Updated: January 31, 2012 22:23 IST

China unfairly limits raw material exports: WTO

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A file picture of the Director General of WTO Pascal Lamy a the World Trade Organisation( WTO), in Geneva, Switzerland.
A file picture of the Director General of WTO Pascal Lamy a the World Trade Organisation( WTO), in Geneva, Switzerland.

The ruling is a major victory for U.S., India and others

Led by the U.S., several countries, including India, Mexico and Brazil, have won their battle against China at the World Trade Organization on export of raw material. In a ruling, the WTO Appellate Body found China's export restraints on several industrial raw materials used as key components in steel, aluminium and chemicals industries to be inconsistent with China's WTO obligations.

The Appellate Body affirmed a WTO dispute settlement panel's July, 2011, finding, therefore, agreeing with the U.S. and rejecting China's attempts to portray its export restraints as conservation or environmental protection measures or measures taken to manage critical shortages of supply.

“Today's report is a tremendous victory for the United States — particularly its manufacturers and workers,” the U.S. Trade Representative, Ron Kirk, said in a statement. “The Obama Administration will continue to ensure that China and every other country play by the rules so that U.S. workers and companies can compete and succeed on a level playing field,” he said. The export restraints challenged in this dispute include export quotas and export duties, as well as related minimum export price, export licensing, and export quota administration requirements. The raw materials at issue include various forms of bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus, and zinc. Export restraint on these types of industrial products could skew the playing field against the U.S. and other countries in production and export of numerous steel, aluminium and chemical, and a wide range of other products, the USTR said.

They can artificially increase world prices for these raw materials while artificially lowering prices for Chinese producers.

This enables China's domestic producers to produce lower-priced products from the raw materials and, thereby, creates significant advantages for China's producers when competing against US and other producers, both in China's market and other countries' markets. Such export restraints can also create substantial pressure on foreign producers to move their operations and, as a result, their technologies to China.

The European Union and Mexico joined the U.S. as co-complainants in the dispute.

Upon a U.S. request, the WTO Dispute Settlement Body (DSB) will adopt the panel and Appellate Body reports within 30 days and call for China to bring its measures into compliance with its WTO obligations.

Argentina, Brazil, Canada, Chile, Colombia, Ecuador, India, Japan, Korea, Norway, Saudi Arabia, Chinese Taipei, and Turkey joined as third parties in the dispute. — PTI

Beijing regrets

Chinese officials have expressed their regret that the World Trade Organization (WTO) has upheld its ruling against China in a raw materials export case, the Ministry of Commerce (MOC) said Tuesday. China welcomed the WTO's support for China's appeal on major issues in the case, under a process which allows the ruling body to correct some false judgments. But, at the same time, it is regretful that the ruling has been upheld, the Ministry said in a statement on its website. In 2009, the U.S., the European Union and Mexico filed a complaint to the WTO, claiming China's export restrictions on nine raw materials, including zinc, coke and magnesium, inflated global prices and gave an unfair advantage to the country's domestic producers.

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