U.S., Europe Seek WTO Help With Chinese Export Restraints

In parallel moves, the U.S. and the EU announced that they are taking a harder line on China’s attempts to restrain exports of key materials.

U.S. Trade Representative Ron Kirk announced Tuesday that the United States is initiating formal dispute settlement consultations at the World Trade Organization on China's export restraints on several important raw materials, including bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus, and zinc. Kirk said his agency “is very concerned that China appears to be restricting the exports of these materials at the expense of U.S. industries that need these materials, and their workers. This appears to be occurring despite strong WTO rules designed to discipline export restraints.”

In Brussels, the European Union requested formal WTO consultations with China on about ten industrial raw materials, the European Commission said Tuesday. If consultations fail to resolve either of these disputes, the next step in each case would be for the U.S. or the EU to request a WTO panel to hear the complaint.

Kirk said 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” in the production of numerous downstream products in the steel, aluminum and chemical sectors. China is a major producer of these raw materials. “These export restrictions by China skew the playing field against American workers and businesses. They unfairly advantage Chinese producers. Under WTO rules, such distortion of the playing field on trade is simply not allowed.”

Kirk added, “In his 2009 trade policy agenda, President Obama promised Americans that his administration, including USTR, would stand up for the rights of American workers and businesses in the rules-based global trading system. We believe that on a level playing field, American workers and businesses can compete and win anywhere in the world. China's policies on these raw materials seem to put a giant thumb on the scale in favor of Chinese producers.”

For her part, EU Trade Commissioner Catherine Ashton said, "The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies in this economic downturn."

Contact Alan Field at afield@joc.com.