ARTÍCULO ORIGINAL

INNOVA Research Journal, ISSN 2477-9024

(Enero-Abril 2024). Vol. 9, No.1 pp. 52-71

DOI: https://doi.org/10.33890/innova.v9.n1.2024.2405

URL: http://revistas.uide.edu.ec/index.php/innova/index

Correo: innova@uide.edu.ec

Consequences of the application of technical barriers to imports in Latin

America

Consecuencias en Latinoamérica de la aplicación de obstáculos técnicos a las

importaciones

Esteban Sebastián Maldonado-Molina

Universidad del Azuay, Cuenca, Ecuador

estebanmaldonado@es.uazuay.edu.ec

https://orcid.org/0009-0002-7159-4697

Luis Tonon-Ordóñez

Universidad del Azuay, Cuenca, Ecuador

ltonon@uazuay.edu.ec

https://orcid.org/0000-0003-2360-9911

Recepción: 25/08/2023 | Aceptación: 30/11/2023 | Publicación: 10/01/2024

Cómo citar (APA, séptima edición):

Maldonado-Molina, E. S., & Tonon-Ordóñez, L. (2024). Consequences of the application of

technical barriers to imports in Latin America. INNOVA Research Journal, 9(1), 52-71.

https://doi.org/10.33890/innova.v9.n1.2024.2405

Abstract

The application of technical barriers to trade in Latin America can be both positive and negative.

To analyze the subject and deepen the existing literature, the objective was to determine which

technical barriers have been applied in Latin American countries and their effect on exporting and

importing companies. For this purpose, a systematic literature review based on the PRISMA

method was carried out in the following databases: Scopus, Dialnet, Scielo, SpringerLink and

Redalyc, from which 518 results were obtained, including articles, reports and books related to the

field of research. These results were filtered to obtain a list of 55 sources that were relevant to the

construction of the topic. It is concluded that the main effects on imports are: cost increases;

reduction of consumption; protection of the national industry; inequality in international trade and

possible consequences for the quality of national and foreign products.

Keywords: economic policy; export/import; international trade; protectionism; trade policy.

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Consequences of the application of technical barriers to import in Latin America

Resumen

La aplicación de barreras técnicas al comercio en América Latina puede ser tanto positiva como

negativa. Para analizar el tema y profundizar en la literatura existente, se estableció como objetivo

determinar cuáles son los obstáculos técnicos que se han aplicado en los países latinoamericanos

y su efecto en empresas exportadoras e importadoras de productos. Para esto, se realizó una

revisión sistemática de literatura basada en el método PRISMA; en las bases de datos: Scopus,

Dialnet, Scielo, SpringerLink y Redalyc, de las cuales se obtuvieron 518 resultados, entre artículos,

informes y libros relacionados con el campo de la investigación. Estos resultados fueron filtrados

para obtener una lista de 55 fuentes que eran relevantes para la construcción del tema. Se concluye

que los principales efectos sobre las importaciones son: aumentos de costos; reducción del

consumo; protección de la industria nacional; desigualdad en el comercio internacional y posibles

consecuencias para la calidad de los productos nacionales y extranjeros.

Palabras claves: comercio internacional; exportación/importación; política comercial; política

económica; proteccionismo.

Introduction

Free trade is traced back to ancient history, as during the neolithic period and the first

barter-trades (Acuna, 2012). Further on, during the Roman Empire the second trade boom took

place and the exchange of goods was refined, implementing taxes and fees that traders had to pay.

Through these historic events, it is possible to state that as time went by, trade evolved acquiring

norms and procedures for its better operation (Alvarez & Santiago, 2002).

Another relevant point is the evolution of the economy, which has resulted in a great

quantity of ideologies that state how to operate it. However, there are two main thoughts that, for

a long time, have kept an ongoing debate: protectionism and liberalism, better known as free

market, and which of them is the most appropriate for an economical growth and trading

development (Fernandez, 2020). Thus, an array of norms, policies and regulations that lead to an

increase of trading activities in national and international markets have been applied.

Into these great varieties of norms, policies and regulations that countries have applied,

striving for the growth of their economies and markets, there are two fundamental groups: tariff

and technical barriers. Tariff barriers refer to an impediment applied by governments in the trading

of foreign goods, unless an economic disbursement takes place, for instance a fee or tax for their

entrance. On the other hand, technical barriers are norms implemented by governments that

demand the good to meet specific requirements - in quality, labeling, sanity, resistance, among

others - for its entrance into the country. The differences between these groups result in diverse

consequences in the market sectors of a country.

In this light, the study of the effects that may be caused by the application of Technical

Barriers to Trade (TBT) in Latin American markets is of high importance; as the countries from

this region seek the growth of all their sectors, increasing the production of their national industries

and consequently of their economies. Notwithstanding, regardless of the effort to boost trade and

the freedom of market regionally, there still are States that opt for protectionist measures that

hinder imports into their territories (Vanegas & Baena, 2019; Gomez, 2021).

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These barriers include technical regulations, norms and quality standards, complex customs

procedure, phytosanitary certifications and requirements, among others. These Non-Tariff Barriers

(NTBs) may limit the access of imports to international markets and generate regional and global

trade distortions.

