Countering Commodity Trade Mispricing in Low-Income Countries: A Prescriptive Approach

Abstract

Commodity trade mispricing, especially the undervaluation of commodity exports, disproportionately harms low-income countries that depend on commodity exports for most of their export earnings. Such countries should (re)consider adopting rule-based pricing methods as a prescriptive alternative to transaction-based valuation systems. This article firmly grounds rule-based pricing in market parameters. It calls for a hybrid form of market-based price regulation in the framework of public–private models of supply chain governance, also integrating advice from independent experts. This article addresses this policy option within the parameters set by international law, considering state regulatory scope under international trade and tax law. It challenges the popular objection that prescriptive pricing methods breach international trade and tax rules. Instead, it emphasizes the complexity of any such legal assessment under international economic law.