China broke trade rules, WTO says in appeal

The World Trade Organization on Monday upheld its ruling that Chinese restrictions on key raw material exports broke trade rules following an appeal by Beijing.

China must bring its duty and export quota measures on elements including magnesium and zinc into line with its WTO obligations, an appeal body said.

The WTO found in favour of the United States, European Union and Mexico in July following a complaint that China had failed to meet the promises it made when joining the body.

They argued that restrictions on the export of the materials, some of which cannot be found outside China, pushed up prices on the foreign market and lowered costs for domestic producers.

In its defence Beijing said measures on some were justified to conserve its natural resources.

Officials launched an appeal on August 31.

The dispute centres on bauxite, coking coal, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus and zinc — many of them vital to the chemical and metal industries for producing things like medicines, fridges and juice cans.

Both the U.S. and the European Union claimed victory after the publication of the appeal body’s report.

“Today’s report is a tremendous victory for the United States — particularly its manufacturers and workers,” U.S. trade ambassador Ron Kirk said.

“Today’s decision ensures that core manufacturing industries in this country can get the materials they need to produce and compete on a level playing field.”

EU trade commissioner Karel De Gucht said the ruling represented a success in efforts to ensure fair access to raw materials for EU industry.

“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,” the commissioner said.

A statement from the Chinese mission to the WTO said Beijing “deeply regretted” the decision.

“China takes the view that the WTO rules ... allow a member to take necessary means to realize its policy objectives such as protection of the exhaustible resources and the environment,” it said.

“A solution should be found by balancing different policy objectives.”

China said it respected the ruling however.

It said it would “apply reasonable policies to administer products” according to WTO rules.