Therefore, the present research has the objective of determine positive and negative effects

that entail the implementation of TBTs towards imports in Latin America, complete the theoretical

framework of the most meaningful barriers in the regions and the results that these have in the

different industrial sectors as importers, followed up by the development of the research as

planned.

The research will be developed through a rigorous literature review applying the PRISMA

methodology, using a variety of academic sources, international organizations’ reports and Scopus,

Dialnet, Scielo, SpringerLink and Redalyc case studies. The purpose is to collate and synthesize

relevant information to identify the main TBTs in Latin America and their consequences.

The economic impacts of TBTs will be analyzed, as are the increase of transaction costs,

the reduction of competitiveness and the stagnated economical growth. Likewise, social effects,

employment variations in the involved sectors and the limitation of consumption options will be

analyzed as well.

In consequence, it is expected of this research to provide a deeper understanding of the

effects of TBTs’ implementation in Latin America and for it to be an starting point in the

identification of these policies and a mainstay for the creation of strategies oriented towards

preventing these results in the different sectors in which these norms are applied, and encourage a

more inclusive and equitable trade among all actors. Besides, through this research it is expected

to raise awareness about TBTs in Latin American and entrepreneur countries, so these have an

opportunity in overcoming the barriers to fully leverage the benefits of international trade, as well

as visualize economic growth and an improvement in their populations' well-being.

Theoretical framework

Trade policy as a concept refers to the group of decisions, strategies and actions adopted

by a country or a government entity that regulates and encourages the international trade of goods,

services and factors of production. In this manner, trade policy seeks economic, politic and social

objectives through the implementation of trade measures as: trade agreements, tariffs, TBTs and

NTBs, subsidies, regulations, among others, to promote a fair development of the country’s inner

economy and improve the relationships of the international market (Irwin, 2020).

Thus, it is imperative to mention international trade which is defined as one of the main

contributors to economic growth - one of the objectives of trade policy; through the exchange of

goods and/or services, countries acquire some products from foreign sources, which turn out

cheaper outside of their territory in comparison to producing them in the country. Consequently,

international trade offers the countries an improvement as they have opportunity to obtain new

machinery or productive tools and so greater competitivity, reflected in the products’ efficiency as

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Consequences of the application of technical barriers to import in Latin America

in their fabrication for exportation and internal consumption (Acosta et al., 2018). Nevertheless,

the two strongest ideologies on international trade must also be referred: liberalism and

protectionism; in which one proposes a free market for the direct transaction of goods or services,

and the other one proposes the closure to international trade, with the objective to preserve its own

industry and interests.

In this sense, according to Pereyra (2015) the free market is a political-economical stance

that offers direct and indirect advantages to a country’s trade. In itself, it gives the green light to

the imports into a nation, by allowing free access to new products that are not produced in the

country or products that are produced in the territory, but with different qualities. As a result, a

new horizon of trade opportunities is opened for local and international development.

Conversely to what was aforementioned, another concept to consider is protectionism,

which is an economic policy established by a government to directly protect their own industry.

This policy has the objective to restrict any access to products that have a foreign origin, so only

national products are consumed, triggering an alleged growth in the country’s industry by boosting

the national industry, generating more jobs and encouraging the population consumption (Aguilar,

2

020). Albeit, protectionism has been understood as a trade policy analyzed and imposed by

central governments, with the objective to establish restrictions and/or measures that can be

expressed in tariff or non-tariff barriers. Through this, the government attempts to specifically

restrict the entry and even the exit of national products, in order to guarantee some interests of the

country, mainly social, economic and safety wellbeing (Baena, 2018).

Once the differences and similarities between these two thoughts and international trade

are explained, it is pertinent to name some of the most used policies to stop imports in Latin

America. As a first concept, it is important to mention import tariffs which are payments placed

over the importing sector by the government, so it can keep carrying out its activities. The objective

of these taxes is to collect an amount of money for the amount of product that enters the country,

so the imported products contribute with an extra income for the country. Nonetheless, these may

cause some difficulties to the importers as well as the clients since, as they must pay an extra

amount of money, traders will find themselves in the need to increase prizes to cover the mentioned

investment and so it signifies the increase of the final prize for the consumer (Krugman et al.,

2

018)

Following up the most remarkable terms about international trade and the implemented

policies for the management and development of it, there are trade barriers, which are divided in

two subgroups: tariff and non-tariff barriers.

Trade barriers play a fundamental role in any external trade activity, due to the fact that

each government ensures to evaluate the necessary measures for the existence of control in trade

exchange development. These barriers may be monetary, as are the tariff barriers, or not monetary

as the TBTs, which are restrictions imposed by governments that receive imports of goods or

services. Therefore, it is necessary to take into account the control provisions established by the

governments when an exchange with another country takes place (Huaman et al., 2021).

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Continuing with the subgroups derived from trade barriers, there are the tariff barriers,

defined as direct monetary obstacles towards importations. These measures are implemented by

the countries as means to prevent the entrance of new merchandise to the country, through the raise

of import prices, which normally are a higher tax fee to pay. Ergo, the industries specialized in the

importation and commercialization of these products are forced to increase their prices, which in

some cases is not cost-effective, leading to a shutdown of production by the same company (Baena,

2

018).

