Section 3 discusses the economics of export restrictions and covers two topics. The first is a
brief tour of the standard trade theory on the consequences of export restriction. As part of
that tour, some model-based studies of an ex ante nature are also illustrated. The second part
reviews some studies undertaken during 2007-2010 and focussed on the food crisis. These
sought to understand the specific role of export restrictions in the price spikes as well as the
impacts and consequences. The overall consensus is that while an exogenous shock like a
drought started the process, export restrictions did amplify, in significant ways, the price rises
into spikes. In the process, food importers suffered not just from the high prices but also from
inconveniences and uncertainties trying to secure supplies from alternative sources. On the
other hand, consumers in exporting countries gained as the rises in food prices were
In a paper on global trade governance and food security, Konandreas (2011) has argued that
to the extent that the fundamentals of the world food markets have changed (towards high
and volatile food prices), multilateral rules must also adjust accordingly to be able to address
trade issues that may arise also in periods when food is dear. This is essential to ensure the
credibility of the global trading system and to foster an environment conducive to more trade
openness on the part of importing countries, assuring them that the world food market is a
reliable source for imports even in periods of relative scarcity. Besides export restrictions,
there are several other elements of the draft Doha texts that need to be revisited with a view
to adjusting the rules to the new situation. The adjustments needed were discussed in an
earlier paper (Sharma and Konandreas 2008) and covered the following: export restrictions;
food aid; export credits; food import financing facility in the context of the Marrakesh
NFIDC Decision; State Trading Enterprises; stockholding and domestic food distribution;
biofuels; and trade facilitation.
2. The incidence and types of export restrictions on foodstuffs
Several agencies and analysts compiled information on export restrictions on foodstuffs
during the food crisis. A FAO survey in 2008 (FAO 2008) based on a coverage of 77
countries had showed that roughly one-quarter of the countries imposed some form of export
restriction during the food crisis. Other policy responses recorded then were as follows: about
half took measures to reduce food import taxes, 55 percent used price controls or consumer
subsidies, one-quarter took actions to increase supply drawing on cereal stocks, and 16
percent showed no policy activities whatsoever.
What follows contributes to that literature by extending the coverage to end-March 2011
(2007-2010, in short).
Policy information on export restrictions used below is presented in
Annex 1 of this paper. The information is compiled from many sources, notably from the
FAO GIEWS’ survey of national food policies, which was intensified during the food crisis.
Annex 1 provides detailed time-line of restrictive measures for the 7-8 countries that were
prominent in the media during the food crisis, and briefly for about 20 other countries.
There are also several papers on restrictive measures on other agricultural products as well as minerals and
metals (e.g. Piermartini 2004 and Korinek and Kim 2010). The WTO Trade Policy Reviews have become a
valuable source for this type of information.
GIEWS, FAO - Country Policy Monitoring: Main Food-related Policy Measures
Two summary tables are constructed – one showing the incidence of restrictive measures
relative to all policy measures (Table 1), and the other showing the types of the restrictive
measures used (Table 2).
Table 1 shows that of the sample of 105 countries covered with some information on food
policy measures (export restrictions and many others), 33 countries (31 percent of the
sample) resorted to one or more export restrictive measures. This is only slightly higher than
the 25 percent recorded in the 2008 FAO survey. Likewise, 16 percent of all the 528 food
policy measures recorded were export restrictive measures. Excluding the five countries in
the “others” region (the sample is not representative enough for the region), Asia tops the list
in terms of countries applying restrictive measures – 50 percent of all, versus 21 percent in
Africa and 18 percent in the LAC. In terms of policy measures also, 23 percent of all
measures were export restrictive for Asia, versus 10 percent in the other two regions.
Table 1 - Food export restricting countries and restrictive measures in a sample of 105
countries, 2007 to end-March 2011
-------------- Countries -----------------
-------------- Measures ------------------
Region covered (#) ) countries (#)
measures (#) ) measures (#)
Source: Author, based on information in Annex 1 for export restrictions and FAO food policy monitoring
database for other measures.
Next, Table 2 illustrates the various types of export restrictive measures used by the eight
major countries covered and a summary for other 20 countries. The instrument in bold is
considered to be the most commonly used measure.
One typical practice common to many of the cases in Table 2 is to combine various
instruments, both sequentially and concurrently as governments reacted to rapid changes in
food prices at home and in the world markets. There were three cases where only a single
instrument was used: MEPs on Basmati rice by India; MEPs on all rice varieties by Pakistan;
and quotas by Ukraine on all products. In other cases, there were combinations: ordinary tax,
variable tax and quotas by Argentina; VAT rebate, tax and quotas by China; ban, MEP and
ban again on ordinary rice by India; ban, quotas, ban on wheat by India; tax, ban, quota on
rice by Egypt; tax, ban and quota on wheat by Pakistan; tax and ban by Russia; and ban,
MEPs and progressive tax on rice by Vietnam. Although subject to further analysis, this
experience shows that various countries find different instruments appropriate for different
products at different times. In general, a more restrictive measure is used when spikes are
more pronounced. This preference for the combination of instruments needs to be taken into
account in considering alternatives for disciplining export restrictive measures (Section 4).
