European Union and Mexico Join the United States in Request
November 4, 2009, Washington, D.C. — The Office of the United States Trade Representative announced today that the United States requested the World Trade Organization (WTO) to establish a dispute settlement panel regarding China’s export restraints on numerous raw materials critical to U.S. manufacturers and workers. The materials at issue are: bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus, and zinc, key inputs for numerous downstream products in the steel, aluminum, and chemical sectors across the globe.
The United States and the European Union requested formal consultations with China at the WTO on June 23, 2009, and Mexico filed its consultations request on August 21, 2009. Today, the European Union and Mexico are joining the United States in requesting the establishment of a WTO dispute settlement panel regarding this matter.
“We are going to the WTO today to enforce America’s rights, so we can provide our country’s manufacturers with a fair competitive environment. We believe the restraints at issue in this dispute significantly distort the international market and provide preferential conditions for Chinese industries that use these raw materials,” said Debbie Mesloh, a USTR spokeswoman. “Working together with the European Union and Mexico, we tried to resolve this issue through consultations, but did not succeed. At this point, therefore, we need to move forward with the next step in the WTO dispute settlement process. We remain open to working with China to find a mutually agreeable solution to our concerns.”
China imposes quotas on exports of bauxite, coke, fluorspar, silicon carbide, and zinc, as well as certain intermediate products incorporating some of these inputs. China also imposes export duties on several raw materials and imposes other export restrictions through its export procedures, including via certain charges (unrelated to any services rendered) that must be paid before certain products can be exported. In addition, China administers its export procedures unfairly in other respects, including, for example, by not publishing relevant measures in a manner that allows them to be readily available to governments and traders. Article XI:1 of the General Agreement on Tariffs and Trade (GATT) generally prohibits restrictions on exports other than taxes, duties, and charges. GATT Article X requires China to administer its measures in a uniform, impartial, and reasonable manner, and GATT Article VIII requires that any charges in connection with export be limited to the cost of services rendered. Further, China’s WTO Accession Protocol contains broad commitments not to restrict the right to export goods. Specifically, China committed as part of its WTO accession to eliminate export duties for all products other than those listed in a specific annex. China also committed to limit any export duties on the listed products to specified levels. The export duties being challenged are on products not listed in the annex or are imposed at rates that exceed the annex limits.
Requesting a panel is the next step in the WTO dispute settlement process after requesting consultations. The WTO’s Dispute Settlement Body will consider the U.S. panel request at its meeting scheduled for November 19.