Expanding supply chains and required transparency in export restrictions of raw materials

Transcription

1 Expanding supply chains and required transparency in export restrictions of raw materials Junichiro Kuroda Principal Director Multilateral Trade System Department Ministry of Economy, Trade and Industry of Japan May 10, 2012

2 Supply chains are expanding around the world Trade of intermediate goods has increased World Non-fuel merchandise exports by type of good, (in billions of US$) Source: Trade patterns and global value chains in East Asia (2011, IDE-JETRO and WTO) 1

3 Examples of key raw materials for the global supply chain Raw materials are the starting points of supply chains Hard Disk Drives Abrasives Hard disk platters Hard disk drives Personal Computers Cerium - Cerium Oxide Exhaust Gas Catalysts Catalytic converters Catalyst material 3-way catalysts (Exhaust Gas Catalysts) Automobiles Platinum - Platinum Metals Lithium Ion Batteries Positive-electrode material Lithium - Lithium Cobalt Oxide Lithium Ion Batteries Personal Computers Automobiles Cell phones 2

4 Spreading Export Restrictions Export restrictions are rapidly proliferating around the world The number of trade restrictive measures in the world Other Export border Trade remedy 0 October 08 to October 09 November 09 to mid-october 10 Source: Overview of development in the international trading environment (WTO, 21/11/2011) Mid-October 10 to mid-october 11 3

5 Examples of export restrictions of raw materials Russian Federation Export duties on copper (0% 10%)(2008), certain magnesium scrap ( 5% 20%), alloyed nickel (5% 10%) and copper cathode(0% 10%) (2011) New determination of export tariffs on nickel depending on world market prices(2011) China Export quotas and licensing requirement on rare earth ferroalloy (2011) Second batch of export quotas for coke, 11 rare earth minerals, certain non-ferrous metals (2011) Turkey Specific registration requirements on exports of copper scrap(2011) Indonesia Due to the New Mining Law (2009), it may become impossible to export minerals mined in Indonesia such as nickel and copper before refining/purification, and the restrictions may serve as de facto export restrictions. India Export duties on iron ore fines (5% 20 %), iron ore lumps (15% 20 %)(2011) Argentina Imposition of precautionary price reference for copper exports (2009) Source: Annex 2:Summary and Status of G-20 trade and trade-related measures since October 2008 : 2011 Report on Compliance by Major Trading Partners with Trade Agreements - WTO, FTA/EPA, BIT (METI, Japan) 4

6 Impact of export restrictions on raw materials 5 Export restrictions on raw materials have a negative impact on not only production and employment in their import countries but also those in downstream countries as a whole through the global supply chain The export restrictions also have a negative impact on the countries themselves which take the measures, because no one can supply a full range of raw materials necessary for its industry from its domestic market The export restrictions distort the global competitive environment through price differentials between domestic and international markets Investments escape from the country taking unpredictable and uncertain regulations, which weaken the country's competitiveness in the long term Opaque export restrictions do not benefit anyone because they aggravate the economic efficiency of the world economy and the country taking the measures itself

7 6 Japan s action toward export restrictions of raw materials by other countries 1. Securing Resources Overseas -Strategic approach in resource diplomacy -Resources development 2. Recycling <Rare metals used in mobile phones> 3. Developing substitute materials

8 7 Actions toward export restrictions through multilateral/bilateral occasion 1. Reaffirming to standstill and roll back commitments in multilateral forums such as G20 and APEC e.g. G20 Cannes Summit Communiqué We reaffirm our standstill commitments until the end of 2013, as agreed in Toronto, commit to roll back any new protectionist measure that may have risen, including new export restrictions and WTOinconsistent measures to stimulate exports 2. The WTO dispute settlement mechanism

9 Actions toward export restrictions through multilateral/bilateral occasion (cont.) 3. Bilateral consultation -Bilateral negotiation - Business Environment Improvement Subcommittee in RTAs -Provisions on export restriction in RTAs e.g. Comprehensive Economic Partnership Agreement between Japan and the Republic of India Art. 22 Import and Export Restrictions (citation) Party shall, upon the request of the other Party, provide to the other Party, as soon as possible after the prohibition or restriction is introduced, relevant information, which shall include a description of the good involved and the introduced prohibition or restriction, the actual date of introduction of such prohibition or restriction In total 6 of 13 Japan s RTAs have similar provisions e.g. NAFTA Art. 315 (citation) a Party may adopt or maintain a restriction with respect to the export of a good of the Party to the territory of another Party, only if: a) the restriction does not reduce the proportion of the total export shipments of the specific good made available to that other Party relative to the total supply of that good of the Party maintaining the restriction b) c) the restriction does not require the disruption of normal channels of supply to that other Party or normal proportions among specific goods or categories of goods supplied to that other Party. 8

10 Existing rules on transparency of export/import restrictions in WTO agreements More transparency is essential as of exports WTO disciplines / Licensing agreement Imports Exports GATT Art. X (citation) 1. Laws pertaining to restrictions or prohibitions on imports or exports shall be published promptly in such a manner as to enable governments and traders to become acquainted with them. GATT Art. XIII (citation) 3.(a), the contracting party applying the restrictions shall provide,, all relevant information concerning the administration of the restrictions, the import licenses 5. in so far as applicable, the principles of this Article shall also extend to export restrictions. Existence of the Licensing Agreement for enhanced transparency Agreement on Import Licensing Procedures 9

11 Japan s proposal on export licensing in WTO Proposal : Protocol on Transparency in Export Licensing to the GATT 1994 Proponents : Japan, Chinese Taipei, the Republic of Korea, the United States, Ukraine, Chile and Costa Rica Procedures : Notify the WTO of any measure on export licensing and modification thereof Existing WTO Agreements Proposed Transparency Mechanism Member A Exporters Member A Exporters Export Licensing Due to unexpected Export Licensing, importers cannot obtain raw materials to be delivered to manufacturer. Exporters cannot deliver their products by unexpected Export Licensing. Export Licensing Notify within 60 days List of products Description of the procedures for the submission of applications Administrative body(ies) to which applications must be submitted Description of the measures Expected duration Overall amount of the quota and others?? Importers Member B Importers Member B 10

12 11 Conclusion As global supply chains are expanding and deepening, export restrictions have a bigger impact on the world Export restrictions not only affect production and employment of downstream countries but also hinder long-term economic and job growth of the countries taking the measures by investment flight if the rules are opaque Currently most countries may address this challenge individually. However, in the age of economic interdependence, international collaboration is required Opaque export restrictions benefit nobody. Improvement of transparency is essential, for example by our proposal

13 Thank you!!