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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.

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Export Restrictions on Strategic Raw Materials and Their Impact on Trade and Global Supply

This chapter examines how export restrictions impact on trade and the global supply of selected strategic metals and minerals. The metals and minerals examined are of particular interest for a number of reasons: they are generally geographically concentrated in a few countries, many are used in the production of high-technology goods in strategic sectors, and there are few substitutes for these raw materials given the present state of technology. Case studies of export restrictions concerning three raw materials — molybdenum, chromite and rare earths — shed some light on the potential global effects of export restrictions on strategic raw materials.

English

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