In a dispute that highlights growing tension between China and its Western trading partners, the World Trade Organization ruled [on July 5] that Beijing violated global rules by restricting exports of nine raw materials used in the manufacturing of high-technology products,
reports the New York Times (via Boston Globe). The case had been lodged by United States, the European Union, and Mexico, in 2009.
The raw materials are widely used in the steel, aluminum, and chemicals industries, says the report.
The WTO ruling does not concern another dispute, about Chinese export restrictions on rare earths that are critical commodities in the electronics industry. But as China had cited environmental protection as a reason for export restrictions on both the nine raw materials the WTO has now ruled about, and the rare mineral earths, the decision is seen as strenthening other European arguments against Chinese restrictions on another category of exports – rare earths, 17 minerals also used in the high-tech industry.
China can appeal to the ruling, says the report. It can also comply with, or ignore the ruling. In the latter case, the United States, Europe, and Mexico will eventually be allowed to respond with equivalent trade sanctions.
That however, would hardly solve the problems of the industries which depend on Chinese exports.
According to the Chinese ministry of trade’s website – via Enorth -, the WTO ruled both against Chinese export quotas and tariffs on exports. The notice quotes a ministry official in charge of treaties and legal issues (条约法律司负责人) as saying that the Chinese side had expressed regret that the measures were not seen as in accordance with China’s commitments to the WTO, and that the ruling hadn’t taken the protection of environment (“humankinds life and health”) into consideration. (对于专家组裁定中方涉案的出口关税和出口配额措施不符合中方加入世贸组织的承诺和有关世贸规则，且未满足保护可用尽自然资源、保护人类生命健康等例外条款的条件，中方表示遗憾。) The Chinese side also pointed to a WTO commitment to sustainable and healthy development. (中方认为，这些措施的实施虽然对国内外的使用者有一定影响，但其符合世贸组织倡导的可持续发展目标，有利于促进资源类产业健康发展。) China would, in accordance with the WTO regulations, conduct scientific management of natural resources, protect fair competition, and promote sustainable development. China was now assessing the WTO ruling.
There have been suspicions that
Beijing is attempting to force foreign companies who want access to large quantities of rare earth metals to form joint-ventures with local firms and base their manufacturing operations within China,
to develop domestic champions that can compete with the leading international firms.
If so, WTO proceedings may be slow enough to help China implement such a strategy.