RESTRICTEDWORLD TRADE
ORGANIZATIONWT/CTE/W/101
G/TBT/W/103
25 January 1999
(99-0253)
Committee on Technical Barriers to Trade
TECHNICAL BARRIERS TO THE MARKET ACCESS OF DEVELOPING COUNTRIES
Background Note by the Secretariat
1. This Note has been prepared in response to a request by the Committee on Technical Barriers
to Trade (CTBT) for the Secretariat "to establish the state of knowledge concerning the technical
barriers to the market access of developing country suppliers, especially small and medium-sizedenterprises (SMEs), as a result of standards, technical regulations and conformity assessment
procedures".
1  The section on environmental requirements also responds to a request by the
Committee on Trade and Environment (CTE) for a regular update of the effects of eco-labelling
requirements on the market access of developing countries.2
2. It builds on a previous Secretariat Note entitled Restrictive Trade Effects of Standards,
Technical Regulations and Conformity Assessment Procedures , prepared in April 1997
(G/TBT/W/42).  The Secretariat wishes to draw th e attention of delegations to the limited number of
new studies conducted on this subject since that date, and to the fact that much of the literature is
focused on environmental requirements.3
3. This Note begins with a general discussion of how technical barriers to market access may
emerge, with a focus on developing countries.  It then presents the most recent literature on this
subject, with respect to: (1) national environmenta l requirements (which constitute the bulk of the
recent literature), (2) other national requirements (where not much has been written), and
(3) international standards (where the focus of the literature is on environmental and quality
management standards).
I. HOW TECHNICAL BARRIERS TO MARKET ACCESS MAY EMERGE
A. DEVELOPING COUNTRIES AND STANDARDIZATION
4. For an understanding of how technical requirements4 and conformity assessment procedures
may act as barriers to the market access of developing countries, it is important to begin by situating
these countries in the field of standardization.  In general, the literature on standardization indicates
that developing countries tend to be "standard-takers" rather that "standard-setters" 5  In others words,
fewer standards are developed by these countries, than are by their developed counterparts.
                                                     
1The request was made during the Triennial Review of the TBT Agreement and is contained in
document G/TBT/5.
2The request was made at the CTE meeting of 19-20 March 1998, and is contained in document
WT/CTE/M/17.
3A number of CTE documents are relevant to this Note and include: WT/CTE/W/25-26 (1996) on the
effects of environmental measures on market access, es pecially in relation to de veloping and least-developed
countries, and WT/CTE/W/79 (1998) on the market access impact of eco-labelling schemes.
4In this Note, the term 'technical requirement' will be used to refer to both standards and technical
regulations.
5Stephenson (1997).  This view has also been expressed in a number of other works.WT/CTE/W/101
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Page 2
5. This situation is explained by the variables which tend to influence the pattern of standards
development in different economic sectors:  (1) industry size and concentration, (2) dominance of
specific suppliers or buyers, (3) level and speed of technological advancement, and (4) public interest
in safety, health and environmental protection.6  As industrialization has taken place on a greater scale
in developed than in developing countries, and has been accompanied with a rise in the level of safety,
health and environmental protection, standards development in these countries has outpaced the
developing world.
6. Not only is the overall number of standards in developing countries smaller, but it has also
been observed that fewer standards become mandatory.  Amongst other reasons, this is attributed to
the relatively less developed and diversified manufacturing sector in the developing world, and the
resulting lack of a perceived need by industry to develop additional standards.7  With respect to
standardization at the international level, the meaningful participation of developing countries in this
process has been put into question (this issue is addressed in greater detail in Section IV).
7. The literature also states that in many developing countries, establishing conformity with
technical requirements is difficult to undertake. Th e infrastructure and human resources for laboratory
testing and calibration, as well as certification, are lacking. Moreover, many developing countrieshave not established accreditation systems.  In Latin America and the Caribbean, for instance, only
seven countries have:  Argentina, Brazil, Chile, Colombia, Costa Rica, Peru and Venezuela.
8  There
also appears to be a dearth of agreements conc luded in the areas of metrology, testing and/or
certification involving developing countries, although  efforts are underway in this regard within the
framework of various regional groupings.9
8. While this information illustrates the limited role  that developing countries play in the realm
of standardization relative to their developed counterparts, it is not intended to indicate that they
should undertake more standardization, or should evolve from being standard-takers to setters.
Adopting existing standards could, in certain situatio ns, be more economically efficient than inventing
new ones.  However, it aims at drawing attention to two issues in the literature of particularimportance to this Note:  (1) the extent to which developing countries rely on standards which they do
not themselves develop, with all the difficulties that such a situation could entail (such as, a lack of
familiarity with the process of standardization in e xport markets, with how to best comply, etc.), and
(2) the limitations involved in carrying out conformity assessment activities domestically.