On the contrary, according to the World Trade Organization (WTO), the TBTs are rules or

norms established by the organization or the governments, based on the protection of health, and

the people or the environment wellbeing. For this reason, every member state of the organization

has the authority to implement new barriers as a way to protect their industries. Still, it is

recommended for these policies to be established in accordance with international norms to

facilitate international trade between two or more countries.

Furthermore, there are some of the most used policies by Latin American governments,

these are phytosanitary measures (PSMs), which are regulations and procedures created by the

government to protect the health and the flora and fauna of the country. The main objective of the

PSMs is the protection of all the ecosystems by inhibiting the introduction and transmission of

plagues or diseases as harmful organisms, insects, bacteria or virus to plants, animals and/or

humans, that may have a negative impact in agricultural production, food safety, the environment

and the population’s health (DaSilva, 2020).

Similarly, other TBTs applied in the region are quantitative restrictions, which are norms

used in international trade to limit the amount of goods or services that may be imported into the

national market or establish an amount of goods that can be exported by the country. This

restriction is of high importance, as it is based in the imposition of limits over a physical quantity

to maintain an equilibrium in the nation’s market and to deter the shortage of national products or

an oversupply of imported goods (Lodono and Baena, 2020; Martin, 2020).

Literature review

Before a deeper understanding of what are non-tariff barriers or TBTs, it is useful to

emphasize the history that precedes them. This refers to the General Agreement on Tariffs and

Trade (GATT) and how this agreement was in force from 1948 to 1994. Its objective was to

regulate all tariff and non-tariff measures taken by member countries and the organization in itself

(Gaspar, 2013). In the beginning, the agreement was signed by twenty three countries, among

which were: Chile, United States, Belgium, Brazil, China, Australia, France, and others. Out of

the the measures stated in the agreement, there were NTBs, which were considered an additional

difficulty for the multilateral trading system between countries because, when they were

implemented, these barriers seeked to avert any disruption in international trading, but at the same

time, they were a viable option to achieve new political objectives and increase the international

trading of some countries (World Trading Organization, 2023a).

During the first years that the GATT was in effect, the main points of discussion were the

tariff measures that were focused on the balance of payments, development and employment

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during the Kennedy administration in 1960. However, as time went by, the points experienced a

change of direction, as they become eclipsed by the new non-monetary measures related to the

elaboration techniques of the products, sanitary and even environmental standards which were

encompassed in trading obstacles not retaliate to tariffs, during the Tokyo round in 1970 (Gaspar,

2

013). This change of direction resulted in mixed results, as it was debated due to the update of

the measures and how these may be more complex to implement and would even cause friction

among countries and their international trading regulations. Besides, as the new trading policies

were applied, there was the opportunity to achieve higher trading standards since they were related

to foreign products with different standards not found in the national market, thence a new

purchase choice was offered to consumers (Chang, 2013).

In accordance with the previously mentioned policies, a differentiation between non-

monetary and monetary regulations was instituted, which favored tariff measures, and

consequently they considered it a more equal protectionism measure in economic terms (WTO,

2

023a). This implies that as these policies were only monetary, they do not represent great

difficulty in regard to their implementation or elimination through agreements between both

parties, contrary to non-tariff policies since these were considered discriminatory by trading and

market forces (Irwin, 2020). According to the history of the TBTs, the GATT founders overcame

some difficulties as they compiled and defined these measures in a sole section because they

included different categories of edible and non-edible products, qualities, labellings, language, and

others; in addition to taking into consideration the diverse origins of each good. The most

significant policies during that time, which were subjected to the GATT’s drafting, were the

quantitative restrictions which were based on the amount of product that entered a nation’s market.

Notwithstanding, the agreement was planned to regulate the NTBs, so these would not be

prohibited and accordingly they could institute the necessary policies, so these would not be

discriminatory and avoid a higher level of restriction in future negotiations.

Moreover, it is substantial to highlight that since 1995, the organization responsible for

monitoring the application of TBTs is the World Trading Organization, WTO. The organization’s

primary objective is to offer aid to less developed countries in regards to international trading and

national productivity. By this means, the WTO has 164 affiliate members as of May, 2023; the

members are free to implement all types of trading policies, protectionists as well as liberals, but

without dismissing the fact that these cannot be discriminatory or disrupt other country’s

international market. Ergo, the organization has a principal role on the forthcoming policies or

measures, and so it must objectively collate, analyze and disseminate the new dispositions of each

nation and corroborate that they meet the standards regulated by the WTO (World Trading

Organization, 2023b).

One of the most relevant factors internationally speaking is the free market, which is based

on the implementation of economic policies in the pursuit of gradually reducing tariff barriers and

the NTBs between different countries (Aguilar, 2020; Baena, 2020). Likewise, governments strive

for the liberation of the market as a fundamental factor of the positive growth of their countries’

economy, assigning this policy to the creation of full employment and greater dynamization of

products or services that citizens may need (Krugman et al., 2018). This is why there is a certain

degree of understanding between the aforementioned economic statement and Latin American

countries that look for the growth of their national economies.

