China rebuffs US and EU over trade attack

The US and the EU filed a joint complaint to the World Trade Organisation on Tuesday, accusing China of restricting exports of some raw materials in order to help Chinese manufacturers.

Ron Kirk, a US trade representative, said it was the first time the US had complained about China to the WTO since Barack Obama took office this year.

He said the US is "deeply troubled at what appears to be a conscious policy to create unfair advantages for Chinese industries by making raw materials cheaper for China¡¯s companies to get and goods more economical for them to produce."

China has high export taxes on a range of ingredients used in steel, aluminium and chemicals such as bauxite, coke, magnesium, silicon metal, yellow phosphorous and zinc. Mr Kirk added that two years of negotiations with China on the issue had been fruitless.

China is either a major supplier or the only source of the materials in question, the EU said. The materials are used to make everything from electonics to cars. "Many of these are very important for China and its manufacturing industry," said Judy Zhu at Standard Chartered.

"China uses its export duties to keep these resources at home".

The Chinese Trade ministry quietly rebuffed the WTO complaint. "The main objective of China's relevant export policies is to protect the environment and natural resources. China believes the policies in question are in keeping with WTO rules," said the ministry of Commerce. "Following the WTO procedures for dispute resolution, China will appropriately handle the request for consultations."

The tone of the response was relatively mild compared with some of the vehement reactions China has had to previous complaints. Beijing also retaliated with its own request for the WTO to investigate US restrictions on the import of Chinese poultry products.

The US and China banned imports of each other¡¯s poultry in 2004 after outbreaks of bird flu but China lifted its ban in September last year and the US has not reciprocated.

The complaint is the latest in a series of trade spats between China and the West, with both sides trying to protect their domestic manufacturers. The US has introduced "Buy American" legislation and China has also reminded companies and government offices to "Buy Chinese".

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