Export control as industrial policy on natural resources: Regulatory limitations on China – raw material and China - Rare earths cases

Abstract

This paper evaluates the legal boundaries of export controls as industrial policies on natural resources, emphasizing articles XI, XX(i), and XX(j) of the GATT-94. The context comes from the concerned restrictions that led to the China-Raw Materials and China-Rare Earths cases at the WTO. Much of the literature has been focusing on systemic linkages: trade and environment/public health. Despite its importance, this paper innovates by focusing on the discretionary space of export controls as industrial policies that Members may adopt, without resorting to any environmental or public health arguments. Indeed, whether in Raw Materials the term industrial policy is not found in the dispute reports, in Rare Earths it appears at least thirty times in the Panel´s report. After the analysis, this paper suggests distinct conformation of these spaces. Article XI of the GATT-94 would convey constricted space for export quotas due to time, substantive, and circumnstancial criteria. Article XI of the GATT-94, on the other hand, would provide considerable room for export duties; though Members with specific accession commitments (e.g. China), may have curtailed it, as interpreted by the Appellate Body. Finally, Articles XX(i) and XX(j) of the GATT-94 would rarely accommodate "ordinary" industrial policies. Their use attaches to stabilization plans and international emergencies, respectively. As the economics implications of the concerned measures were not analyzed, the paper also paves the way for future law and economics perspectives on this topic.

Changes to the Regulatory Framework of the Chinese Rare Earth Industry after the Global Financial Crisis

“…Restrictive export instruments imposed on natural resources have been used since the period of mercantilism from the sixteenth to the eighteenth century, when French laws prohibited the exports of gold, which was used as the measurement of a country's wealth. However, these export controls were also used in other historical episodes, such as during the period of industrialization, the First and Second World Wars, and even in the era of trade multilateralism in the GATT-period before the foundation of the World Trade Organization (WTO) (Ribeiro 2014).…”