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The openness to free trade without any restriction may cause severe consequences in the

countries (Chavez and Lee, 2019). By creating a strong dependence on imported products or in the

massive exportation of products to a specific country, it may cause a decline in national industries

similar in goods or services as they are extremely surpassed by the foreigner or if there is an only

product, like raw material, that is exported and it stops being exported, then there would be a

dramatic decline in the industry, leading to the close of businesses or entire sectors, which

translates in an increase of national unemployment (Baena, 2019; Bonfanti, 2015). In this context,

Latin American governments believe that applying protectionist measures will allow them to

increase national consumption, protecting their main sectors, generating more employment

nationally and finally leading to a better product or service specialization in their own countries

(Torres, 2017; Ramirez & Guevara, 2018).

To better exemplify the NTBs implemented throughout the years with the goal of

protecting the industries and economies of different countries, there are the phytosanitary and

sanitary measures (PSM, for its initials), which were measures adopted by governments to protect

and preserve the wellbeing of people and animals. This measure was also applied towards the

preservation of national agriculture by preventing plagues or illnesses that may be caused by

imported products. Other applications that can be explained are the Technical Barriers to Trade

(TBT, for their initials) which is commonly applied by governments as a means to establish certain

requirements to be met by the product that is about to enter the market, with the objective of

protecting their consumers (Baena, 2019). This measure was implemented by the WTO in 2003 as

a more efficient means to protect the national economy but also as a new way to improve the

consumption and lifestyle of people (Londono and Baena, 2020).

A case worth mentioning on NTBs and the effects they may have on countries the moment

they enter the WTO is the case of China in 2001. The asian giant kept close trading relationships

for years, being a huge exporter of products to varied destinations, as the United States of America,

the European Union, Japan or Mexico, which are countries that up to that moment had already

adopted tariff and non-tariff measures to the entry of foreign products into their markets.

Subsequently, when China joined the organization, it was under the agreements and measures

implemented by the other nations and the WTO, so the moment the merchandise from China was

entering the countries, it was denied and returned to China, as it did not meet the established

policies as the technical regulations of quality for electronic devices in Japan, Spanish instruction

manuals for electronic devices in Mexico or the corresponding tagging system in the as well as in

the European Union (Huaman et al., 2021).

Another important point is reflected in the first non-monetary technical barrier applied by

Ecuador in July of 2003 for the importation of steel rods and cables to strengthen reinforced

concrete. In this case, the Ecuadorian government notified the WTO its intention on implementing

this technical regulation about the product quality to be commercialized in the country, with the

objective of ensuring its citizens’ safety through durability and resistance of this construction

material (DaSilva, 2020). It is also important to mention that this measure was not implemented

immediately; according to WTO standard the regulation had a period of 90 days to take effect, so

exporters and Ecuadorian importers could prepare for this change in trading policies (Barajas,

2

019).

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Another Ecuadorian case is the implementation of a new regulation for the tagging and

labeling of fabrics, footwear, related accessories and items of clothing from Colombia in March of

2

013. This regulation stated a technical rule in which a minimum standard of requirements was

established for tagging and labeling. The main goal of this barrier was the protection of consumers

by guaranteeing safety and quality standards printed in the tags, as well as preventing practices

that may cause mistakes or discomfort in the consumers at the moment of the products’ acquisition

(

Larco & Bazurto, 2020).

One last case related to Ecuador and product quality may be identified in the Ecuadorian

Technical Project for ceramic tiles established in 2014 and negotiated until June of 2015 (World

Trading Organization, 2023b). This regulation intended to establish a field of application in the

obligatory requirements for ceramic tiles, with goal of preventing possible health and wellbeing

risks for consumers, as well preserving the national industry by guaranteeing the rival products

keep the same quality standard as the one in the country and evade the prejudice of the final

consumers (Tonon, 2015).

It is also necessary to stress how the NTB or non-monetary are not only based on product

quality, but they also look after the health of the consumers or the general population. This is the

reason why there are certain technical obstacles that have been enforced with the purpose of

maintaining the health and wellbeing of citizens and consumers, as is the case of one of the first

non-monetary applications in France in 1997. The French government decided to apply a

prohibitive measure to asbestos, in which every product that uses this material in its fabrication,

production or everyday use will be restricted and rejected (Kuhn and Viegelahn, 2019). Through

this, the State seeked to preserve its citizens’ integrity and health by preventing the trading or use

of products that contained this material, consequently asbestos was classified as a toxic material

and even cancerogenous to human beings (Valverde, 2016).

Methodology

For the development of this systematic literature review, the PRISMA 2020 methodology

was applied (Page et al., 2021). The method is based on the compilation of scientific articles and

research, which will be evaluated to finally be included in the final review. It is relevant to remark

that due to the nature of the methodology, it uses a verification list of 27 parts, albeit not all the

steps were considered for this review. Consequently, the items considered will be detailed further

on.

