the "substantial reduction of tariffs and other trade barriers". The GATT mechanism involved a series of multilateral negotiations, known as "rounds," to mutually lower tariffs. The Uruguay Round, launched in 1986, was the most comprehensive, resulting in the creation of the World Trade Organization (WTO) on January 1, 1995, which succeeded the GATT.
The WTO, which incorporates the original GATT text (now known as GATT 1994), provides a permanent forum for negotiating further reductions and includes a stronger Dispute Settlement Mechanism to enforce trade rules. A key concept connected to this system is Most-Favored-Nation (MFN) treatment, which generally requires a WTO member to grant the same trade advantages to all other members. While the WTO successfully reduced tariffs, non-tariff barriers have become more prominent in recent years, often taking the form of complex regulations, certification requirements, and administrative procedures that create hidden compliance costs. This shift means that while the core concept of a tariff (a tax) has remained the same, the nature of the non-tariff barrier has evolved from explicit quotas to less visible, "behind the border" regulatory divergence, particularly in services trade.