Thursday, 2 February 2012
EU welcomes WTO ruling against Chinese export restraints on raw materials
The Appellate Body of the World Trade Organisation (WTO) confirmed this week the findings made by a panel in July 2011 that China's export restrictions on several industrial raw materials are in breach of WTO rules.
EU Trade Commissioner Karel De Gucht
The WTO found that China's export restrictions are not justified for reasons of environmental protection or conservation policy.
The final ruling was welcomed by EU Trade Commissioner Karel De Gucht. "This final ruling is a great success in our efforts to ensure fair access to the much needed raw materials for EU industry. Today's decision has confirmed that China's export restrictions on these raw materials are incompatible with the WTO rules. It sends a clear signal that such measures cannot be used as a protectionist tool to boost domestic industry at the expense of foreign competition.
"China now must comply by removing these export restrictions swiftly and furthermore, I expect China to bring its overall export regime—including for rare earths—in line with WTO rules."
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The Appellate Body found that the export duties and quotas imposed by China on various raw materials [various forms of bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc] are protectionist measures in breach of WTO rules and that China failed to justify them.
The Appellate Body in particular upheld the finding that China has committed unconditionally in its Accession Protocol to the WTO not to levy export duties and that this commitment cannot be reduced by reverting to the general exceptions of the GATT.
The EU said that: “The decision was a significant recognition of the interdependence of all WTO members—whether developed or developing—when it comes to non-discriminatory access to raw material supplies as a fundamental principle underlying the global trading system.”
The EU added that it supports and encourages all countries to promote an environmentally friendly and sustainable production of raw materials.
However, it also strongly believes that export restrictions do not contribute to this aim. “There are more effective environmental protection measures that do not discriminate against foreign industry,” stated the EU this week.
Previous attempts at dialogue did not prove successful and so the EU decided to go to the WTO dispute settlement mechanism and focused on an important set of raw materials.
“Restrictions on these materials have caused concerns for European industry such as the chemical, steel and non-ferrous metal industries, as well as their downstream clients, ranging from producers of beverage cans, CDs, electronics, automotives, ceramics, refrigerators, batteries and medicines and many more,” it explained.
The EU (and the co-complainants the US and Mexico) will now request the adoption of the reports by the WTO Dispute Settlement Body within 30 days.
China will then have to bring its measures in compliance with the rulings within what the EU described as ‘a reasonable period of time’.
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