Eligibility criteria

The number of references was determined as a starting point to consider the relevance of

the content of the articles and the dates of publication, grouping the most notable sources in the

research areas, in English as well as Spanish. In relation to the date of publication, it was limited

to the most recent years of publication, specifically between 2018 and 2023; notwithstanding, the

use of older articles or reviews is also valid to broaden the range of eligibility of the research.

Research

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The theoretical base for the compilation of articles is quantitative, by establishing a

theoretical literary retrieval. Databases were used for the bibliographical retrieval, as are: Scopus,

Dialnet, Scielo, SpringerLink and Redalyc. The selection of the articles was completed through

crucial phases, which started with a general study of the concepts and history of the “technical

obstacles to trade”. The research process provided 3 165 results. During the second research phase

the same process was used, but adding the term “Latin America” shortening the research level to

the 19 countries that belong to the region: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica,

Cuba, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panamá, Paraguay, Peru,

Dominican Republic, Uruguay and Venezuela, since the review is focused on the effects in this

area. Subsequently, 518 results were determined between research, articles and studies.

In addition, a first filter was established through title reading, discarding duplicate research

and low relevance to the topic, resulting in a sample of 110 articles. Following the proposed

methodology, a second filter was reading the introduction and conclusion of the articles, with the

goal of corroborating the similarity between them and the research objectives, their relevance in

Latin America as a focus of study and their effects in the region.

Bias risk

The bias risk of this research was evaluated through the selection and notification of articles

to be used. The risk is evidenced during the inclusion or exclusion of certain articles, which may

incline the review results towards a specific perspective. On the other hand, the risk of publication

was also evident as the meaningful information related to the topic lacked certain factors, and so

the research ratio was amplified to years out of the pre-established range to compile all the

imperative information for the research.

Research results

Once the sources used for the research were established, key words were stated for a better

segmentation to validate the most remarkable articles and studies. The words used in research of

information were: TBT, NTB, phytosanitary barriers, exportations and importations in English and

Spanish to widen the retrieval range. The time established for the bibliographic compilation was

approximately 8 weeks in which necessary, relevant and high-quality information was compiled;

followed by an important information retrieval for the analysis, to use all the acquired knowledge

to develop a precise research.

Once again, the information was stored, and only the most relevant and beneficial studies

were kept. Once compiled, they were summarized and verified to corroborate their similarity to

the topic to be developed as well as their relevance in regard to the research objectives stated

previously.

Lastly, a qualitative selection was applied to determine the articles through the creation of

a database in the Excel software for a better compilation of information based on the objectives,

conclusions, publication date and references, to deal in a better way with interpretation and

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Consequences of the application of technical barriers to import in Latin America

contextualization of all the research reviewed. The result of this phase was a selection of 55

sources.

As it is displayed in Figure 1, the reference selection process is described.

Figure 1

PRISMA flow chart

Source: Elaboration based on Page (2021)

Discussion and results

Effects of technical barriers on importations in Latin America

Once the theoretical framework, origin and motifs for the implementation of technical

barriers have been established, it is time to consider the effects that these may have in Latin

American countries. Even though some examples explaining the reasons and the possible

consequences of these barriers have been provided, consecutively, deeper advantages and

disadvantages in the considered countries will be explained.

Aguilar, (2012); Hidalgo, (2018) considered that these NTBs are decisive in a country’s

international trade, referring to the difficulties that may present due to their implementation. A

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Esteban Sebastián Maldonado-Molina & Luis Tonon-Ordóñez

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clear example provided by the authors is price increase in national and international products,

specifically in the case of Brazil and the technical regulations on international goods’ quality. The

State, by applying these measures, conditions importers to pay an extra charge for their products’

commercialization and so a price increase once they are in the market. On the other hand, by

restricting the entry of competitive products, the national industry may increase its prices due to a

demand increase of the products still leading to the increase of prices in the country (Esteve et al.,

2

020).

The increase of importation prices in consequence to the application of technical barriers

is highly detrimental for import companies. This was evidenced in 2013 with the implementation

of the new Ecuadorian Technical Regulation RTE INEN 033, which was implemented for ceramic

floors and tiles and established a minimal quality regulation for the importation of this product.

Every foreign manufacturing company that did not have the INEN 033 verification could not

export its product to Ecuador, pushing importers to disburse large amounts of money for the

pertinent evaluation in national laboratories and prevent losing future sales because of the rejection

of its product (Tonon, 2015). In this context, ceramic importers raised the prices to the public for

the additional cost applied to their products and lost competitivity in the market against other

national and foreign producers that had the required verification (Rojas et al, 2022).

Likewise, Latin American countries that want to implement the TBTs have to consider how

these may destabilize the market to satisfy the demand of the product if they are applied in foreign

products without a local substitute product (Marquez, 2022; Rodriguez, 2014). Furthermore, as a

consequence of the application of new NTBs in a national market, there could be a drop in

consumption, leading the competent entities to find new ways of meeting the unplanned deficit by

the barriers, applying new measures to raise income as the increase of tax rates (Tello, 2022).

