The Economic Impact of Export Restrictions on Raw Materials

image of 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.  

By diverting exports to domestic markets, export restrictions raise prices for foreign consumers and importers. At the same time, by reducing domestic prices in the applying countries and increasing global uncertainty concerning future prices, export restrictions negatively affect investment, thus potentially reducing the overall supply of raw materials in the long term. In view of existing alternative policy tools that have a different impact on trade, the effectiveness of export restrictions to achieve stated policy objectives should be carefully reviewed.  

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


Export Barriers and the Steel Industry

A healthy world steel industry depends on the free trade of the raw materials used to make steel. At present, trade in these raw materials is not free, as major producing countries impose a variety of restrictions on exports. These measures distort international competition by providing domestic companies with an advantage. In this way, export restrictions distort not only the world markets for these raw materials, but the broader world markets for steel and products made from steel. This chapter describes the export restrictions that a number of producing countries have imposed on raw materials which are used to produce steel. It aims to identify the impact such restrictions have had on international prices and on the availability of raw materials. Three raw materials are used as the basis for this analysis: iron ore, coke and steel scrap.


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