Export cartels are exempted from the competition laws of most countries. While some scholars and several World Trade Organization (WTO) Members have recently condemned such cartels, others have argued that they allow efficiency gains that actually promote competition and trade. After summarizing the contending views, and also the scanty theoretical literature on the subject, this paper reviews the treatment of export cartels in various jurisdictions and the limited empirical evidence that is available on their prevalence, efficiency justifications, and effects on international trade. Insights from economic theory are then applied to the arguments for and against export cartels, suggesting criteria that could help to determine their validity and an importing country’s best response. The paper concludes that while importing countries should evaluate foreign export cartels under a “rule of reason”, most developing countries will be constrained by a lack of technical expertise and limited enforcement capacity. It suggests a novel approach, based on parallels with anti-dumping procedures, which would strengthen their hands.
