1. Export Restrictions on Commodities
Professor Simon J. Evenett

2. Contents of this presentation
The questions raised by the resort to export restrictions.
The resort to export restrictions on commodities during the recent global economic downturn.
Economics of export restrictions.
Alternatives to export restrictions on commodities.

3. Policy questions raised by the frequent recent use of export restrictions
Who has resorted to the use of export restrictions and who has been hurt?
What are the consequences of export restrictions?
What alternatives to export restrictions exist? Are any of those alternatives preferable?
Is there a case for strengthening multilateral rules on export restrictions?

4. Resort to export restrictions on commodities since November 2008
Period
Number of export restrictions imposed
Number imposed by G20 nations
Number of export restrictions harming LDCs
Number of export restrictions harming G20 countries
November-December 2008 1
2009 14 9 11 13
2010 26 17 18
January-September 2011 10 12
Source: Obtained from Global Trade Alert database, 19 September 2011.

6. Preferred alternatives to export restrictions (1)
Stated policy objective
Alternative policy/policies, preferable to export taxes and quotas.
Promoting food security
Grant direct consumption subsidy payments to those in need.
Lower inflation
Tighten macroeconomic policy if price-increasing measures are broad-based.
Reduce import tariffs if price rises causing concern are those of imported, internationally-traded commodities.
Releasing government reserves of such commodities are preferable to export taxes and quotas too, but effect may be only short term.
Redistributing windfalls from unanticipated commodity price increases
Impose profit tax on commodity producers
Conservation of natural resources
Impose production tax or, where available, equivalent production quota.
Limit production-related environmental damage
If the environmental damage done by different extraction or production techniques differs, then the non-discriminatory application of production taxes and production quotas (including potentially the shutting down of entire production facilities) requires stricter measures to be taken against more environmentally harmful facilities.

7. Preferred alternatives to export restrictions (2)
Stated policy objective
Alternative policy/policies, preferable to export taxes and quotas.
Reduction of consumption- or user-related environmental damage
Impose a tax on buyers, including buyers of foreign goods if the latter too create environmental damage.
In principle there is a case for differential consumption taxes if the environmental harm done differs across sources of the same raw material.
Promotion of downstream industry
Impose a subsidy to production subsidy that has same effect on output of downstream industry as the export tax or quota on the raw material input.
Alternatively, having established why the downstream industry is being held back, then take measures to take the restraint directly (e.g. provision of finance, skilled labour etc.)
Raising government revenues
Ideally, impose a labour or consumption, sales, or value-added based tax system with a much broader tax base than an export tax. A tax on certain land use is also preferable.
Should export taxes be used for this purpose then they should be implemented on the broadest range of comparable products that are shipped abroad, not just one or a few selected raw materials.

8. Implications for policymaking
Many governments have resorted to export restrictions or taxes on primary commodities during the recent global economic downturn.
In addition to the frequency of imposition, these measures frequently harm the commercial interests of the poorest countries, the LDCs.
For every stated purpose for export taxes or restrictions there exists a preferable policy. Encouraging the use of the latter is the central policy recommendation.
This recommendation implies there is no conflict between attaining food security and environmental objectives and eschewing export restrictions.
Multilateral rules should be revised to ban the use of export taxes and restrictions and mandate the use of non-discriminatory alternatives, provided governments have the expertise and resources to implement those alternatives. Implies a role for technical assistance and for neutral advice givers.