EU and US want WTO action to act on Chinese exports

The European Union has requested World Trade Organization (WTO) action over Chinese export restrictions on raw materials used by the steel, aluminium and chemical industries and EU officials said the United States had also filed a similar complaint against China. “The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies in this economic downturn. I hope that we can find an amicable solution to this issue through the consultation process,” said EU Trade Commissioner Catherine Ashton. The move follows several years of unsuccessful EU efforts to see the matter resolved. Should talks in Geneva fail, WTO judges would likely be asked to rule on the issue. EU officials say China imposes export restrictions in the form of 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 in Brussels said. The EU and the US argue that such restrictions violate international trade rules. “Restrictions on raw materials give Chinese companies an unfair advantage, as downstream industries in China have access to cheaper materials than their competitors outside China,” EU officials said in a statement. The restrictions affect European industries which provide around 500,000 jobs. China is the EU’s second trading partner behind the US, and the biggest source of EU imports. The EU is China’s biggest trading partner. The US complaint involves 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. China is either the top producer or a major producer of all nine raw materials. The US argues China is limiting exports to the US and other countries, which drives up the costs for US firms but lowers the costs for Chinese competitors. “After more than 2 years of urging China to lift these unfair restrictions without result, we are filing at the WTO,” 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.