B. P
OTENTIAL BARRIERS10
9. Technical requirements and conformity assessment procedures have the potential to become
barriers to trade.  For instance, when they make different and stricter demands on imported thandomestically produced goods, trade may be impeded.  In addition, when they are insufficiently
transparent, are frequently amended, and involve translation costs, additional impediments may arise.
10. Technical requirements may also have an adverse impact on trade when products are
over-regulated (i.e. when they must conform w ith too many requirements);  when incompatible
requirements are set for the same products by different countries;  etc.  Conformity assessmentprocedures may also do so when the same products have to be tested in different countries using
                                                     
6Ibid.
7Ibid
8OAS Trade Unit  (1997).
9Stephenson (1997).
10This section is, to a certain extent, based on OECD (1997) and OECD (1998).WT/CTE/W/101
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different procedures; when the assessment facilitates to be used are inconveniently sited and charge
high fees;  etc.  The resource constraints of developing countries may exacerbate these problems.
11. Technical requirements and conformity assessment procedures impose "compliance costs" on
businesses.  One author defines these as "the additional costs incurred by businesses in meetingrequirements for complying with a given standard.  They include both the costs of achieving
compliance and the costs of demonstrating  compliance through established conformity assessment
procedures."
11
12. In meeting the requirements of their export markets, the compliance costs incurred by
businesses are not only a function of the stringency of those requirements, but of the requirements that
they already meet in their domestic markets.  When the latter are significantly less stringent, the costs
of achieving compliance with export markets are raised (as even the most preliminary adjustmentsthen have to be made).  As developing countries tend to be standard-takers, and have fewer domestic
standards than their developed counterparts, their compliance costs are therefore high.
13. The breakdown of compliance costs in any given situation can also influence the extent to
which they may act as barriers to trade. Compliance costs can be broken down into direct and indirect
ones. Direct costs are those associated with the necessary changes to products and/or process andproduction methods (PPMs), and coul d include modifications to product design, investment in new
machinery, staff training and changes to product testing.  Indirect compliance costs are associated
with more general impacts, such as loss of economies of scale in production, distribution and
marketing.
14. Compliance costs can also be classified into recurring and non-recurring ones.  Non-recurring
costs are expenditures that are only incurred for in itial compliance - the purchase of new machinery
for instance.  Recurring costs are the repeated expenditures associated with routine conformity
assessment, increased operating costs as a result of compliance, etc.  Recurring costs have the
potential to impede market access most significantly when economies of scale are not achieved by
standardization, or are even reduced.  They then come to represent a more significant proportion ofoverall cost.
15. In general, all compliance costs can act as obstacles to developing country trade when high,
However, direct non-recurring costs can be made particularly high for developing countries in the
absence of the required technology or the necessary human resources for compliance.  Also, SMEs
may be unable to assume high non-recurring costs due to their limited financial resources, and
recurring ones when they cannot achieve economies of scale (SMEs are addressed in greater detail in
Section II).
II. RECENT LITERATURE ON NATIONAL ENVIRONMENTAL REQUIREMENTS
16. A number of case studies have been conducted by Jha et al. to determine, amongst other
issues, the impact of environmental policies on the market access and competitiveness of developing
countries and economies in transition.
12  The types of environmental policies that they have examined
include both standards and technical regulations, such as product-content requirements(e.g. regulations limiting the amount of hazardous substances contained in products), recycled-content
requirements, and labelling and packaging requirements.
                                                     
11OECD (1998).
12Jha, Markandya, and Vossenaar (forthcoming publication).  The countries examined include:
Zimbabwe in Africa;  China, India, Malaysia, the Philippines, and Thailand in Asia; Brazil, Colombia andCosta Rica in Latin America and the Caribbean; and, Poland and Turkey in other regions.WT/CTE/W/101
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17. The authors indicate that environmental requirements in developed countries tend to be
sector-specific, affecting in particular fisheries and forestry, leather and footwear, textiles and
clothing, and certain consumer  products.  They add that:
"A significant share of developing country exports are in product categories which
already have to comply with environmental regulations of developed country
markets.  An analysis carried out by UNCTAD [United Nations Conference on Trade
and Development] indicates that, on average, about one-third of the value of total
exports and about half of the value of manufactured exports of developing countries
originate in such sectors.  This is particularly relevant for Asian developing countries,
since over 60 per cent of their manufactured exports, in value terms, originate in such
sectors."
