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U.S. Pursues WTO Complaint Against Chinese Restrictions on Raw Materials Exports

Thursday, October 27, 2016
Sandler, Travis & Rosenberg Trade Report

The Office of the U.S. Trade Representative is accepting through Dec. 15 comments on the issues raised in a World Trade Organization dispute against Chinese restrictions on exports of nine raw materials. The U.S., along with the European Union, recently advanced this case by requesting the establishment of a dispute settlement panel.

USTR states that China maintains export duties of 5 to 20 percent, quantitative restrictions such as export quotas, and additional requirements (such as prior export performance requirements) that impose restrictions on the trading rights of enterpriser seeking to export various forms of antimony, chromium, cobalt, copper, graphite, indium, lead, magnesia, talc, tantalum, and tin. These materials are used to produce high-value products in the aerospace, automotive, electronics, chemicals, and other sectors.

USTR has said that China’s export restraints raise the prices of raw materials for downstream manufacturers outside of China while lowering the prices paid by manufacturers in China, thus creating pressures on foreign 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) and to not restrict the right to export goods (e.g., through quotas). 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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