U.S. takes on China in WTO over raw material export duties

The United States has asked the World Trade Organization to press for China’s elimination of export duties on nine different raw materials used in the manufacture of wide range of high-tech and industrial products.    The United States has asked the World Trade Organization (WTO) to press for China’s elimination of export duties on nine different raw materials used in the manufacture of wide range of high-tech and industrial products.
   “When China joined the WTO, China agreed to eliminate its export duties on these products, but it has failed to follow through on this commitment,” the White House’s Office of the U.S. Trade Representative said in a statement Wednesday. “The export duties China imposes provide substantial competitive advantages for Chinese manufacturers by making them more expensive for U.S. manufacturers that rely on these raw materials to produce their downstream goods.”
   China continues to assess export duties on antimony, cobalt, copper, graphite, lead, magnesia, talc, tantalum and tin. These metals are important to U.S. industries such as aerospace, automotive, electronics and chemicals.
   “These duties are China’s attempt to game the system so that raw materials are cheaper for their manufacturers and more expensive for ours,” U.S. Trade Representative (USTR) Michael Froman said. “This scheme is directly at odds with WTO commitments China has made, and as we’ve shown time and again, we will hold them accountable to their commitments.”
   The USTR noted China’s export duties on these raw materials range from 5 to 20 percent ad valorem.
   In two previous WTO disputes (China – Measures Related to the Exportation of Various Raw Materials and China – Measures Relating to the Exportation of Rare Earths, Tungsten, and Molybdenum), the WTO confirmed that China is obligated to eliminate export duties on any products other than those listed in the annex. The WTO also found that China cannot seek to justify imposing such export duties through the exceptions listed in Article XX of the GATT 1994.
   “Through this new WTO action, the United States seeks to extend and reinforce the important victories obtained by the United States in those two previous WTO challenges,” USTR said.
   Consultations are the first step in the WTO dispute settlement process. If the United States and China are not able to reach a mutually agreed solution through consultations, the United States may then request that the WTO set up a dispute settlement panel to examine the matter.
   The Obama administration has been praised by a number of U.S. trade associations and lawmakers for its continued efforts to press China in the WTO to bring its trade policies and practices in line with its global obligations.
   “The use of export duties by our competitors impacts the ability of U.S. companies to compete globally, and constitutes the kind of unfair subsidy practice we should be challenging vigorously in the WTO,” said National Foreign Trade Council President Rufus Yerxa.
   “It is the responsibility of the United States to lead the way in fighting for fair trade standards. Today’s action against China is a step in the right direction towards creating a more level playing field for American workers, farmers, and businesses,” said Rep. Ron Kind, D-Wis., in a statement.