18. Jha et al. construct a useful model of the factors which tend to have a bearing on the trade and
competitiveness effects of environmental policies, which include:
(1) The destination of exports:  Trade is affected more significantly when exports are
destined to markets that are heavily environmentally regulated;
(2) The basis for export competitiveness:  When such competitiveness is based on low
prices, compliance with environmental requirements can undermine it;
(3) Firm size: Compliance with environmental requirements can be particularly difficult
for SMEs;
(4) Availability of raw materials, specialized inputs, technology and information: Their
availability facilitates compliance;
(5) Corporate structure:  The more vertically integrated companies are (i.e. the more the
companies producing finished products can exercise control over their suppliers), the
greater their ability to control environmental quality throughout a product's life cycle;
and
(6) Relationship with foreign firms: Strong links with foreign firms can facilitate
compliance by, for instance, increasing access to environmentally sound
technologies.
19. On the basis of the case studies conducted, they reach the conclusion that:
"There is no empirical evidence to suggest that existing environmental policies have
widespread effects on market access.  However, effects could be more significant forsome sectors and for small and medium-sized enterprises.  Environmental policies
may have differentiated competitiveness effects on developed and developing
countries.  In most cases, however, competitiveness effects of environmental policies
can be addressed by appropriate policies at the national, regional and international
levels."
20. However, Jha et al. also indicate that account should be taken of the fact that the "compliance
costs of environmental policies may become more significant in future.  For example, increased
efforts to avert the problem of climate change may have strong trade and competitiveness effects on
certain sectors." At present, however, they suggest that environmental requirements need not act asbarriers, but, rather, could open up new trade opportunities for environmentally-friendly products.
21. Both UNCTAD and the Economic and Social Commission for Asia and the Pacific (ESCAP),
point out that open economies have greater scope for reducing the competitiveness effects of foreign
technical requirements because of better access to information, inputs and technology.  In addition,WT/CTE/W/101
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liberal foreign investment laws and the protection of intellectual property can facilitate the access to
clean technology.13
22. ESCAP maintains that there is "little evidence  to suggest that trade-related environmental
measures adopted in developed country markets have had a significant impact on the exportperformance of the ASEAN countries [reference is made to the timber, textile and electronic sectors]
…  It is also difficult to separate vulnerability to trade-related environmental measures from policy
choices made by Governments."  However, it also states that adverse effects tend to be experienced by
SMEs, and that Asian developing countries are concerned about the emergence of environmental
policies based on PPMs (which may not reflect developing country environmental priorities, and
which could reduce their welfare).
14  In addition, a number of other authors have expressed concern
regarding the potential inability of developing countries to obtain reasonable price premiums for theenvironmental improvements they introduce.
15
23. However, while the conclusion of recent studies appears to be that environmental
requirements have not restricted market access, this does not mean that there are no examples of
impediments to trade.  Numerous examples are documen ted in the literature, but, overall, their effects
are not seen to have been significant, and it is argued that appropriate national policies could have
mitigated them.  Cited in the literature, for instance, are the difficulties which India experienced in
phasing out AZO dyes in the textiles sector in response to a new German regulation, and the high
compliance costs that were involved.16
A. L EAST -DEVELOPED COUNTRIES (LDC S)
24. UNCTAD indicates that LDCs experience particular difficulty in complying with the
environmental regulations of their export markets. Packaging requirements, such as the German
Packaging Ordinance of 1994, have been of conc ern.  In addition, campaigns by non-governmental
organizations (NGOs) against LDC exports on the grounds of low environmental and labour standards
have also been a problem.  Nepal's carpet exports to Germany, for instance, were adversely affected
by environmental and child labour campaigns.  The sector accounted for 58 per cent of all Nepaleseexports.
17  UNCTAD states that:
"LDCs have in general had some difficulty in adapting to environmental and health-
related standards in their export markets.  Some of these standards, particularly
technical regulations and sanitary standards, are consistent with WTO rules but may
nevertheless entail significant costs for LDCs wishing to comply with them.  It would
thus be useful to examine the extent to which technical assistance provisions in theTBT Agreement and the SPS [Sanitary and Phytosanitary Measures] Agreement have
alleviated the burden of compliance for LDCs."
                                                     
13UNCTAD (1995a) and ESCAP/UNCTAD (1996).
14ESCAP/UNCTAD (1996).
15Jha, Hewison and Underhill (eds.) (1997).
16Ibid. In addition, the problems experienced by the Colombian flower industry due to  foreign
eco-labelling schemes was recently presented to  both the CTBT and the CTE (G/TBT/W/60 and
WT/CTE/W/76).
