WTO upholds ruling on China's export restrictions

PUBLISHED : Wednesday, 01 February, 2012, 12:00am
UPDATED : Wednesday, 01 February, 2012, 12:00am


The World Trade Organisation has rejected China's appeal of a WTO ruling that found its restrictions on exports of nine raw materials breached trade rules.

The WTO concluded on July 5 that Chinese quotas, export duties and licence requirements on the country's exports of industrial ingredients that include coke, zinc and bauxite were discriminatory.

The restrictions fuelled friction between China and the United States, European Union and Mexico, which accused Beijing of favouring Chinese manufacturers.

Analysts said that as a result of the WTO Appellate Body's decision, China might have to remove export duties on the raw materials involved, and the US and the EU might make good on threats to complain to the WTO over Chinese restrictions on exports of rare earths, a group of 18 elements used in high-tech products.

'Even if China cuts export duties on the raw materials, exports may not increase because of strong demand on the mainland and the economic downturn in Europe and the US,' said Johnson Chan, the vice-chairman of the Hong Kong Energy and Minerals United Associations.

Coking coal has since 2009 been subject to a 40 per cent export tax, while its export quota shrank to 8 million tonnes last year from 11.93 million tonnes in 2009. In the first six months of last year, it stood at 4.6 million tonnes.

The Ministry of Commerce said yesterday it regretted the WTO decision, but would formulate policies to preserve natural resources.

US Trade Representative Ron Kirk said the WTO report was a 'tremendous victory', particularly for manufacturers and workers.

The European Commission said the report obliged China to bring the challenged measures into compliance with the rulings.

The EU said it continued to be deeply troubled by China's use of export restrictions on rare earths and many other industrial raw materials.