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International Trade in Natural Resources: Practice and Policy

Author

Listed:
  • Michele Ruta

    (Economic Research Division, World Trade Organization, Geneva 21, CH-1211, Switzerland)

  • Anthony J. Venables

    (Department of Economics, University of Oxford, Oxford, OX1 3UQ, United Kingdom)

Abstract

Natural resources account for 20% of world trade and dominate the exports of many countries. Policy is used to manipulate both international and domestic prices of resources, yet policy is largely outside the disciplines of the WTO. The instruments used include export taxes, price controls, production quotas, and domestic producer and consumer taxes (equivalent to trade taxes if no domestic production is possible). We review the literature and argue that the policy equilibrium is inefficient. This inefficiency is exacerbated by market failure in long-run contracts for the exploration and development of natural resources. Properly coordinated policy reforms offer an avenue to resource-exporting and resource-importing countries to overcome these inefficiencies and to obtain mutual gains.

Suggested Citation

  • Michele Ruta & Anthony J. Venables, 2012. "International Trade in Natural Resources: Practice and Policy," Annual Review of Resource Economics, Annual Reviews, vol. 4(1), pages 331-352, August.
    • Handle: RePEc:anr:reseco:v:4:y:2012:p:331-352
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-resource-110811-114526
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    Keywords

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    JEL classification:

    • F1 - International Economics - - Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation

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