17UNCTAD (1998).WT/CTE/W/101
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B. S MALL AND MEDIUM -SIZED ENTERPRISES (SME S)
UNCTAD has identified a number of factors which make it difficult for SMEs to comply with
environmental requirements.  These factors may pr event SMEs from complying with other types of
technical requirements as well.18
(1) They may lack the necessary information, technology and capital for compliance;
(2) They may not achieve the economies of scale necessary to make their environmental
investments profitable;
(3) The limited physical space of their industrial facilities may make it difficult to place
environmental equipment;
(4) They may be unable to ensure that their raw materials are produced in accordance
with eco-labelling and other environmental criteria;
(5) They may be unable to acquire production inputs at competitive prices, and thus, to
transfer part of the adjustment costs to their suppliers;  and
(6) The costs of testing, inspection, and verification may be too high for them to assume.
III. RECENT LITERATURE ON OTHER NATIONAL REQUIREMENTS
25. A World Bank Working Paper has recently reviewed the state of standards development in
developing countries, and reached conclusions on how foreign technical requirements and conformity
assessment procedures may affect their exports.19  The Paper states that standardization activity in
developing countries remains limited, and that it has been neglected as a policy area in favour of trade
and industrial policies.  It argues that, as the share of developing country exports in international trade
has been limited, and as many developing countries in Latin America and Africa and, to a lesser
extent Asia, export mainly primary products (where standards are few), the incompatibility of
emerging foreign and domestic standards could not have played a major role in deterring developingcountry exports.
26. As a result, the paper states that the potential for technical requirements and conformity
assessment procedures to become non-tariff barriers, should not, at this stage, be of priority concern to
developing countries.  Rather, attention should be devoted to building the necessary infrastructure for
standardization and conformity assessment activities, and developing the necessary human resources.
It recommends that, since developing countries tend to be standard-takers, their immediate priority
should be to adopt the standards of their main trading partners and/or international ones.
IV. RECENT LITERATURE ON INTERNATIONAL STANDARDS
27. Most of the literature on international standards recognizes the important role which they can
play in facilitating trade by reducing the divergence of national technical requirements.  However,
concerns have been expressed about the inability of developing countries to effectively participate in
their design.  Their need for technical assistance in this regard has been highlighted.
28. UNCTAD has undertaken extensive work on the implications of international environmental
standards on developing country exports.  It indicates that it is too soon to predict the trade effects of
ISO's Environmental Management Systems (EMS) standard, known as ISO 14001.
20  It argues that
ISO 14001 certification could be a tool for developing countries to increase their export
                                                     
18UNCTAD (1995b).  These issues are also raised by the ESCAP/UNCTAD (1996) study, and by Jha,
Hewison and Underhill (eds.) (1997).
19Stephenson (1997).  The author also examines the impact of international standards, and his views on
this issue are briefly presented in Section IV.
20UNCTAD (1997a).WT/CTE/W/101
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competitiveness and strengthen their market position.  However, if such certification becomes a
requirement due to overseas supply-chain pressure and/or public procurement policies, it could
constitute a non-tariff barrier to trade.
29. In a recent  UNCTAD  Expert Meeting on the trade and investment impacts of international
environmental standards on developing countries,  similar conclusions were reached.21  However, it
was felt that the concept of 'trade barriers' in relation to ISO's EMS needed to be further defined.
30. The Expert Meeting identified two potential problems for developing countries: their
inadequate participation in the formulation and implementation of ISO 14001, and the lack of the
international accreditation of their certification bodies.  It also drew attention to the special difficulties
which SMEs could confront, such as their inability to assume the financial costs involved, lack of
technical expertise and experience, limited human resources as well as management time, and generallack of awareness about ISO 14001.
31. The United Nations Industrial Development Or ganization (UNIDO) has recently surveyed a
number of developing countries and emerging ec onomies in Latin America, the Caribbean, Africa,
Asia and Eastern Europe, to determine the impact of ISO 9000 (Quality Management) and 14000
(Environmental Management) standards on their market access.
22  On the ISO 9000 series, the survey
demonstrates that while some respondents believe the standards could improve their competitive
position and their internal efficiency, others are concerned about the practical problems involved in
certification and accreditation.
32. With respect to the ISO 14000 series, the survey demonstrates that some government
departments and national standardizing bodies fear the emergence of new barriers to trade. Theproblems identified in relation to the series include:  that the lack of the necessary infrastructure could
increase compliance costs, that few developing countries have national certification and accreditation
bodies, that there is a lack of qualified consultants, trainers and auditors, and that technical equipment
are frequently unavailable.  However, ISO 14001 is seen to be of benefit by some in that it facilitates
conformity assessment with the environmental requirements of export markets, and improves
environmental management at the firm level.
