Benefits of trade liberalisation

Trade in raw materials

 

Industrial raw materials are essential to everyday life.  Did you know that your mobile phone is made using 50+ different minerals and metals? 

The OECD's newest video Trade in Raw Materials demonstrates how overly restrictive export policies in the raw materials sector can have adverse effects on economic growth and development. It also highlights the successful experience of countries such as Australia and Chile, illustrating how minerals-rich economies can best capitalise on their resources.

 

 

Mineral resources represent a vast stock of wealth in some countries. In some, exports of such products dwarf all other exports. But resource abundance does not always bring sustained economic growth and development: it can have the opposite effect, sometimes referred to as the ‘resource curse’. Research suggests that growth from mineral resources is lower than that due to other factors and can be very volatile. Countries that are heavily reliant on their mineral wealth often have weaker institutions, spend less on education and are more corrupt.  Moreover, the mining sector generally provides little direct employment in the regions where extraction occurs.

Some countries restrict exports of unprocessed minerals in an attempt to support or create a downstream processing industry that will create jobs, or simply to provide revenue for the government.  But OECD analysis suggests that export restrictions are not the best way to achieve these crucial policy objectives.

Fortunately, there are concrete examples of how mineral resources can contribute to sustainable, economy-wide growth.  OECD analysis points to some successes and shares some lessons from their experience.

»Read the policy note

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Explore the Data

This interactive data visualization tool includes an inventory of export restricting measures placed on 66 metals and minerals.  Data has been collected for all minerals-exporters and are combined with production figures, known reserves and trade flows. Try it now to see how trade in raw materials stacks up in your country. 

 

Trade in Raw Materials Data Vizualisation Compare your country

 

 

The OECD Inventory of Restrictions on Exports of Industrial Raw Materials reports export taxes, prohibitions, licensing requirements and other measures by which governments regulate the export of industrial raw materials including minerals, metals and wood. Explore the data!

 

Analysis

OECD work on trade in raw materials spans a wide range of approaches including the analysis of economic impacts of trade restrictions, regulatory frameworks in selected minerals-rich countries, disciplines used in multilateral or bilateral trade agreements, and transparency measures.

 

Regulatory frameworks

Mineral Resource Trade in Chile: Contribution to Development and Policy Implications

Instead of resorting trade measures such as export restrictions to manage its minerals sector, Chile manages its minerals sector through a combination of balanced taxation, stable investment measures, good management of tax revenue, exchange rate policy and initiatives aimed at producing a multiplier effect of economy-wide development, according to this study. (OECD Trade Policy Paper No. 145)

 

Export Restrictions on Raw Materials: Experience with Alternative Policies in Botswana

Demand for non-renewable natural resources is forecast to rise steadily over the coming decades. Underlying trends of long-term rising demand and falling supply of mineral resources will inevitably increase pressure on prices and intensify competition for scarce resources. This paper examines some of the policies in place in Botswana that have contributed to the governance and management of its substantial minerals sector. (OECD Trade Policy Paper No. 163)

 

Managing the Minerals Sector: Implications for Trade from Peru and Colombia
Managing and regulating the extractive industries can pose substantial challenges to minerals-rich countries. Aiming to overcome the "resource curse", some countries attempt to generate greater gains from their natural resources by using trade policy instruments such as export restrictions. This study examines the Peruvian and Colombian experiences as regards some aspects of the management of their extractive industries. (OECD Trade Policy Paper No. 186)

 

Economic impacts of trade restrictions

Economics of Export Restrictions as Applied to Industrial Raw Materials
Governments intervene in non-renewable natural resources sectors more than in many others, including through the use of export taxes and quotas. This paper aims to increase understanding of the economic effects of export restrictions, in particular as they apply to the mining sector. It ascertains the prevalence of export restrictions on metals and minerals, proposes a Cournot-Nash model of export restrictions, suggests some of the economic effects due to the presence of export restrictions, and draws some implications for trade policy among producing and consuming countries of non-renewable natural resources. (OECD Trade Policy Paper No. 163)

 

Taking Stock of Measures Restricting the Export of Raw Materials: Analysis of OECD Inventory Data
Governments appear increasingly inclined to apply border and domestic measures to restrict the export of raw materials. For industrial raw materials, the OECD is constructing an Inventory of measures that have been applied since 2009. The underlying survey covers some 100 countries, some 15 types of measures and most minerals, metals and wood. This paper analyses 2009-2010 data collected so far for the minerals and metals sector. (OECD Trade Policy Paper No. 140)

 

Recent Trends in Export Restrictions
Export duties were applied by 65 out of 128 WTO member countries over the period 2003-2009, an increase on 1997-2002. These duties were introduced primarily by developing and least developed countries, and were mostly applied on agricultural products, minerals and metal products. This paper looks at the use of export restrictions in this period and at international disciplines on these measures. (OECD Trade Policy Working Paper No. 101)

 

Export Restrictions on Strategic Raw Materials and Their Impact on Trade
Molybdenum, chromite and rare earths are among a range of metals and minerals essential for producing computers, hybrid vehicles and many more high-tech consumer goods. Industrial users and importing countries are concerned by recent export restrictions and their effect on the supply and prices of these materials. This paper examines cases of export restrictions by producer countries on these strategically-important raw materials, focusing on their stated objectives and actual impacts. (OECD Trade Policy Working Paper No. 95)

  

Disciplines

Multilateralising Regionalism: Disciplines on Export Restrictions in Regional Trade Agreements
In some instances, regional trade agreements (RTAs) explore policy areas that are the subject of few disciplines at the multilateral level, and may provide lessons and suggest good practices that could be used to inform discussions in a wider setting. One such policy area is export restrictions and taxes. This study suggests that there are a number of ways by which World Trade Organisation (WTO) disciplines in the area of export restrictions could benefit from the approaches found in some RTAs. (OECD Trade Policy Working Paper No. 139)

 

Transparency

Transparency of Export Restrictions: A Checklist Promoting Good Practice 
The incidence of export taxes, prohibitions and other measures that raise export prices, limit export quantities or place conditions on exporting is on the rise. This paper develops a checklist of good practice in transparency which can serve as a tool for self-evaluation by governments and for promoting better and more consistent transparency practices in this area. The items of the checklist are drawn from norms and practices found in WTO and regional trade agreements and good governance guidelines, and provides guidance with respect to such questions as what, when and how information about export restrictions governments ought to make public. (OECD Trade Policy Paper No. 164)

 

Export Restrictions: Benefits of Transparency and Good Practices
Transparent trade legislation, policies and practices benefit governments and business alike by reducing transaction costs and uncertainty, simplifying procedures and encouraging investment. This paper studies the information published online by 33 countries on their policies of export restrictions in the minerals sector, and presents a checklist of best practices for addressing gaps in the availability and accessibility of information. (OECD Trade Policy Paper No. 146)

 

 

Key publications

Export Restrictions in Raw Materials Trade: Facts, Fallacies and Better Practices

The aim of this publication is to contribute to an informed policy dialogue among countries that irrespective of whether they apply export restrictions or not, all rely on a well-functioning global market for at least some of the raw materials needs of their industries.

 

The Economic Impact of Export Restrictions on Raw Materials

Export restrictions on raw materials are applied to achieve a number of policy objectives. However, they can have a significant and negative impact on the efficient allocation of resources, international trade, and the competitiveness and development of industries in both exporting and importing countries. 

In response to the growing concern on the use of export restrictions on raw materials, particularly by emerging economies, OECD held a Workshop on Raw Materials in Paris in October 2009. This book presents a selection of papers discussed at the workshop.


 

 

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