Wednesday, February 10, 2010

November 06, 2009 13:03 PM

EU Queries WTO Panel On China Export Restrictions On Key Raw Materials

By Tengku Noor Shamsiah Tengku Abdullah

KUALA LUMPUR, Nov 6 (Bernama) -- The European Union has sought explanation from the World Trade Organisation (WTO) panel on Chinese export restrictions on a number of key raw materials which it considers a clear breach of international trade rules.

The EU has raised the issue with China repeatedly, including through formal WTO consultations, but without success.

" It has now turned to the WTO dispute settlement process to ensure China's compliance with international obligations.

The United States and Mexico also called for a panel on the same issue today," said EU Trade Commissioner Catherine Ashton in a statement e-mailed to BERNAMA today.

She said: " China's restrictions on raw materials continue to distort competition and increase global prices, making conditions for our companies even more difficult in this economic climate.

" I regret that the formal consultation process and significant EU engagement on this issue has not led to an amicable solution which would have been our preferred course of action," she said.

European industries have raised concerns over a number of years on export restrictions -- quotas, export duties and minimum export prices -- which China imposes on key raw materials such as yellow phosphorous, bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide and zinc.

Some of these resources cannot be found elsewhere.

Restrictions on raw materials give Chinese companies an unfair advantage as downstream industries in China have access to cheaper materials than their competitors outside China.

The chemical, steel and non-ferrous metal industries as well as their downstream clients are the main sectors concern.

The EU considers these restrictions are in violation not only of general WTO rules but also of specific commitments that China signed up as part of the WTO Accession Protocol.

The protocol sets out either prohibitions against the use of export duties or strict caps on a limited number of products and discipline the use of export licensing and binding minimum export prices.

The EU's concerns are not limited to the restrictions merely as further legal action cannot be ruled out if these concerns are not effectively addressed.

The EU asked for a formal WTO consultations on June 23 but the discussions did not lead to an amicable solution.

-- BERNAMA

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