33. ESCAP fears that ISO 14000 standards will one day become de jure requirements for
international transactions (through public procurement policy for instance).
23  Developing countries
do not have the resources to participate in their development, and the standards could hurt SMEs.
This view is shared by the World Bank Working Paper, where it is also argued that international
standards are frequently skewed towards developed country interests.24
34. A survey conducted by ISO on the proliferation of ISO 9000 and ISO 14000 certificates,
indicates that certification in developed countries has been much greater than in developing
countries.25 However, certificates spread in 1997 to a number of new developing countries and
economies in transition (for instance, ISO 9000 certificates were awarded for the first time in Sudan
and Senegal, while ISO 14000 certificates were awarded in Saudi Arabia, the Czech Republic and the
Republic of Korea).  The survey may be used as an indication of the extent to which firms indeveloping countries have succeeded in becoming certified.
                                                     
21UNCTAD (1997b).
22UNIDO (1997). Questionnaires were distributed to trade and industry government departments,
national standardizing bodies, certification and accreditation bodies, and SMEs and larger firms.
23ESCAP/UNCTAD (1996).
24Stephenson (1997).
25ISO (1998).WT/CTE/W/101
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REFERENCES USED IN THIS NOTE AND IN DOCUMENT G/TBT/W/42
Aruoba, Celik (1993), Impact of Environmental Regulations and Standards in European and
North American Markets on Turkish Exports, Research  Paper, University of Ankara / Ernst Reuter
Research Institute.
Cecchini, Paolo et al. (1988), Th e European Challenge - 1992. The Benefits of a Single Market,
Aldershot (England).
ESCAP/UNCTAD (1996), Enhancing Trade and Enviro nment Linkages in Selected Environmentally
Vulnerable Export-oriented Sector s of the ESCAP Region, New York.
GATT (1991 and 1993), Trade Policy Review - European Communities, Geneva.
German Development Institute (1994), Ecological Product Standards and Requirements as a New
Challenge for Developing Countries' Industries Exports  - The Case of India's Leather, Textiles and
Refrigeration Industries, Berlin.
ISO (1997), ISO Survey of ISO 9000 and ISO 14000 Cert ificates (The Seventh Cycle, Up To And
Including 1997), Geneva.
Jha, Hewison, and Underhill (eds.) (1997), Trade, Environment and Sustainable Development; A
South Asian Perspective, London.
Jha, Markandya, and Vossenaar (forthcoming publication), Reconciling Trade and Environment,
London.Leebron, David W. (1996), Mutual Recognition: Stru cture, Problems, and Prospects, OECD Trade
Committee Symposium on Regulatory Reform and International Market Openness, Paris.
OAS Trade Unit (1997), National Practices on Standards, Technical Regulations and Conformity
Assessment Procedures in the Western Hemisphere, Washington D.C.
OECD (1997), The OECD Report on Regulatory Reform; Volume 1: Sectoral Studies, Paris.
OECD (1998), Regulatory Reform in the Global Economy; Asian and Latin American Perspectives,
Conference Proceedings, Paris.
Stephenson, Sherry M. (1997), Standards and Conformity Assessment as Nontariff Barriers to Trade,
the World Bank, Policy Research Working Paper, Washington D.C.Sykes, Alan O. (1995), Product Standards for Intern ationally Integrated Goods Markets, Washington
D.C.
Tupper, Gilbert P. (1992), Testimony before the Subcommittee on Technology and Competitiveness of
the Committee on Science, Space and Technology of the U.S. House of Representatives,
Washington D.C.UNCTAD (1995a), Environmental Policies, Trade and Competitiveness:  Conceptual and Empirical
Issues, TD/B/WG.6/6.WT/CTE/W/101
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Page 9
UNCTAD (1995b), Trade, Environment and Developm ent; Aspects of Establishing and Operating
Eco-labelling Programmes, TD/B/WG.6/5.
UNCTAD (1997a), Environmental Ma nagement Standards, Particularly the ISO 14000 Series: Trade
and Investment Impacts on Developing Countries, TD/B/COM.1/EM.4/2.
UNCTAD (1997b), Report of the Expert Meetin g on Possible Trade and Investment Impacts of
Environmental Management Standards, Particul arly the ISO 14000 Series, on Developing Countries
and Opportunities in this Context, TD/B/COM.1/10.
UNCTAD (1998), The Least Developed Countries 1998 Report, Geneva.
UNIDO in cooperation with UNCTAD and ITC (1997), Implications of International Standards for
Quality and Environmental Management Systems, Vienna.
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