Description

An export ban is a government prohibition on exporting certain products (e.g. to certain countries). It is an extreme form of an export quota.

The General Agreement on Tariffs and Trade (GATT 1947) Article XI prohibits all forms of export restrictions except export taxes. Export bans imposed temporarily in order to meet critical shortages in foods or other essential products are another exception. However, expressions such as ‘temporary’, ‘critical’, and ‘shortage’ are not specifically defined. Therefore, export bans on agricultural products are permissible provided their use can be justified to the WTO.

Export bans may be a useful way of countering short-term shortages of essential commodities in the event of crisis, although they are not appropriate as a long-term measure for strengthening food and nutrition security, controlling inflation or boosting processing industries. Moreover, export bans may have adverse effects on importing countries, where the exporting country has a significant share of the world market and the export ban leads to higher world market prices. An export ban on foodstuffs can therefore have a negative impact on countries that are net importers of food.

So-called ‘government to government’ (G2G) sales often take place despite the existence of an export ban. This means that some exports of limited volumes to certain countries are temporarily permitted despite the existence of a ban. Critics cite non-WTO compatibility in this context, since some countries are favoured over others.

Instead of an export ban, an export tax with an very similar impact on prices and volumes could be levied. In contrast to export bans, export taxes are WTO-compliant. Another alternative might be to set a comparatively high minimum export price.

Requirements

• A properly functioning country-wide administration and monitoring system with access to the relevant information and sufficient technical and human capacities for its design, implementation and monitoring
• Clear and coherent political strategy and targets for policy-makers and public authorities
• Close cooperation and knowledge sharing with research institutions
• Compatible regional and world trade law (WTO conformity)
• Constant market surveying and forecasting
• Efficient customs administration
• Market price information systems

Possible Negative Effects

• Market and trade distortion and economic losses
• Loss of income for domestic farmers (reduction in producer surplus) and exporters due to lower domestic prices and loss of exports
• Sales markets and trading partners may be lost and could be difficult to win back in the future
• Production in the sector of the product concerned drops due to lower prices, endangering food and nutrition security in the medium and long term