The International Trade Practice Center on Bloomberg Law® provides in one comprehensive, time-saving resource.
July 19 — China faces scrutiny at the World Trade Organization over export restrictions on raw materials for manufacturing airplanes, cars, computers and mobile phones, after U.S. and European Union trade officials launched a joint WTO dispute.
Specifically, the EU and the U.S. challenged the legality of China's 5 percent to 20 percent export duties on 11 raw materials—antimony, chromium, cobalt, copper, graphite, indium, lead, magnesia, talcum, tantalum, and tin—and China's export quotas on antimony, indium, magnesia, talc, and tin.
The trade restrictions do not comply with the terms of China's 2001 WTO accession agreement, which requires Beijing to eliminate all taxes or charges on exports of such products, according to the joint complaint.
A WTO victory could help reduce key input costs for various U.S. producers such as Abermarle Corp., Apple Inc., Boeing Co., Ford Motor Co., General Motors Co., Nucor Corp., the United States Steel Corp. and Vulcan Materials Co.
The total annual export value of the products in question exceeds $1.3 billion, according to the EU.
The measures create an unfair playing field, U.S. Trade Representative Michael Froman told reporters. Froman said during a July 19 press call that he is “confident” the WTO will find such practices to be illegal.
The U.S. earlier won a similar WTO dispute against China's export restrictions on rare-earth minerals (242 ITD, 12/17/13).
The joint request for consultations supersedes and expands upon last week's U.S. WTO dispute filing against China because it challenged Beijing's export quotas in addition to its export duties (135 ITD, 7/14/16).
“The export quotas that we are highlighting today have the same distortive effect as export duties,” Froman said. They “make it less expensive for Chinese manufacturers and more expensive for foreign manufactures,” he said.
European Trade Commissioner Cecilia Malmstroem told reporters it's “crystal clear” that the Chinese export restrictions violate international trade rules and noted that the EU won its previous two trade disputes against China
The EU agreed to file its dispute with the U.S. dispute after Malmstroem and her Chinese counterparts failed to reach an agreement over the matter during a meeting in Beijing this month, she said.
Froman and Malmstroem said the dispute is unrelated to the ongoing debate over whether WTO members should consider China a market economy after a key provision of its accession protocol expires on Dec. 11, 2016.
“This is not really an issue of market economy because obviously China is not a market economy,” Malmstroem said.
“Market economy status is a separate issue,” Froman said. “We have our statutory criteria to help define what the process is and what the standards are for achieving that status and that's separate from any of these sorts of actions.”
If the U.S. and other major WTO economies—such as Canada, the EU and Japan—were to grant China market economy status, they would lose their ability to protect domestic companies with higher dumping margins based on comparable market prices.
China could launch a major WTO dispute against those countries don't grant it market economy status this year, which would risk worsening trade relations.
Europe has been emboldened by two previous victories over China at the WTO. The Geneva-based global trade arbiter ruled in 2012 against Chinese export restrictions on nine other raw materials—bauxite, coke, fluorspar, magnesium, silicon carbide, silicon metal, yellow phosphorus and zinc (19 ITD, 1/31/12). In 2014, it ruled against similar curbs on rare earths, tungsten and molybdenum (170 ITD, 9/3/14).
A request for consultations is the first step in the WTO dispute settlement process and trade officials from the three countries will soon meet in parallel discussions to resolve the matter.
The U.S. and EU may ask the WTO establish a dispute settlement panel to jointly investigate the dispute, if the U.S., EU and China are unable to reach a mutually agreed solution through consultations.
China's loss of the case could permit Brussels and Washington to impose trade sanctions against it, if Beijing doesn't comply with the ruling.
With assistance from Jonathan Stearns
To contact the reporter on this story: Bryce Baschuk in Geneva at firstname.lastname@example.org
To contact the editor responsible for this story: Jerome Ashton at email@example.com
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)