Trade Body Slams China on Raw Material Curbs

Posted July 5th, 2011 at 1:30 pm (UTC-5)
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Judges with the World Trade Organization say China broke global trade rules by limiting exports of raw materials needed to make products ranging from steel to electronics.

The WTO panel Tuesday rejected Beijing's argument that the curbs were needed to protect China's environment, ruling instead in favor of the United States, the European Union and Mexico.

The ruling affects the export of nine raw materials, including coke, bauxite, magnesium, silicon metal and zinc.

The U.S., EU and Mexico first filed the complaint in 2009, saying China's export restrictions were making it more difficult and more expensive to buy the raw materials. They also said that China had not placed any restrictions on domestic use of the materials.

U.S. Trade Representative Ron Kirk said the ruling represents a “significant victory,” while EU Trade Commissioner Karel De Gucht said he expects China will now comply with international rules.

China can either appeal the ruling or comply. If Beijing refuses to comply it could face retaliatory trade sanctions.

The WTO ruling could also affect another dispute between China and several industrialized nations over so-called rare earth elements, needed to make high-tech products like mobile phones, computers and hybrid cars.

China accounts for more than 95 percent of the world's rare earth supplies but has been tightening trade, causing steep price increases and prompting concern.

Beijing also halted rare earth shipments to Japan last year during a maritime dispute. Japan and other countries have been looking to diversify supply sources to reduce their dependence on China.