A very important factor related to the TBTs is how mostly these have been implemented

in Latin America in relation to the quality of foreign products willing to enter national markets. A

clear example of this is how Brazil, Ecuador, Colombia and Mexico are the countries which most

have implemented NTBs (Alvarado, 2019; Badillo, 2008). In some cases to metals and

construction material, ceramics and shoewear. They based the application of NTBs on the

objective of preserving the quality of national products and avoiding products of lower quality and

price from entering the market and losing competitiveness against them (Gaspar, 2013; Londono

and Baena, 2020; Huaman et al., 2021). However, these policies may be counterproductive over a

long period of time since, by restricting the entry of any kind of foreign products due to their

quality, local producers acquire a certain level of a monopoly in their respective markets and in

some cases industrial sectors may lower their quality to cheapen costs without altering the

established prices due to a lack of competitiveness (Baena 2018a; Gomez, 2021).

Another imperative factor in the establishing of non tariff barriers is the government’s

compromise of ministering to the wellness of the internal market and its population by

implementing these regulations to only allow the entry of the best products into the market to

benefit its people (Baena, 2018b). Thus, it imposes adaptations to every foreign product that wants

to be commercialized inside the country, by establishing the same or higher quality standards than

the national production and satisfying the needs of the consumers. Additionally, it is possible to

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identify how the variety in products can match each of the consumers’ social classes, generating

massive consumption in each class (Bernal, 2018; Chavez, 2019).

In a different light, the application of NTBs to foreign products may generate a new effect

in the market, considering that, if higher quality products enter the market, national producers

propose new strategies to keep their products cost-effective in the national market and not lose

competitiveness (Olha et al., 2021). Besides, the importers that pass the verifications imposed by

the TBTs acquire an advantage in the market by offering products of the same quality as the ones

commercialized in the country, but at a lower price, which signifies a boost in the importer sector

of specific goods (Rodriguez, 2014). Nonetheless, this situation explained by the authors may lead

the national market to a price war since the industrial sector, seeing how its product stops being

competitive against the foreign good, will attempt to lower its prices to match the ones of the

importer sector (Acosta et al., 2018; Bergamini and Dextre, 2022).

In most of the countries that implement technical obstacles, these are commonly pushed by

different - and most commonly - national sectors, who compel the competent entities to apply these

new trading regulations. In this sense, the national industrial sector protects itself from foreign

competitors, but at the expense of harming an importer sector which operates in the country alike,

by hiring workers, at a lesser than the industrial sectors, paying taxes and specially offering a

similar product at different prices. Once the new trade disposition is established, the importers are

in a risk position as they have more complications to commercialize their product in national

territory and so a possible discontinued operation as a result of shortage of product or sales (Baena,

2

019; Martin, 2020).

Another negative effect for the importer sector once the TBTs are applied to its products is

the alteration of the supply chain (Delgado & Yanez, 2019; Pereyra, 2015). This refers to how the

importers, as they must abide by the new dispositions and regulations for the entry of their

products, have to keep their goods in warehouses, laboratories and customs offices until they are

approved so they can enter the country to be commercialized. This delays the delivery of

merchandise to their clients, who will delay the final delivery to the consumer (Vanegas & Baena,

2

019).

From a similar point of view, by applying restrictive norms or stipulating new requirements

for the commercialization of foreign products, importers of food and non-food products,

witnessing that new policies are applied to their products, will be unmotivated. As governments

implement obstacles that difficult their operations or enhance the uncertainty of the importer

sectors, they must decide if it is convenient to carry on with their operations and adjust to the new

scheme by raising prices, or reduce the volumes of their purchases and keep the same activity level

they had worked at, in the hopes of a change in the government dispositions that opens the market

to importations but risking loss during production, which also puts them in risk of closing their

companies (Bonfanti, 2015; Larco & Bazurto, 2020).

As it has been explained, the implementation of TBTs is based on the protection of the

national industry, specifically industrial sectors that maintain an important percentage in the

operations in the country (Leping, 2022). The sectors that have received greater protection in Latin

America are the basic metal production sector in Brazil, the construction with materials and

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supplements sector in Colombia and Ecuador, but it also takes place in agriculture products to

preserve the wellbeing of the flora and fauna in the national territory in Mexico, GUatemala or

Nicaragua (Garcia & Guevara, 2018; Vernaza et al. 2020).

In regard to the protection of industrial sectors by Latin American States by applying TBTs,

it is relevant to highlight different sectors as shoewear in Brazil, food tagging in Uruguay or toys

manufacture in Argentina. These have acquired a remarkable performance in their operations as

they behold how their respective governments seek to protect the sectors through these policies

and strengthen national consumption as well as a possible exportation of these products (Kuhn &

Viegelahn, 2019). Besides noticing how the safest the sectors feel, the more openness they will

have to develop their activities, hiring more labor which increases the employment levels in the

different countries (Fernandez, 2020).

Furthermore, as it was mentioned in previous paragraphs, in Latin America, there are

countries who have implemented a great number of technical barriers to the TBTs, applying few

or none of these trade policies, as it is the case of Paraguay, Bolivia, Dominican Republic or

Nicaragua and Honduras (Baena, 2020). These countries possess common characteristics, all have

relatively small territories. Such is the case, that there is commercial inequality among them, since

there is not a fair distribution between foreign and national products. Also, it is relevant to state

that if the smaller countries implement NTBs or PSMs, these would lose suppliers, conditioning

their situation in the internal market due to a shortage of indispensable products for the population

(Steinberg, 2006).

