PRESS RELEASE 
 
PRESS/611 
23 July 2010 
 
(10-3963) 
WORLD TRADE REPORT 
WTO report calls for more coop eration among governments in 
natural resource trade 
Trading in natural resources creates a great many challenges both for importing and exporting 
countries and governments need to cooperate more intensively if these challenges are to be 
adequately addressed, according to WTO economists.  
 In the WTO flagship publication World Trade Report 2010 launched on 23 July 2010 in Shanghai 
and Geneva, the economists maintain that “in a world where scarce natural resource endowments 
must be nurtured and managed with care, uncooperative trade policies could have a particularly damaging effect on global welfare”. 
 
The World Trade Report 2010 focuses on trade in natu ral resources, such as fuels, forestry, mining 
and fisheries. The Report examines the characteri stics of trade in natural resources, the policy 
choices available to governments and the role of international cooperation, particularly of the 
WTO, in the proper management  of trade in this sector.  
 
Director-General Pascal Lamy, in his foreword, said: “I believe not only that there is room for 
mutually beneficial negotiating trade-offs that encompass natural resources trade, but also that a failure to address these issues could be a recipe for growing tension in international trade 
relations”. 
 “Well designed trade rules are key to ensuring that trade is advantageous, but they are also 
necessary for the attainment of objectives such as environmental protection and the proper 
management of natural resources in a domestic setting,” he added.  
The key elements of the Report: 
Natural resources have a number of distinctive features  — the skewed geographical 
distribution of natural resources, their exhaus tibility, the widespread occurrence of economic 
effects of natural resource exploitation disregarded by the market (externalities), high natural 
resource dependency in some economies, and tendencies towards high price volatility in natural resource markets. These specificities affect the modes of resource trade as well as the effects that 
international commerce in natural resources has on welfare. 
 Gains from resources trade  — Due to the geographical concentration of natural resources, trade 
has the potential to improve efficiency and increase  welfare by shifting resources from regions of PRESS/611 
Page 2 of 3 
 
 relative abundance to regions of relative scarcit y. However, welfare comparisons are complicated 
by dynamic factors, namely the exhaustibility of natural resources, and pervasive market failures. 
The latter include imperfectly competitive market s and open access to resources when property 
rights are poorly defined. 
 
Four other major issues  are commonly associated with natural resources trade — the presence of 
environmental externalities, the effect of technolo gy on the sustainability of resources, the so-
called “curse” faced by resource-rich economies, and the high volatility that characterizes some 
resource sectors. International trade interacts with all these factors in complex ways, in some cases exacerbating existing problems and at times providing solutions. 
 
Trade policy in resource sectors  — Resource-rich countries often restrict exports through a 
variety of means such as export taxes and quanti tative restrictions, whereas tariff s and other 
import restrictions in resource-scarce countries are low. There are, however, two important 
qualifications to this general rule. First, domestic policies that are likely to affect trade flows, including subsidies, technical regulations and consumption taxes, are frequently used. Second, the 
structure of protection that resource exporters face tends to rise with the stage of processing 
(tariff escalation).  
Policy interventions  in natural resource sectors are justified on welfare grounds by the specific 
features of natural resources. Governments employ trade policies as instruments to achieve a number of legitimate objectives, such as improving resource conservation or stimulating 
diversification of exports away from dominant resource sectors. However, three significant caveats 
need to be kept in mind. First, trade measures are often a second best policy to address problems 
associated with natural resources. Second, rest rictions on trade have beggar-thy neighbour 
effects, either because they may affect world prices or because they shift profits between 
exporters and importers. Third, trade and domestic  measures in natural resource sectors are close 
substitutes in some cases. 
 
Resources trade regulation  — The general principles of the multilateral trading system provide 
a framework for limiting non-cooperative trade policies, including within resource sectors. Several 
WTO rules have relevance in relation to the specific features of natural resources. WTO rules, 
however, were not drafted to regulate natura l resources trade and may not always respond 
adequately to sectoral specificities. 
 
The Report identifies several areas where consideration could be given to intensified 
cooperation . One such area involves trade policies such  as export taxes, where bargains might 
ameliorate uncooperative trade outcomes. A second issue concerns the scope for conservation 
policies, such as the treatment of subsidies aimed at improving the conservation of natural resources. A third issue relates to the facilitation of trade flows of natural resources, specifically 
the scope of freedom of transit. A fourth area concerns the clarity of current WTO rules and the 
coherence between these and rules of international law embedded in different agreements that may be relevant to natural resources.  
 
Key facts: 
The total value of world trade in natural resource s was US$ 3.7 trillion in 2008, or nearly 24 per 
cent of world merchandise trade. This value has increased more than six fold between 1998 and 
2008.  PRESS/611 
Page 3 of 3 
 
 
The share of fuels in natural resource trade rose from 57 per cent in 1998 to 77 per cent in 2008. 
Fish and forestry products each represented 3 per cent of world trade in 2008, while mining 
products were responsible for 18 per cent.  The top 15 exporters of natural resources were responsible for 52 per cent of world resource 
shipments in 2008, while the top 15 importers received 71 per cent of traded resources. 
 Applied tariffs are (on average) 23 per cent lo wer in natural resource sectors relative to 
merchandise trade. Average bound rates in natural resource sectors are 1.7 per cent in developed 
countries and 30.4 per cent in developing and least-developed countries.   
Export taxes cover 11 per cent of natural reso urces trade compared to 5 per cent of other 
merchandise trade. Export restrictions on natural resource products represent 35 per cent of notified export restrictions.  
 
Several natural resource sectors appear prominently in the subsidy notifications. Available research suggests that global subsidies to fi sheries are in the order of US$ 25 and 29 billion 
annually.  
  
Chart: World natural resources  exports by product, 1990-2008  
 
(Billion dollars)      
 
         
              
       
       
       
       
       
       
       
       
       
       
       
       
Source : WTO Secretariat estimates.      
 
 
END