China loses appeal against WTO raw material export restrictions

China loses appeal against WTO on raw material export restrictions

2:27 AM, 1st February 2012
China loses appeal against WTO on raw material export restrictions

GENEVA, SWITZERLAND: China lost an appeal at the World Trade Organization (WTO) in a case about its export restrictions on raw materials, a ruling that could make it harder for major commodity exporters to withhold supplies on the global market. The United States, European Union and Mexico had all launched WTO legal cases in 2009, challenging China’s right to restrict exports of materials including bauxite, coke, magnesium, manganese, and zinc. Many countries also later accused China of choking off global supplies of rare earth metals, causing prices to rocket for crucial ingredients in many high tech products.

China’s export restrictions helped to bolster domestic supplies of raw materials, cutting prices for local users. As well as giving an advantage to Chinese industry, it encouraged foreign firms to set up within China to give them a leg-up over competitors who faced higher costs for raw materials. The complaints against China were watched by 13 countries, including Brazil, Canada, Norway, Japan and Saudi Arabia, each of which had declared a substantial interest in the outcome to gain observer status in the case. Although WTO law does not rely on previous cases as a precedent, trade experts said the case breaks new ground in an important but largely unexplored area of trade law and could threaten similar export regimes around the world.

© Reuters News

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