Export Taxes and Other Restrictions on Raw Materials and their Limitation through Free Trade Agreements: Impact on Developing Countries

Uuring 28-04-2016

Export taxes and restrictions take various forms and their effects may not be limited to the countries that apply them. Developing countries use such export taxes and restrictions in pursuit of development policy objectives. The effects on third countries depend on the market power of the country applying them and the nature of the restriction or tax. Large developing and emerging economies are the main users of these types of instruments, which are often used to counter the distortions due to tariff escalation. Multilateral trade rules do not forbid the use of export taxes, but they do apply to export restrictions. The treatment of these instruments in Free Trade Agreements (FTAs) negotiated by the EU varies, even between the different Economic Partnership Agreements (EPAs). The EU should be flexible when it comes to the treatment of these instruments in trade agreements involving LDCs and small developing countries. In some cases, the EU should consider renegotiating existing agreements to remove strict prohibitions that can hamper development.