Page 36 from: April 2015
36 April 2015
At the 2012 BIR World Recycling Conven-tion in Rome, guest speaker Barbara Fliess
– senior trade policy analyst at the Organisation
for Economic Co-operation and Development
(OECD) – revealed that an estimated 19% of the
world’s iron and steel scrap exports by value were
subject to a restriction of some sort even though
‘the ideal situation would be free trade in most
circumstances’. Since then, the OECD has delved
even deeper into this issue and turned up a
wealth of fresh data – but the conclusion reached
those several years ago remains unaltered.
Indeed, at a recent workshop in Cape Town, South
Africa, the OECD made a compelling case for
multi-lateral action to counter the harmful
impact of export barriers, supporting its argu-
ment with new publication ‘Export restrictions
in raw materials trade: facts, fallacies and better
practices’. This concludes that a multi-lateral
approach ‘would be the most effective way to
make lasting progress on disciplining export
restrictions’, which it describes as ‘beg-
gar-thy-neighbour policies that look attractive
from a unilateral point of view only if it is
assumed that other countries do not react when
an export restriction is imposed’. Indeed, it adds,
experience shows that export controls ‘can trigger
similar actions in other supplier countries, driving
up prices further, making price volatility worse,
and creating a crisis of confidence that spreads
from one resource to the next. Nobody benefits.’
Trade flows distorted
Export restrictions ‘distort trade flows’ and
‘reduce domestic prices in the countries apply-
ing the measures’, claims the study. ‘Assisting
downstream industries to grow and compete
may be the intended result of such restrictions.
However, the restrictions punish producers of
the commodity and discourage investment that
will ensure long-term local supply of the raw
material.’ And the study also contends that, with
respect to raw materials, the specific issues that
export barriers are expected to address, in those
countries that use them, ‘are in the main domes-
tic market or policy failures, unrelated to trade’.
Export restrictions on raw materials have pro-
liferated over the last decade, whether in the
name of revenue generation, natural resource
conservation or promotion of downstream pro-
cessing/value-adding at home. The OECD study
assesses each of these arguments for restrictions
in turn and challenges their assumed benefits. It
states for example: ‘Tax revenue (from export
levies) may be less than expected in the longer
term due to lower production levels if raw mate-
rials producers invest less in their operations.’
‘Bandwagon effect’
When one country imposes such restrictive meas-
ures, the OECD study goes on to explain, there is
an incentive for others to react and create a ‘snow-
ball’ or ‘bandwagon’ effect. ‘Using export taxes in
an attempt to provide preferential market condi-
tions to domestic suppliers ignores this implica-
T R A D E B A R R I E R S By Ian Martin
‘ Nobody benefits’
from export restrictions,
insists OECD
A 2012 snapshot of export restrictions
imposed on ‘metal waste and scrap’
Export prohibitions 129
Export quotas 9
Export taxes 141
Licensing requirements 226
Other export measures 47
Total 552
Source: OECD
Over the past five or six years, the OECD has conducted a number of
studies into the use and implications of export restrictions on trade
in raw materials. Strands from all of these have now been drawn
together in a single publication entitled ‘Export restrictions in raw
materials trade: facts, fallacies and better practices’, and its conclu-
sions provide weighty support for recycling industry arguments in
favour of free and fair trade.
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