US, EU charges on export curbs rejected

By Ding Qingfen (China Daily)
Updated: 2009-06-25 07:31

The government Wednesday dismissed charges by the United States and Europe that its restrictions on exports of some raw materials violate international trade rules, saying that its policies were in keeping with World Trade Organization (WTO) regulations and meant to protect valuable natural resources.

"The main purpose of certain export measures is to protect the environment and precious resources. These policies are in line with WTO rules," the Ministry of Commerce said in a statement.

On Tuesday, the US and the EU said they were filing a complaint with the WTO about China raising the export tax and reducing export quotas on some raw materials - in force since 2007 - arguing the policy is not in line with China's commitments when it joined the WTO in 2001.

The export curbs on some industrial raw materials harm their downstream producers, including steelmakers, chipmakers and the aerospace industry, they said.

This is the first WTO case the Barack Obama administration has filed, and Canadian officials said they had not ruled out joining the case.

Nine raw materials are listed in their complaints: Coke, bauxite, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc. They include a range of strategic minor metals used in applications such as alloys, ceramics, mobile phones and light bulbs.

The appeal comes after Washington and Brussels failed in the past two years to persuade China to lift the restrictions.

China has rich deposits of the nine raw materials. Annually, the nation accounts for 50 percent of global coke exports, 50 of the fluorspar, and 30 percent of zinc.

Under the WTO dispute-resolution framework, the US and the EU will first seek consultations with China. If they cannot reach consensus within 60 days, they have the right to ask the WTO to appoint a panel to hear the complaint.

"It's very much hoped that we will not have to proceed to the next stage," US Trade Representative Ron Kirk told a press conference on Tuesday in Washington.

In the 1990s, China extended tax rebates to stimulate the exports of some rare metals. But as outbound trade soared, the government increased the export tax on specific rare metals thrice since 2005, with 2007 seeing the biggest jump.

According to EU Trade Commissioner Catherine Ashton, "the Chinese restrictions distort competition and increase global prices, making things even more difficult for our companies in this economic downturn".

But Chinese trade experts challenged the argument.

"Although WTO rules say members should not set barriers on imports and exports, some specific cases concerning national safety, environmental protection and natural resources are considered exceptions," said Fu Donghui, managing director of Allbright Law Firm Beijing. China's rare metals had been exported at an unreasonably low price, which led to huge losses in precious natural resources, said Chen Gong, senior analyst from Anbound Group. "Restrictions are vital."

In the past two years, exports have seen a decline, said Liu Yinan, vice-chairman of the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters.

The commerce ministry also said yesterday that China has asked the WTO to investigate a US ban on imports of Chinese poultry, saying it's a discriminatory measure.

In 2004, the two countries banned imports of each other's poultry following an outbreak of bird flu. China lifted its ban after a few months, but the US has failed to implement its promise to open its market.