MercoPress. South Atlantic News Agency

WTO calls for more global cooperation in natural resources trading

Director-General Pascal Lamy optimistic about the evolution of 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 World Trade Organization 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 natural resources, such as fuels, forestry, mining and fisheries. The Report examines the characteristics 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.

Lamy also confirmed his forecast that global trade will increase 10% in 2010 compared to the previous year.

The total value of world trade in natural resources was 3.7 trillion US dollars in 2008, or nearly 24% of world merchandise trade. This value has increased more than six fold between 1998 and 2008.

The share of fuels in natural resource trade rose from 57% in 1998 to 77% in 2008. Fish and forestry products each represented 3% of world trade in 2008, while mining products were responsible for 18%.

The top 15 exporters of natural resources were responsible for 52% of world resource shipments in 2008, while the top 15 importers received 71% of traded resources.

Applied tariffs are on average 23% lower in natural resource sectors relative to merchandise trade. Average bound rates in natural resource sectors are 1.7% in developed countries and 30.4% in developing and least-developed countries.

Export taxes cover 11% of natural resources trade compared to 5% of other merchandise trade. Export restrictions on natural resource products represent 35% of notified export restrictions.

Several natural resource sectors appear prominently in the subsidy notifications. Available research suggests that global subsidies to fisheries are in the order of 25 billion and 29 billion US dollars annually.