As it was developed, the effects of the different applications of the TBTs have an influence

in national importers and manufacturers, but it is also noteworthy how international relations

between two countries may also be harmed or finished if these get to a point of no return. To the

better understanding of this, authors Quiroz et al. (2022), Sarmiento (2018) and Tello (2020)

provide a hypothetical case. If a country like Peru decided to implement varied barriers to

Ecuadorian products, with the goal of protecting their national production, this would not only

reduce the money income of Ecuador, but it would also condition the exporter sector that have

Peru as destination, since they are adversely affected by these barriers as they restrict the

commercialization in the Peruvian market. Consequently, this would trigger an answer by the

Ecuadorian government, who will also implement non-monetary barriers to products of Peruvian

origin, creating a trade conflict between two neighbor countries who have a strong commercial

relationship (Garcia, 2017).

Discussion

The effects faced by import and industrial national sectors during the application of TBTs

in the region are diverse. This refers to the uncertainty that these generate when they are applied

by governments in the pursuit of maintaining economic stability for the country and conditioning

these sectors in their activities to the point of layoffs, liquidation and permanent shutdowns of

companies (Gaspar, 2013; Gomez, 2021; Huaman et al., 2021)

Mostly, the analyzed authors approached a different point of view in regards to the effects

of the adoption of new NTBs in Latin America. They reckoned that the application of these

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measures is purely protectionist of national industries, considering a greater economic growth

(Aguilar, 2021; Londono & Baena, 2020). Conversely to what was explained, in most cases the

NTBs or PSMs are applied in the region’s markets stemming from political decisions which should

not influence the market and, in contrast, should spread a free market ideology with the purpose

of encouraging the consumption of the inhabitants due to the excess of national and foreign

offerors, resulting in the growth of national economy as long as there are enough competitive

sectors in the market (Baena, 2018a; Bernal, 2018).

Another relevant factor in regards to their implementation are the effects of the quality of

the products that are commercialized in the national market (Esteve et al., 2020; Petrova, 2020).

Such is the case that some authors like Rodriguez (2014), Sarmiento (2018) & Tello (2020) estate

how the application of NTBs to restrict the consumption of imported products is beneficial for the

general public, as they prevent low or untrustworthy quality products from entering the country,

understanding that these products harm consumers and producers due to unfair competitiveness

since they count with extremely low prices in comparison to national productions (Garcia, 2017;

Hidalgo, 2018; Rojas et al., 2022). Notwithstanding, other authors differ on this idea about the

adoption of non-monetary barriers, commenting that when national producers witnessed a lack of

competitiveness in similar products, they tend to build monopolies or oligopolies, or simply

decrease costs by maintaining their prices, lowering the quality of the product (Marquez et al.,

2

022; Tello, 2022; Torres, 2017).

An example of the discrepancies found regarding the analysis of the effects of technical

obstacles to trade is demonstrated in the works of Chen & Mao (2020) and Vanegas and Baena

2019). They express that the application of these measures during specific time periods, as during

(

the COVID-19 pandemic, was sound concerning the restriction of entry of food products to the

markets because of the great uncertainty during this time; due to the little knowledge about the

virus’ propagation, the measures protected the population’s health. However, the converse is

mentioned by Krugman et al. (2018) & Irwin (2020). The last state that limiting trade between

countries during a crisis may be counterproductive for the economy, harming trade activities, since

during difficult times, it is imperative to maintain as much as possible a stable economic activity

to avert worsening the inhabitants’ and the countries’ situation.

In respect to the political aspect of the implementation of these measures, it is based on the

protection of industries and social wellbeing. In this light, governments apply the NTBs to avoid

the entry in large quantities of foreign products, which means a lower exit of currency to cover

transportation fees, insurance, documentation and the product per se (Olha et al., 2021; Quiroz et

al., 2022). States seek for a way to anticipate these exits and for the money to stay in national

territory so it keeps flowing through the economic cycle (Alvarado, 2019; Betancourt, 2022;

Chavez, 2019). Meanwhile, once new trade regulations are imposed, different commercial sectors

or groups are affected as not only their products are restricted, but companies also have to

implement shortages in insurance, transportation, importers and local traders who perform their

activities through foreign products. If all these groups stop their activities in sequence, there would

be an increase in the country’s unemployment levels and thus a recession in the economic cycle,

conditioning even farther a State’s situation (Baena, 2020; Martin, 2022).

Additionally, it was evidenced how the implementation of NTBs in a region with such

close relations - as it is in Latin America’s case - could be damaging for its development in the

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international market (Garcia & Guevara, 2018; Leping, 2022). The absence of ethics in

governments while seeking a profitable position of their markets above the other countries to

preserve their interests may be counterproductive. When States implement these regulations as a

means to protect their industries, it could result in a blunt disbalance of international trade. Besides,

it portrays in front of the other countries of the region as extremely protectionist and it may lead

to the end of international relations with the countries that perceived the application of non-

monetary barriers as a threat for their own markets (Fernandez, 2020; Bergamini & Dextre, 2022).

