Access to Raw Materials: The EU's Pursuit of New Trading Rules on Export Control

Abstract

In response to surging commodity prices and shortages of raw materials, the European Commission in 2008 adopted its Raw Materials Initiative (RMI) with the aim of securing sustainable supplies of raw materials for the EU economy. The RMI is to be founded on three pillars consisting of access to raw materials on world markets, sustainable supplies from European sources, and the reduction of European consumption. External trade policy constitutes an essential element of RMI-related policy. The EU is not only a major player in the raw materials market, but is also trying to create disciplines in that respect. The EU attempts to ensure access to raw materials through different fora and venues, including multilateral frameworks and bilateral negotiations, and ranging from rule-making to law-enforcement.

Multilaterally, the EU keeps raising this issue in such fora as G8, Organization for Economic Cooperation and Development (OECD), and United Nations Conference on Trade and Development (UNCTAD) and seeks cooperation with international organizations such as the World Bank and the International Seabed Authority. The EU has also submitted a proposal under the auspices of the Doha Development Agenda (DDA) within the WTO with a view to strengthening disciplines on export restrictions. It has additionally taken the opportunities offered by WTO accession negotiations to secure commitments from acceding members to eliminate or phase out their export restrictive measures. Regarding law enforcement, it has filed complaints against Argentina and China on certain export restrictive measures on hides, leather and raw materials via the WTO dispute settlement mechanism. Bilaterally, the EU consistently included trade rules on export restrictions in its external economic agreements. Such practices are present in EU external economic agreements such as the EU-Korea Free Trade Agreement (FTA), EU-CARIFORUM Economic Partnership Agreement (EPA), EU-Columbia-Peru Trade Agreement, and so on.

The EU’s pursuit of disciplines in export restrictions faces a number of challenges. First, the existing trade regulatory regime led by the General Agreement on Tariffs and Trade (GATT)/WTO system focuses mainly on the liberalization of import restrictions and has little regulation on export restrictions. The rationale underpinning the GATT/WTO system is to secure market access to other countries through tariff reduction and the elimination of non-tariff barriers. Secondly, whereas commitments on export restrictions are undertaken by some new WTO members, these commitments only bind the members concerned and do not extend to other members. A law-making process resulting in specific obligations applicable only to a limited subset of WTO members may undermine the multilateral nature of the WTO rules. Thirdly, in pursuing trade rules on export restrictions in its FTA negotiations, the EU may further marginalize the role of the WTO in global trade governance, and thus deviate from the spirit of the second subparagraph of Article 21(1) of the Treaty on European Union (TEU), which instructs the Union to ‘promote multilateral solutions to common problems’.

In this context, this chapter aims to explore the EU’s contribution to new trade rules pertaining to export restrictions with a view to securing its access to raw materials. This chapter examines both the EU’s position within the multilateral WTO framework (section 2) and its bilateral negotiations with other trade partners (section 3). Within the WTO forum, this chapter first, by contrasting the EU’s proposal relating to export taxes with that of Japan and the US, focusing mainly on procedural transparency on export licensing, illustrates the EU’s aim to advance rule of law and respect for international law in the wider world and its regulatory ambition to ‘promote multilateral solutions to common problems’.

Secondly, it investigates whether and how the EU can successfully secure commitments on export restriction from new WTO members during bilateral accession negotiations. It will examine the EU’s complaints lodged via the WTO dispute settlement mechanism with regards to Argentina and China on their export restrictive measures. With regard to the bilateral aspect, this chapter will examine those provisions pertaining to export restrictions in selected EU external economic agreements. This chapter concludes with an evaluation of the EU’s success in pursuing trade disciplines on export restrictions through law-making and law enforcement in multilateral frameworks and bilateral negotiations (section 4).

Keywords: WTO, EU, Raw Materials, Export Restrictions, Bilateral EU External Agreements

JEL Classification: K33, K39, K29