WTO rules against China limiting export raw materials

WTO rules against China on limiting export of raw materials

3:45 PM, 7th July 2011
WTO rules against China on limiting export of raw materials

GENEVA, SWITZERLAND: The World Trade Organization ruled that China was unfairly protecting its domestic manufacturers by limiting the export of nine raw materials that are used widely in the steel, aluminum and chemical industries.

A WTO panel sided with the United States, European Union and Mexico, which had each filed complaints saying China was driving up the prices they pay for raw materials such as coke, bauxite and zinc by setting export duties and quotas on them.

The panel rebuffed China’s argument that its export limits were needed to protect its environment and said those export restrictions should be removed.

WTO judges concluded Tuesday that “China’s export duties were inconsistent with the commitments that China had agreed to,” when it joined the trade organization in 2001.

“The panel also found that export quotas imposed by China on some of the raw materials were inconsistent with WTO rules,” the judges said.

The judges recommended that the WTO ask China to drop the duties and quotas. China can still appeal the panel’s decision. But if Beijing loses the case and then doesn’t comply, the parties to the case can negotiate a settlement - or a WTO body can authorize one.

China’s export restrictions have caused supplies of some raw materials to tighten globally, pushing prices higher and creating an incentive to use Chinese manufacturing facilities.

But the ruling’s more important effect could be that it helps the US and European Union support another trade complaint against Chinese attempts to restrict exports of rare earth materials that are used in many high-tech products, according to Europe’s trade chief.

“This is a clear verdict for open trade and fair access to raw materials. It sends a strong signal to refrain from imposing unfair restrictions to trade and takes us one step closer to a level playing field for raw materials,” said Karel De Gucht, EU Trade Commissioner.

He added that “In light of this result, China should ensure free and fair access to rare earth supplies.”

(C) Associated Press




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