Wednesday, June 24, 2009

U.S., EU act against China on raw material exports

U.S., EU act against China on raw material exports
US files WTO case against China
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By Susan Cornwell and Darren Ennis
WASHINGTON/BRUSSELS (Reuters) - The United States and European Union took action against China on Tuesday for restricting exports of industrial raw materials, intensifying a trade struggle at a delicate time for the global economy.
In the United States the decision to bring the dispute before the World Trade Organization was seen as part of a more muscular trade policy promised by the Obama administration, but it added to tensions at a time when Washington counts on Beijing to keep buying its debt.
Europe and the United States had earlier failed to persuade resource-hungry China to reduce its export tariffs and raise quotas on materials like bauxite, coke and manganese that are used in steel, microchips, planes and other products.
Billions of dollars in trade flows are affected, and China gives its industries an unfair edge, U.S. officials said.
"After more than two years of urging China to lift these unfair restrictions, with no result, we are filing at the WTO today," U.S. Trade Representative Ron Kirk told a news conference in Washington.
"We are most troubled that this appears to be a conscious policy to create unfair preferences for Chinese industries" that use the materials, he said.
As a first step, the United States and the European Commission -- which oversees trade for the 27-nation EU bloc -- formally sought consultations with Beijing at the global trade watchdog. If these talks fail, after 60 days the next step would be to request a WTO panel to hear the complaint.
"It is very much hoped that we will not have to proceed to the next stage," Kirk said.
In Brussels, EU Trade Commissioner Catherine Ashton said: "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," she said in a statement.
CHINA LIMITING EXPORTS
The EU and the United States say China restricts exports of raw materials despite a pledge to eliminate export taxes and charges made when it joined the WTO in 2001.
This hurts foreign "downstream producers" of goods, such as aluminum producers and steelworkers, since the export restraints limit their access to raw materials and raise world market prices for the materials while lowering the prices that domestic Chinese producers have to pay, U.S. officials said.
U.S. officials said the nine materials covered by their case were bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc.
In Ottawa, Canadian officials indicated they had not ruled out joining the case. "For the moment, we are closely monitoring developments in this file," said Melisa Leclerc, spokeswoman for Canadian Trade Minister Stockwell Day. Continued...
Source: Reuters

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