WTO sets panel on China raw material export curbs

The World Trade Organisation set up a panel on Monday to rule on complaints by the United States, European Union and Mexico about Chinese curbs on exports of raw materials important to their own industries.

The three, who agreed that only one panel need to look into the issue although they filed their complaints separately, argued that the restrictions pushed up costs of materials used to produce steel, aluminium and chemicals.

China had blocked a previous request for a dispute panel, to be composed of three trade experts who will have six months to come up with their findings, but under WTO rules was not able to reject it a second time.

Most disputes at the WTO, which umpires the rules for global commerce, involve attempts to block imports unfairly.

But in this case, the complainants argue that China's export restrictions give an unfair advantage to its domestic industries which can buy the raw materials involved more cheaply.

A U.S. official told the WTO's Dispute Settlement Body (DSB) that the curbs included export quotas and duties, minimum export pricing, and limits on the right to export and other measures that pushed up export prices for the goods involved.

The official, echoed by diplomats from the 27-nation EU and Mexico, argued that the Chinese measures not only violated WTO trading rules but also the terms of the agreement under which China entered the WTO in 2000.

China says the restrictions -- on exports of bauxite, coke, magnesium, manganese and other minerals -- are needed to conserve natural resources.

A Chinese representative told the DSB that Beijing felt the decision by the three to go ahead with the panel request in the case would not help find a solution, and that continuing dialogue would have been better.

He also argued that the way the three had formulated their complaint made it difficult to prepare a defence because the legal base on which it was based was not sufficiently clear.

China would ask the panel, likely to start work in the New Year, for a quick ruling on that issue, he said.

In a move ahead of Monday's WTO dispute settlement body meeting, China announced last Wednesday that it would cut export duties in 2010 on certain forms of three other base metals -- molybdenum, indium and tungsten.

At the same DSB meeting on Monday, the United States was able to block China's request for a panel to rule on U.S. additional duties on Chinese tyres imposed in September.

Under WTO regulations it will not be able to block a second request, which China could make at the next meeting of the DSB, set for Jan. 19.

Washington imposed the 35 percent duties because unions had complained that Chinese low-price tyres were flooding into the country, destroying jobs.

Global trade rules allow countries to impose temporary duties as a safeguard against sudden surges of imports.

In another development at the DSB session, the Philippines rejected a call by the European Union for a panel to examine Manila's taxes on spirits. If Brussels persists in the case, as expected, a panel will be created automatically in January.

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