WTO Rules China Unfairly Protected Domestic Manufacturers By Limiting Exports

Posted on Jul 6 2011 - 2:35am by Matt Kaludi

WTO

GENEVA — The World Trade Organization ruled Tuesday that China was unfairly protecting its domestic manufacturers by limiting the export of nine raw materials that are used widely in 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 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.”

China’s export restrictions have caused supplies of some raw materials to tighten globally, pushing prices higher and favoring an emphasis on using Chinese manufacturing facilities.

But the ruling could be more important in helping the U.S. and Europeans 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,” said EU Trade Commissioner Karel De Gucht. “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.”

She said expectations now are for China to “bring its export regime in line with international rules. Furthermore, in the light of this result, China should ensure free and fair access to rare earth supplies.”

EU officials say export prices for raw materials more than doubled when compared with the price in China because of the export quotas, and for some products half of the final c

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