Export Restrictions on Strategic Raw Materials and Their Impact on Trade

Barriers to trade come in a variety of forms. This paper examines one such barrier, export restrictions,and how it impacts trade and global supply in selected strategic metals and minerals. The metals andminerals examined in the paper are of particular interest for a number of reasons: they are generallygeographically concentrated in a few countries, many are used in the production of high-technology goodsin strategic sectors and there are few substitutes for these raw materials given the present state oftechnology. For all these reasons, importing countries are dependent on a reliable supply of these rawmaterials. Export restrictions may be applied for a number of reasons: protection of the environment,preservation of natural resources, protection of downstream industries, or as a response to a number ofdifferent market imperfections. This paper examines the motivations for using export restrictions and findsvarying impacts on trade and global supply. In one case, the export restrictions put into place did not fulfilltheir objective of environmental protection. In another, the presence of export restrictions in one countryput pressure on other exporters to apply restrictions suggesting the potential for competitive policypractices in restricting exports. In a third case study, export restrictions were seen to impact investmentdecisions by potential suppliers worldwide by introducing an added element of risk in the industry. Theimpact of export restrictions on strategic metals and minerals are exacerbated in many cases becauseproducing countries have a quasi-monopoly on supply. Since these metals and minerals are essential in theproduction of some high-technology products and are not easily replaceable in the medium term, industryparticipants in some importing countries are concerned about future access at sustainable prices.