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Trade restrictions backfire
Posted: 22 October 2012

That's the problem with restricting trade on a commodity in which you enjoy a comparative advantage. Others will simply innovate to reduce their dependency on it.

That is happening with China's monopoly over rare earth minerals, and in the long term, will happen with OPEC's control of the oil market. When restrictions cause prices to escalate beyond a certain level, alternatives become more attractive, and the incentive to invest in new technology rises.

Then of course, there is also the opportunity to retaliate with some restriction of your own, as this MindBullet suggests.

Japanese manufacturers to China: We don’t need your rare earths
22 October 2012
Earlier this year, we noted that Japan’s Toyota was loosening China’s stranglehold on rare earth metals, not through any policy harangue or through extra ...
MindBullet logo US BANS HELIUM EXPORTS IN ELEMENT TRADE WAR
China's medical and consumer electronics manufacturers in turmoil
Dateline: 15 August 2015
In a widely expected, but controversial, move the US has banned all helium exports to China and its major trade partners, following China's banning of all ...
 
 
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