Moreover, it may be interpreted how an excessive application of TBTs leads to inequality

between the nations that do not apply these policies. It is detrimental for every involved territory.

If a nation of small economy decided to implement these regulations, it will harm its own market

by limiting the importing goods for the consumer. In consequence, there will be a shortage of

products which in some cases do not have substitutes in the national market or in an extreme case

it will push the inhabitant to satisfy their needs with local products, which not always can supply

all the population (Barajas, 2019; Steinberg, 2006; Vernaza et al, 2020).

Conclusion

After considering all the aspects about the implementation of TBTs, and complying the

objective, it was found that the main consequences of the application of these regulations in Latin

America are: quality variation of imported and national products, price increase in the importer

sector, over protectionism of the national industry, monopolies or oligopolies in industrial sectors,

and the decline of the economic activities of the importer sector.

It was possible to show how these results are significant for Latin American markets, in

which there are positive effects such as: the quality improvement of imported products and so the

improvement of national production; a clear protection of the industrial sectors of each territory

which leads to an economic recovery that offers new employment opportunities and this an

increase in local consumption. However, the implementation of these regulations bring negative

consequences, specially for importer sectors, as their operation costs increase due to the new

requirements established, and these lead to a raise of prices by these sectors to cover the new costs.

In addition, a strong implementation of NTBs to imported goods may result in a clear unmotivation

in regards to the activities of this group, unchaining a possible shutdown of operations.

Since the Latin American region has 19 State members, the main technical obstacles

applied by mis of the nations are: restrictive quality regulations, tagging and clothing labeling,

environmental and health. This group of policies applied to prevent the entry of imports is divided

in two subgroups, the NTBs and the PSMs. One pretends to control the market of non-food goods

by regulating the national market and preventing a dependency on imported products, and the other

one pretends to maintain the population’s health and the wellbeing of the region’s flora and fauna.

In small economies, the implementation of TBTs is not really beneficial, as they tend to

generate conflicts between producers and importers, and create uncertainty in the citizens because

they do not completely understand the purpose of these regulations. This is mainly related to the

common restrictions applied throughout the last two decades, e.g. the quality restrictions of

products for their commercialization in a territory. In this context, the implementation of TBTs in

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big and small economies may lead to the emergence of commercial retaliations, since these can be

applied to import products from countries with good trade relations that, in response, will apply

the same policy to another product from the first country or in extreme cases it will end any trade

relation with the country.

Also, it was evidenced how through the application of restrictive measures by Latin

American governments, the industrial sectors receive the direct protection of the State, which looks

for the preservation of the sectors and to encourage them in the best way possible. They take these

industrial groups to a new commercial level by the hand of restrictive measures towards their

competitor products and by offering better products manufactured in the territory for the

consumption of the people, creating more employment opportunities, increasing the expenses of

the population and so incrementing the revenues for the State. This translates in a remarkable

growth of the local economy as it expands the limits of the national industrial sector.

Simultaneously, while the national products are severely benefited by the implementation

of non-tariff measures, importers - a commonly smaller group - also perceive drastic changes. This

refers to how these groups’ operation model changes radically in the need of adaption to a new

trade system under the application of NTBs.

Due to the variables mentioned, it is visible how through the implementation of TBTs there

are many factors that, as a whole, seek to build an ideal situation for the industrial sector as well

as for the importers and for them to share a same market, as well as generating advantages and

disadvantages in the analyzed sectors, and the studied region. Their implementation is closely

related to the different trade activities that importers and national producers maintain, trying to

evade a conflict over the market between the products of the national sector and the imported

goods. Besides, they pretend to avoid dependency on foreign goods or, on the other hand,

encourage only local consumption, even though it is not prepared enough to satisfy each of the

needs of the different social classes.

As it was mentioned previously, the existing information relating to the TBTs in Latin

America is scarce as a result of the lack of research exclusively related to the topic and the

limitation around the language, in this case Portuguese, since Brazil is the biggest country in Latin

America and the one that has mostly implemented TBTs, it is fundamental to know its language

to approach the most precise information relevant to the topic because there still is plenty of

information to approach. Therefore, the purpose of this review was to contribute to future reviews,

government institutions and/or companies that want to deepen their knowledge about TBTs and

be able to prepare for them.

What is currently known about TBTs is that they are a trade policy pretty delicate to

implement, which must be applied knowing the general context of the market of each of the

countries where these regulations intend to be implemented. Also, it is necessary to understand

their effects in the commercial sectors and international trade, avoiding extremes, seriously

harming one group or the other, and also maintaining the good trade relations between countries

that seek for the protection and growth of their own markets, as well.

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For future research, it is pertinent to establish what may be the effects resulting of the

implementation of non-monetary barriers in different specific sectors as tiles and ceramics, food

products or clothing, to determine in depth what are the consequences in each of these sectors.

Moreover, this research is applicable in other regions as it is the case of developing countries like

districts in Asia or Africa. Further, the effects of these policies in the trade between continents as

Europe, Asia or regions like North America should be considered, evaluating their result in

contrast to Latin American countries.

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