EconPapers    
Economics at your fingertips  
 

Distortion Effects of Export Quota Policy: An Analysis of the China - Raw Materials Dispute

Christophe Charlier () and Sarah Guillou ()

No 2013-07, Sciences Po publications from Sciences Po

Abstract: The China - Raw Materials dispute recently arbitrated by the WTO opposed China as defendant to the US and the EU as claimants, on the somewhat unusual issue of export restrictions. For the claimants, Chinese export restrictions on various raw materials of which the country is a major producer create shortages in foreign markets. This scarcity does not prevail in the Chinese market and the price in the foreign markets increases, providing a cost advantage to the Chinese industries using these raw materials. China defends export limitations using Article XX of the GATT 1994 on possible exceptions to the prohibition of quantitative restrictions to conserve natural resources. This paper oers a theoretical analysis of the dispute with the help of a model of a monopoly extracting a non-renewable resource and selling it on both the domestic and foreign markets using Fischer and Laxminarayan (2004)'s framework. The theoretical results focus on the eects of imposing an export quota on quantities, prices and ecacy, and are used to comment on the claims of the parties and on the ndings of the Panel and Appellate Body. Given the crucial importance of demand elasticities in this theoretical understanding of the con ict, the empirical part of the paper provides estimates of import demand elasticity of the claimants as well as of China { for each product concerned in the case, dened at the HS6 level. The empirical results show that among the products concerned in the dispute, two groups can be dierentiated depending on China's export position. When China is a major or rst exporter, there is no evident sign of the distortionary eect of an exportquota. When China is a weak exporter, but a strong producer and consumer, thereis evidence coherent with the model according to which China is imposing a quotaexport restriction that is inecient.

Date: 2013-05
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://spire.sciencespo.fr/hdl:/2441/f6h8764enu2l ... ources/wp2013-07.pdf (application/pdf)

Related works:
Journal Article: Distortion effects of export quota policy: an analysis of the China-Raw Materials dispute (2014) Downloads
Working Paper: Distortion Effects of Export Quota Policy: an Analysis of the China - Raw Materials Dispute (2014) Downloads
Working Paper: Distortion Effects of Export Quota Policy: an Analysis of the China - Raw Materials Dispute (2014) Downloads
Working Paper: Distortion Effects of Export Quota Policy: An Analysis of the China - Raw Materials Dispute (2014) Downloads
Working Paper: Distortion effects of export quota policy: an analysis of the China-Raw Materials dispute (2014)
Working Paper: Distortion effects of Export quota policy: an analysis ofThe China - Raw materials dispute (2013) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spo:wpmain:info:hdl:2441/f6h8764enu2lskk9p504jih2g

Access Statistics for this paper

More papers in Sciences Po publications from Sciences Po Contact information at EDIRC.
Bibliographic data for series maintained by Spire @ Sciences Po Library ().

 
Page updated 2020-07-29
Handle: RePEc:spo:wpmain:info:hdl:2441/f6h8764enu2lskk9p504jih2g