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International Trade in Natural Resources: Practice and Policy

Michele Ruta

World Trade Organization (WTO)

Anthony J. Venables

University of Oxford; Centre for Economic Policy Research (CEPR)

March 1, 2012

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.

Number of Pages in PDF File: 35

Keywords: natural resources, trade, export tax, tariff escalation, OPEC, WTO, terms of trade

JEL Classification: F1, F13, Q3

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Date posted: April 5, 2012  

Suggested Citation

Ruta, Michele and Venables, Anthony J., International Trade in Natural Resources: Practice and Policy (March 1, 2012). Available at SSRN: http://ssrn.com/abstract=2034883 or http://dx.doi.org/10.2139/ssrn.2034883

Contact Information

Michele Ruta (Contact Author)
World Trade Organization (WTO) ( email )
Rue de Lausanne 154
Geneva 21, CH-1211
+41 22 7396354 (Phone)
+41 22 7395762 (Fax)
Anthony J. Venables
University of Oxford ( email )
Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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