China Programme • Volume 7 • Number 18 • 19th October 2007
CHINA UNDER FIRE AT WTO FOR LIMITING EXPORTS OF NATURAL RESOURCES
CHINA UNDER FIRE AT WTO FOR LIMITING EXPORTS OF NATURAL RESOURCES
Some of China’s trading partners have targeted the country’s policies limiting exports of coke, steel and trace metals.
The US, the EU and Japan submitted documents at the WTO, which were discussed at a 15 October meeting of the Committee on Market Access that reviewed Beijing’s implementation of its WTO obligations.
US says its steel, car, semiconductor industries disadvantages
At the 15 October meeting, the US asked China to justify export quotas on raw materials including coke, silicon, tin, and zinc, saying the limits "significantly disadvantage" foreign producers reliant on the raw materials (the US submissions, G/MA/W/89 is available at http://docsonline.wto.org). According to the US, these raw materials are used to produce steel, chemicals, airplanes and automobiles, and the export quotas give Chinese manufacturers "a massive advantage over their American competitors." Specifically, Washington expressed concern that the export limits had been imposed with "no comparable restrictions on domestic sales."
The US also complained that China has failed to notify its export quotas as required at the WTO.
According to Stephen Norton, spokesperson for the US trade representative in Washington, "We are trying to work out our problems through dialogue. It does not mean a WTO case is imminent or being planned."
The EU also asked China to justify export limits on coke and certain non-ferrous metals, and to explain potential future export limits on high-polluting steel industry products, including pig iron and steel scrap (G/MA/W/91).
Japan asks for information on environmental policies, effects
Japan expressed similar concerns (G/MA/W/90), suggesting that in light of Beijing’s justification of the policy on "resource protection, environmental protection, and trade surplus reduction grounds," a failure to impose domestic restraint measures would leave China in violation of WTO rules on export restrictions. According to Japan, China’s measures cannot be justified under GATT Article XX - which allows for exceptions to trade rules when the preservation of natural resources are at stake - because the measures only target exports.
Japan asked for additional specific information domestic production, consumption and restrictions in order to justify the quantitative restrictions of exports of trace metals such as rare-earths, tungsten, antimony, tin, silver, magnesium, bauxite, indium and molybdenum. The two last trace metals were covered by export restrictions since July 2007, and Japan claims that the number of export licences has been declining for all non-ferrous metals.
Background
China is the main global producer for many raw materials, including antimony, coke, fluorspar, indium, magnesium carbonate, rare earths, silicon, talc, tin, tungsten and zinc. For example, in 2005, China produced 84 percent of the world share of antimony; one-third of the world’s tin; and one-fourth of the world’s zinc.
China had to agree to reviews of its compliance with its WTO obligations as part of the price of its accession the global trade body in 2001. Sources report that the delegations repeated the acrimonious exchange typical of these reviews at the 15 October meeting: the EU, Japan, and the US expressed dissatisfaction with China’s answers, and China complained that some of the questions were inappropriate and even unrelated to its commitments or the WTO’s mandate.
China’s trading partners are also targeting the country on other grounds, including infringement of intellectual property rights and unfair subsidies (see Bridges Weekly, 17 October 2007, http://www.ictsd.org/weekly/07-10-17/wtoinbrief.htm).
ICTSD reporting; "US, EU, Japan press China at WTO over promises to open markets," AP, 16 October 2007.