Shortage Clause

Shortage clause in Global Commerce Policy

In this regard, shortage clause is: a provision sometimes included in free-trade agreements to enable a party to impose export restrictions because of a shortage of a commodity on the internal market. The free-trade agreement between the European Community and Mexico, for example, states that a party may adopt export restrictions or export customs duties if major difficulties arise, or are likely to arise, for the exporting party because of (a) a critical shortage, or threat thereof, of foodstuffs or other products essential to the exporting party, or (b) a shortage of essential quantities of domestic materials to a domestic processing industry when prices are held below the world market price as part of a governmental stabilization plan, or re-export to a third country against which the exporting party maintains export customs duties or export prohibitions or restrictions. The entries on trade policy are here. If such measures are taken, they must not be arbitrarily or unjustifiably discriminatory, and they must not be used to protect the domestic industry.[1]

Shortage clausein the wold Encyclopedia

For an introductory overview on international trade policy, see this entry.

Resources

Notes and References

1. Dictionary of Trade Policy, “Shortage clause” entry (OAS)

See Also