Garten, Jeffrey E., former member, Policy Planning Staff U.S. Department of State Staff Member, Economic Policy Group Executive Office of the President


An appraisal of the role played by imports of critical mineral materials in shaping U.S. foreign policy during the current decade, with particular emphasis on the importance of energy particular emphasis on the importance of energy and minerals in U.S. trade patterns with economically less developed nations.


This paper will discuss three elements of U.S. international minerals policy - the international minerals environment, the government's objectives, and the imperatives for U.S. policies

A. The Environment

In the last several years, we have seen first, tight supply situations and soaring prices for a number of critical industrial raw prices for a number of critical industrial raw materials; and, then, rapidly declining prices; we have witnessed the determined and economically disruptive action of the OPEC cartel; we have experienced recurrent resort to unilateral barriers to raw material exports; and we have heard predictions of natural resource exhaustion.

These events have, of course, colored the public debate over U.S. raw materials policy. public debate over U.S. raw materials policy. But the emerging U.S. government policy itself is less a response to any particular event or scare in the last year or two, than to longer term trends which are occurring in the international economy and in the minerals markets.

Let us set aside predictions of natural exhaustion of resources. The government's feeling is that if resource scarcity occurs it will be because of improper public policies and not natural depletion. The following considerations, however, are strongly influencing U.S. foreign economic policy.

First, it is quite possible that several structural changes are occurring in the world economy which will have a major impact on minerals markets. Many economists are concerned that a de facto synchronization of the business cycle in industrial countries will result in recurring and possibly more severe business cycles than the recent period we have just been through. The result would be reflected in greater global demand surges and contractions and, hence, wider price swings. There is a concern also that we have entered a period of structural inflation which among other things will continue to encourage commodity speculation and continue to bid up raw material prices. There is the growing interdependence among many countries, which means that we are all drawing on one global resource base; insures that even many temporary economic disturbances will be transmitted quickly from one economy to the rest; and makes foreign policy reach to our gas pumps, our food counters, and the aluminum pumps, our food counters, and the aluminum siding on our garages. And there have been major changes in the relative economic relationships between countries.

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