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International Trade in Natural Resources: Practice and Policy

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  • Michele Ruta
  • Anthony J. Venables

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 this 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 exploration and development of natural resources. Properly coordinated policy reforms offer an avenue to resource exporting and importing countries to overcome these inefficiencies and obtain mutual gains.

Suggested Citation

  • Michele Ruta & Anthony J. Venables, 2012. "International Trade in Natural Resources: Practice and Policy," CESifo Working Paper Series 3778, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_3778
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2013. "International Politics and Import Diversification," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 1091-1121.
    2. Charlier, Christophe & Guillou, Sarah, 2014. "Distortion effects of export quota policy: an analysis of the China-Raw Materials dispute," China Economic Review, Elsevier, vol. 31(C), pages 320-338.
    3. Tamasiga, Phemelo & Bondarev, Anton, 2014. "Differential games approach to trade with exhaustible resources," Working papers 2014/14, Faculty of Business and Economics - University of Basel.
    4. Xu Wang & Ryan P. Badman, 2016. "A Multifaceted Panel Data Gravity Model Analysis of Peru's Foreign Trade," Papers 1612.01155, arXiv.org.
    5. Olga Solleder, 2013. "Trade Effects of Export Taxes," IHEID Working Papers 08-2013, Economics Section, The Graduate Institute of International Studies.
    6. Louis Dupuy & Matthew Agarwala, 2014. "International trade and sustainable development," Chapters,in: Handbook of Sustainable Development, chapter 25, pages 399-417 Edward Elgar Publishing.
    7. Dülger, Fikret & Lopcu, Kenan & Burgaç, Almıla & Ballı, Esra, 2013. "Is Russia suffering from Dutch Disease? Cointegration with structural break," Resources Policy, Elsevier, vol. 38(4), pages 605-612.
    8. Xu WANG & Ryan P. BADMAN, 2016. "A Multifaceted Panel Data Gravity Model Analysis of Peru’s Foreign Trade," Turkish Economic Review, KSP Journals, vol. 3(4), pages 562-577, December.
    9. Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2012. "InternationalPolitics and Import Diversification in the Second Wave of Globalization," Discussion Papers Series, Department of Economics, Tufts University 0770, Department of Economics, Tufts University.
    10. Wübbeke, Jost, 2013. "Rare earth elements in China: Policies and narratives of reinventing an industry," Resources Policy, Elsevier, vol. 38(3), pages 384-394.
    11. Yuri Bobylev & Georgy Idrisov & Sergey Sinelnikov-Murylev, 2012. "Export Duties on Oil and Oil Products: Cancel Expediency and Scenario Analysis," Research Paper Series, Gaidar Institute for Economic Policy, issue 161P.
    12. Leonardo Baccini & Veronica Lenzi & Paul W. Thurner, 2013. "Global Energy Governance: Trade, Infrastructure, and the Diffusion of International Organizations," International Interactions, Taylor & Francis Journals, vol. 39(2), pages 192-216, April.
    13. Kashcheeva, Mila & Tsui, Kevin K., 2015. "Political oil import diversification by financial and commercial traders," Energy Policy, Elsevier, vol. 82(C), pages 289-297.
    14. Kashcheeva, Mila & Tsui, Kevin K., 2015. "Political influence in commercial and financial oil trading : the evidence from US firms," IDE Discussion Papers 491, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    15. Uri Dadush, 2015. "Is Manufacturing Still a Key to Growth ?," Research papers & Policy papers 1507, OCP Policy Center.
    16. Ederington,Josh & Ruta,Michele, 2016. "Non-tariff measures and the world trading system," Policy Research Working Paper Series 7661, The World Bank.

    More about this item

    Keywords

    natural resources; trade; export tax; tariff escalation; OPEC; WTO; terms of trade;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General

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