WTO Restricts Dragon’s Exports

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A World Trade Organization (WTO) panel has found that China?s restraints on exports of certain raw materials violate WTO rules.

The WTO is set today to condemn China for limiting exports of major raw materials, rebuffing Beijing’s arguments that curbs are necessary to protect the environment, according to trade diplomats and lawyers.

The decision will help steelmakers and other industrial producers, but, more importantly, will set a precedent for the US and the European Union to file another complaint against China over its quotas on the export of rare-earth materials, 17 minerals used in the high-tech industry.

China recently imposed new export restrictions on rare earth minerals — crucial for the production of mobile phones, fiberoptics and other high-tech goods. China controls 97 percent of world production of the minerals.

Under WTO law, China now can appeal the decision on raw materials. If it doesn’t, or if it loses its appeal, it must remove its export restrictions or face retaliatory trade sanctions from the three complainants.

China, whose mines supply 97% of the world’s rare earths, says export reductions aim to protect the environment and scarce resources – an argument that would comply with world trade rules enforced by the WTO.

The WTO – which rarely comments on current disputes – has publicly questioned whether Chinese curbs on exports of some raw materials to conserve resources meet the stated goals or merely favour Chinese manufacturers.

The?EU, United States and Mexico sued China at the WTO in 2009, complaining that limiting exports of these raw materials through quotas and red tape discriminated against foreign manufacturers and gave Chinese producers an unfair advantage.

Sources: Euractiv, Cov, Reuters, WSJ

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