Table 2 - Illustration of the use of various export restrictive measures during 2007-2010
Restrictive policy instruments used
Wheat, maize, soybean, sunflower
Rice, wheat, maize, flour
a) Basmati rice
b) Ordinary rice
a) Rice (ordinary and basmati)
a) Wheat, maize, barley, flour
Wheat, maize, barley
35 products affected, mostly
cereals, but also sugar, beans, oils,
Tax (ad valorem), Tax (variable), Quota, Ban
Tax (ad valorem), Quota/license
a) MEP, Tax (specific), STE
b) Ban, MEP, STE
c) Ban, Quota, STE
Tax (specific), Quota, Ban
b) Tax (ad valorem), Quota, Ban
a) Tax (ad valorem), Ban
b) Tax (ad valorem)
MEP, Quota, Ban, Tax (variable), STE
Ban in 32 cases, 1 MEP, 1 Tax (ad valorem) and
Source: Author, based on Annex 1.
Note: In a majority of cases, multiple instruments were used, both concurrently and sequentially. The instrument
shown in bold is considered to be the most common measure used. MEP is minimum export price and STE is
state trading enterprise.
2.2 Understanding various forms of export restrictive measures
As an integral part of the review of the experience during 2007-2010, this sub-section
provides briefs on various instruments used. This understanding is essential for considering
alternatives for disciplining such measures in the Doha Round. Based on Table 2, the
following eight instruments are discussed. For the purpose of this paper, export restriction is a
general term used to indicate all forms of restrictions, from a tax to the ban.
measures have the effect of reducing the flow of export, and so should fall within the scope of
the measures aimed at “prohibition and restriction” of exports in GATT Article XI.
1. Export tax – specific, ad valorem, mixed
2. Export tax - variable
3. Export tax – differential (DET)
4. Minimum Export Price (MEP)
6. Government to government (G2G) sales
7. Export ban or prohibition
Adjustment of the VAT rebate rates could also be added to this list because this also influences exports. This
instrument was found to be used in one case (China).
This list reminds of the list of measures in the footnote to URAA Article 4 for imports which were prohibited
by that Article with the exception of ordinary customs duties, TRQs and Special Treatment (Annex 5).
8. State Trading Enterprises (STEs)
Ordinary export tax
Also known as ordinary customs duty, an export tax could be in specific or ad valorem form,
or mixed, typically the applied rate being higher of the two. For imports, a specific tariff
provides greater protection as import prices fall. Similar consideration applies to an export
tax. If based on f.o.b. value, a fixed specific tax results into higher ad valorem rates when
domestic prices are falling, thus providing greater protection against exports at all times to
lower-valued products (e.g. to ordinary than to superior rice). Difficulty in customs valuation
is also a factor for favouring a specific tax. Also for this reason, an export tax is often applied
to constructed values, including a MEP and the world price.
In theory, under some assumptions, all restrictive measures have an equivalent tax and thus
some level of tax should substitute for other measures like quota, and a prohibitive tax being
the same thing as a ban. In the survey, export taxes were not that high, the maximum being
about 40 percent.
This is in contrast to the case with tariffs on the import side. One reason
why taxes are relatively low could be that other forms of restrictions are not prohibited by
GATT/URAA rules, and so there is no need for very high taxes.
GATT Article XI permits export taxation. But as this is not bound, it does not mean much.
Simply banning other restrictive measures without first capping export taxes does not achieve
Export tax - variable
These are progressive tax schedules where the applied rate varies directly with the world
market price, i.e. higher the world price, higher the tax. The key motives are domestic price
stabilization and revenue. Table 3 illustrates two such examples. In March 2008, the
Argentine government modified export tax regime by implementing a sliding tax scheme,
based on fob prices for wheat, maize, soybeans and sunseed. The table shows the details for
wheat only. The minimum and maximum rates in the bands for other products were as
follows: maize 25 percent and 40 percent (prevailing fixed rate 25 percent), soybeans 23.5
percent and 49 percent (prevailing fixed rate 35 percent) and sunseed 23.5 percent and 45
percent (prevailing fixed rate 32 percent). This scheme was announced for four years, but was
discontinued in just four months, reverting in July 2008 to the fixed tax regime. Such a
scheme may be compared with Chile’s price band policy under which import tariffs varied
automatically with the moving averages of the world market prices. A WTO dispute panel
found that scheme not WTO-compatible for imports and Chile has discontinued that policy.
The Indonesian palm oil progressive tax regime continues.
Even for minerals and metals, applied taxes are low (in the 3-30 percent range) (Korinek and Kim 2010),
despite many of the exporters enjoying considerable market power.
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