WTO rules that China unfairly restricts raw materials exports

30 January 2012 16:49  [Source: ICIS news]

WASHINGTON (ICIS)--The World Trade Organisation (WTO) has ruled that China has been placing illegal restrictions on exports of key industrial raw materials that are essential for chemicals manufacturing and other industries, US officials said on Monday.

US Trade Representative Ron Kirk said that a WTO dispute resolution appellate panel has ruled that various restrictions imposed on China’s exports of bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc were “inconsistent with China’s WTO obligations”.

Those raw materials are critical components in the manufacturing of steel, aluminium, chemicals and a wide range of other products, Kirk noted.

In limiting export volumes or imposing export duties on these raw materials, China had argued that its restrictions were legitimate restraints for conservation or environmental reasons or to manage shortages of critical supplies.

The restraints included export quotas and export duties, minimum export pricing, export licensing and export quota administration requirements, according to the office of the US trade representative (USTR).

“Export restraints on these types of industrial products can skew the playing field against the US and other countries in the production and export of numerous steel, aluminium and chemical products,” Kirk said.

“They can artificially increase world prices for these raw materials while artificially lowering prices for Chinese producers,” the USTR said.

“This enables China’s domestic producers to produce lower-priced products from the raw materials and thereby creates significant advantages for China’s producers” in the global market, he added.

In addition, said Kirk, “Such export restraints can also create substantial pressure on foreign producers to move their operations and, as a result, their technologies to China.”

The US initiated its complaint against China in June 2009.  The EU and 15 other nations later joined in the case to challenge Beijing’s export restrictions on raw materials.

The WTO dispute resolution panel found in favour of the US and the other petitioners, but Beijing appealed that decision. A hearing was held at the WTO in early November last year, and the final decision announced on Monday was again in support of the plaintiffs.

Kirk said that the WTO now will call upon Beijing to rescind the offending export restrictions.

“Today’s report is a tremendous victory for the US – particularly for its manufacturers and workers,” Kirk said.

He said that the Obama administration “will continue to ensure that China and every other country plays by the rules, so that US workers and companies can compete and succeed on a level playing field”.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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