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U.S. Expands WTO Complaint Against Chinese Export Duties, Quotas on Raw Materials

Monday, July 25, 2016
Sandler, Travis & Rosenberg Trade Report

The U.S. has broadened a challenge at the World Trade Organization concerning export duties China is imposing on raw materials. The original request targeted export duties of 5 to 20 percent on antimony, cobalt, copper, graphite, lead, magnesia, talc, tantalum and tin. The U.S. (joined by the European Union) has now expanded that request to include export duties on chromium and export quotas on antimony, indium, magnesia, talc and tin. A press release from the Office of the U.S. Trade Representative states that these latter materials are “key inputs into high-value U.S.-made products in vital industrial sectors, including aerospace, automotive, construction, and electronics.”

According to USTR, China’s export duties and quotas on these raw materials disadvantage foreign producers by raising the prices of raw materials for downstream manufacturers outside of China while lowering the prices paid by manufacturers in China, which are thus able to manufacture lower-priced goods. In this way, USTR states, China’s export restraints create pressures on non-Chinese producers to shift production operations, technologies and jobs to China.

Further, China committed as part of the terms of its WTO accession to eliminate export duties for all products other than those listed in a specific annex (which do not include those at issue in this challenge) and to not restrict the right to export goods (e.g., through quotas). The press release notes that in two previous disputes the WTO found that China’s imposition of export duties and export quotas on two different sets of raw materials was inconsistent with WTO rules and could not be justified as legitimate conservation or environmental protection measures.

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