US, EU file WTO complaint over Chinese export restrictions - Summary

Washington/Brussels - The United States and European Union on Tuesday filed complaints with the World Trade Organization (WTO) against a variety of Chinese export restrictions on raw materials used by the steel, aluminium and chemicals industries. The moves follow several years of unsuccessful US and EU efforts to see the matter resolved. The WTO action charges that China is giving its companies an unfair advantage over foreign competitors. The export limits involve nine raw materials that are critical for the production of steel, aluminium and chemicals, which in turn are used to manufacture hundreds of different products. "After more than two years of urging China to lift these unfair restrictions without result, we are filing at the WTO today," US Trade Representative Ron Kirk told reporters in Washington. "Now more than ever we know that trade is essential to keeping America's economy afloat," Kirk said. China is either the top producer or a major producer of all nine raw materials. The US and EU argue that China is limiting exports to other countries, which drives up the costs for US firms but lowers the costs for Chinese competitors. "The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies in this economic downturn," said EU Trade Commissioner Catherine Ashton. "I hope that we can find an amicable solution to this issue through the consultation process." Should talks at the Geneva-based WTO fail, WTO judges would likely be asked to rule on the issue. China's restrictions include quotas, export duties and minimum export prices on a variety of raw materials, including yellow phosphorous, bauxite, magnesium, silicon and zinc. Some of these resources cannot be sourced from elsewhere, officials said. Kirk cited the example of coke, which is used to make steel. China produced 336 million metric tons of coke in 2008 - about 60 per cent of the world's supply - but limited exports to just 12 million metric tons. That put the global price for coke at 740 dollars per ton in August 2008, while the price in China stood at 472 dollars per ton. The EU and US argue such restrictions violate international trade rules. Trade officials from both regions said the nine materials chosen for the filing were only a start - more could be brought before the WTO in future. The restrictions affect European industries which provide around 500,000 jobs. US officials said the limits affected multi-billion- dollar trade flows. China is the United States' second-largest trading partner behind Canada, and the EU's second trading partner behind the US. China is the biggest source of imports for both regions. The EU is China's biggest trading partner.