EU and US File Joint WTO Case over Chinese Export Constraints on Raw Materials

June 25, 2009

In a joint filing on June 23, 2009, the US and EU requested World Trade Organization (WTO) consultations with China over its export restraints on various raw materials. The request alleges that China’s export restraints disadvantage foreign downstream producers, such as U.S. steel, aluminum, and chemical manufacturers, by significantly raising world prices for raw materials, while lowering the prices that Chinese producers have to pay.  

According to a statement on the U.S. Trade Representatives’ (USTR) website, China imposes several export restraints, including export quotas (caps on the volume that may be exported), export duties, and other administrative costs, on raw materials (namely bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus, and zinc). In the statement, the USTR claimed that these measures “appear to be part of a troubling industrial policy aimed at providing substantial competitive advantages for the Chinese industries using these inputs.“

Under WTO rules, export restraints are highly regulated. Generally, export quotas are prohibited by WTO rules and export related administrative barriers are inconsistent with WTO principles. Furthermore, China agreed to eliminate most of its export duties when it joined the WTO.

Should the consultations fail to resolve the dispute within 60 days, the US and EU can request the establishment of a WTO dispute settlement panel (DSP). If the DSP rules that China’s measures are inconsistent with its obligations under the WTO, it could authorize both countries to impose retaliatory duties against Chinese products.