The United States and the European Union jointly called yesterday for World Trade Organization intervention regarding China’s export restrictions on raw materials, a move Chinese experts called “ridiculous and unacceptable.”
The move follows their failure to persuade China to reduce its export tariffs and raise quotas on materials such as rare earths, zinc, tin, tungsten and yellow phosphorous.
China’s production of rare earths made up 96% of the world’s total in 2005. Its exports rank first in the world, comprising 63% of the global trade volume.
“The European Union has today requested WTO consultations with China regarding China’s export restrictions on a number of key raw materials, which it considers are in clear breach of international trade rules,” the EU Commission said in a statement yesterday, according to AFP. “The EU 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.”
“The United States has also today requested consultations with China on this issue,” the statement added.
If such talks fail, the next step would be to request that a WTO panel hear the complaint, a step that can take years.
The EU and US complaints concern about 20 types of raw materials, such as copper and bauxite, that China has applied export restrictions on in the form of quotas and tariffs.
Mei Xinyu, a researcher with a think-tank under the Ministry of Commerce, called the move “ridiculous and unacceptable,” saying China has the right to make those types of decisions on export issues.
Mei noted that rare earth minerals such as tungsten “are strategic resources that should be preserved for the nation’s future. If the US raises such a case, it could have a domino effect, as China could also lodge a complaint over the reserve system of strategic resources of the US,” notably oil.
Mei also argued that WTO cases usually take years, and the market situation could change a lot by then, considering other possible countermeasures by China, such as a reduction in its mining capacity of key raw materials.
“Such cases, even if the US wins, can only be vanity achievements of its trade officials,” Mei predicted.
The US and the EU have “staged such kind of shows” several times before, Mei added.
But US Trade Representative Ron Kirk said in Washington yesterday that “China’s measures appear to be part of a troubling industrial policy aimed at providing substantial competitive advantages for the Chinese industries using these inputs.”
“We are going to the WTO today to enforce our rights, so we can provide American manufacturers with a fair competitive environment and put more American workers back on the job,” Kirk told AFP.
The EU decided in 2000 to exert anti-dumping duties on China’s exported coke, a key raw material for steel makers, when the European steel industry was in a slump. But when the steel-making industry started warming, the EU asked China instead to ease its export restrictions on coke and complained that the unavailability of coke from China had forced European prices upward. The EU Commission decided in 2004 to suspend its anti-dumping tax on coke from China.
“China can’t accept the free demand from other countries,” Mei noted.
China’s Ministry of Commerce defended the restrictions on raw materials at a press conference last week in Beijing, saying that if the US and the EU filed a WTO suit against China, the ministry would handle consultations positively with concerned countries.
China’s Ministry of Finance said in a statement Monday that China will abolish export duties on some industrial products and cut the duties for chemical fertilizers and nonferrous metals from July 1 to promote exports, according to Xinhua.
Export duties for some nonferrous metals including molybdenum, tungsten and indium will be halved to 5 percent, the statement said.