Categorized | Trade

Why does India have export restrictions on raw materials?


India is restricting exports of iron ore.

If you want to be an export powerhouse, why would you have export restrictions on raw materials?  Are they anti-iron ore, somehow?

Well, no:

Iron ore exports from India are likely to decline 72 per cent this year, thanks to a number of measures adopted by the government to preserve the key natural resource for domestic use.

They want to use the raw material in the country, add value and sell the higher value products domestically and internationally.  The followers of David Ricardo can whine and gnash their teeth, but the math works for India.  It will indeed create jobs, wealth and growth in India.  Too bad the U.S. leaders don’t pay attention to math.

Its like China with its rare earth metals export restrictions.

The free trade utopians in the U.S. think everyone else is moving towards free trade.  But they’re not.  They’re mercantilists with many overt and covert barriers.  And they don’t cower in fear over “trade war!” rhetoric.

Its time we recognize, and neutralize, the mercantilist tactics of other governments.  USTR would say “we do recognize them and are negotiating with those countries.”  Negotiation has ended up with a unilateral disarmament approach, in that the U.S. reduces its barriers and hopes the other countries will do the same now that we have shown them the golden path.

Ha, ha, ha.  Its funny.  Or sad.  Because they don’t.  And our jobs and wealth flow to other countries.

What will work is a comprehensive U.S. strategy to balance trade by neutralizing foreign cheating and our government taking on the mission of creating jobs and growth through domestic supply chains.  That’s how we grew.  That’s how China, Japan and Germany grow.  You need to have a balanced economy with major portions of the supply chains in many industries housed within your country to gain the benefit of the jobs, wealth and growth.  Its simply what works.


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