U.S. Files WTO Case Against China Over Export Restraints on Raw Materials
The Office of the U.S. Trade Representative has announced that the U.S. has requested World Trade Organization dispute settlement consultations with China regarding its export restraints on numerous important raw materials.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
This is the first WTO dispute settlement proceeding launched by the U.S. under the Obama Administration.
EU Also Requests WTO Consultations with China
The European Union also requested formal WTO consultations with China on this matter. According to an EU press release, it has raised the issue with China repeatedly over the past years without success, and now hopes to use the WTO consultation process to arrive at a mutually satisfactory solution with China.
China a Top Global Producer & Exporter of Raw Materials at Issue
The USTR states that China ranks as a top global producer and exporter of the following raw materials at issue, which are key inputs for numerous downstream products in the steel, aluminum, and chemical sectors:
| bauxite | coke | fluorspar |
| magnesium | manganese | silicon metal |
| silicon carbide | yellow phosphorous | zinc |
USTR Says China Imposes Several Different Export Restraints
According to the USTR, China imposes several different export restraints, including:
export quotas (caps on the volume of the material that may be exported), which are generally prohibited by applicable WTO rules;
export duties which China expressly agreed to eliminate when it joined the WTO; and
other export related administrative measures and costs, all of which appear to be inconsistent with WTO principles.
China's export restraints can disadvantage foreign downstream producers. First, these restraints limit exporters' access to these raw materials. Second, the restraints can significantly raise the world market prices for the materials, while lowering the prices that domestic Chinese producers have to pay. Lower-priced downstream Chinese products derived from the materials can then enjoy an anticompetitive price advantage vis--vis the same products produced outside China.
Dispute Settlement Panel May Be Requested if Consultations Fail
Consultations are the first step in a WTO dispute. Under WTO rules, parties that do not resolve a matter through consultations within 60 days may request the establishment of a WTO dispute settlement panel (DSP).
(The USTR notes that China issued a measure that appears to reduce certain export duties as of July 1, 2009 to promote exports, but it does not appear to affect the duties on eight of the nine materials (yellow phosphorus is the exception).
USTR press release (dated 06/23/09) available at http://www.ustr.gov/about-us/press-office/press-releases/2009/june/united-states-files-wto-case-against-china-over-expor
EU press release (IP/09/986, dated 06/23/09) available at http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/986&format=HTML&aged=0&language=EN&guiLanguage=en