The Impact of the European Union´s Raw Materials Policies on Poor Countries and Emerging Markets

The European Union depends on the import of raw materials such as oil, gas, minerals, metals as well as access to land in non-European countries. At the same time, the EU is an over-consumer and the region with the highest net imports of natural resources. Although resource efficiency on the global level is improving, demand for natural resources is increasing. This is true especially due to the economic growth in large emerging markets such as China or India.

EU raw materials strategies and trade and investment policies focus primarily on access to
natural resources for European companies and investors, mainly concerned with trade distortive measures. There are three issue areas relevant for the resource-rich emerging markets and poor countries, where the EU seeks to implement anti-distortive policies: export taxes, national treatment of Foreign Direct Investment and investor protection. One of the results of these policies is the reduced policy space of the governments in those countries vis-á-vis foreign investors. The capacity to implement economic policies which could take advantage of resource abundance for macroeconomic development is thus impaired.

Two other approaches which have gained some ground recently also characterize the EU raw materials policies and strategies. The first one emphasizes the need to contribute to strengthening institutions in poor countries to creating an “investment climate [conducive] to sustainable management of raw materials.” To this end, the EU supports the improvement of mining taxation regimes, the enhancement of revenue and contract transparency and also targets the creation of links between the extractive industry and local industry. The second approach calls for increased resource effi ciency and the revision of consumption and production patterns in the European Union.

Both of these approaches are a step in the right direction and, if implemented, can contribute to the better management of the resource base in poor countries and emerging markets. Furthermore, the second of the two can also positively contribute to the resource security of the European Union.

Download  The Impact of the European Union´s Raw Materials Policies on Poor Countries and Emerging Markets (PDF, 623 KB) study.