Europe yesterday (13 March) challenged China in the World Trade Organization over its export restrictions on raw materials, simultaneously launching proceedings with the US and Japan for the first time.
The move follows a successful EU challenge at the WTO on similar restrictions for other raw materials earlier this year, the latest challenge covers exports of 17 rare-earth metals, as well as tungsten and molybdenum.
Beijing has set quotas for exports of rare earths, which are critical to the defence industry and manufacturers of high-tech products from hybrid cars to flat-screen televisions.
“These measures hurt our producers and consumers in the EU and across the world, including manufacturers of pioneering hi-tech and green business applications,” said EU Trade Commissioner Karel De Gucht, adding that China's restrictions on rare earths “violate international trade rules and must be removed”.
EU looks for knockout blow
The WTO in July 2011 ordered China to end its quotas and export duties on nine industrial raw materials, and an appeals body uphold that decision in January.
An EU official close to the case said China had made no moves to free the export restrictions since the earlier ruling and the new case was designed to get decisive results.
The official said EU companies had been compelled to relocate to China to get rare earths, and that the restrictions were costing European business “trillions of euros”.
China has denied the allegations in the WTO case, saying that it had enforced the quotas to ensure there was no environmental damage caused by excessive mining.
The EU claims that export restrictions do not address to this aim, saying there are more effective environmental protections that do not discriminate against foreign industries.
Chinese have faith in the WTO system
Wang Xining, a spokesman with the Chinese Mission in Brussels, said: “We have different views over the issue of raw materials exports, and we hope the issue will be properly dealt with within the WTO mechanism.”
Chinese experts told EURACTIV they hoped that proper weight would be accorded to the environmental arguments within the WTO, adding that it would inevitably involve a “long drawn-out procedure”.
The EU official said that sanctions – which can include import bans – would only result from failure of the long trade procedure at the WTO. If sanctions are ultimately necessary, however, the official said they would correspond to the trade abuse, and would amount to ‘very, very significant numbers’.