EUROPEAN COMMISSION - PRESS RELEASE
EU welcomes WTO report on China's export restrictions on
raw materials
Brussels, 5 July 2011 – The WTO today ruled against China's export restrictions of
certain raw materials backing a case jointly brought by the EU, US and Mexico. The
WTO Panel has found that China's export restrictions were not justified on
environmental grounds and should be removed. Today's WTO decision was
welcomed by Europe's trade chief.
"This is a clear verdict for open trade and fair access to raw materials. It sends a
strong signal to refrain from imposing unfair restrictions to trade and takes us one
step closer to a level playing field for raw materials", said EU Trade Commissioner
Karel De Gucht. "I expect that China will now bring its export regime in line with
international rules. Furthermore, in the light of this result China should ensure free
and fair access to rare earth supplies."
The Panel's report clarifies the WTO rules on export restrictions. The findings do
not question a country's right to set environmental standards or to conserve their
natural resources. Such aims can justify trade restrictions under certain
circumstances.
However, the Panel is convinced that export restrictions on trading these materials
are not effective to ensure environmental protection because the production of
these materials is not similarly restricted. Without effective domestic measures to
manage the supply of its natural resources in a sustainable and environmentally
friendly way, the Panel considers that a country cannot rely on the exceptions
allowed under WTO law. The Panel states that such exceptions cannot justify
measures that shield domestic producers from foreign competition in the name of
conservation.
The EU supports and encourages efforts to promote a cleaner and sustainable
production of raw materials. However, the EU believes that export restrictions
cannot and do not contribute to this aim. There are much more effective
environmental protection measures that do not discriminate against foreign
industry. These include investment in more environmentally friendly technologies,
increasing environmental standards, pollution control and effective production and
consumption restrictions, as well as promoting recycling.
The panel's findings constitute a significant recognition of the interdependence of
all WTO Members – whether developed or developing – when it comes to raw
material supplies as a fundamental principle underlying the global trading system.
All countries will benefit when access to raw materials is ensured on a level and
non-discriminatory basis.
IP/11/834
Background
China applies export restrictions on key raw materials, such as bauxite, coke,
fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow
phosphorous and zinc. Some of these resources cannot be found outside China.
The export restrictions are mainly quotas (bauxite, coke, fluorspar, silicon carbide
and zinc), export duties (bauxite, coke, fluorspar, magnesium, manganese, silicon
metal, yellow phosphorus and zinc), a minimum export price system, as well as
additional requirements and procedures for exporters.
These have caused concerns for European industry such as the chemical, steel
and non-ferrous metal industries, as well as their downstream clients, ranging from
producers of beverage cans, CDs, electronics, automotives, ceramics, refrigerators,
batteries and medicines and many more.
Export restrictions can create serious disadvantages for foreign producers by
artificially increasing China’s export prices and driving up world prices. At the same
time, such restrictions artificially lower China’s domestic prices for the raw materials
due to significant increases in domestic supply. This gives China’s domestic
downstream industry significant competitive advantages and puts pressure on
foreign producers to move their operations and technologies to China.
The WTO dispute settlement case was initiated on 23 June 2009 by the EU and
US, followed by Mexico. Consultations were held with China regarding various
export restrictions on the exportation of certain raw materials but no amicable
solution was found. A WTO Panel was established on 21 December 2009.
For further information
MEMO/11/484 on the WTO Panel Report
The WTO Panel Report on case China – Measures Related to the Exportation of
Various Raw Materials (DS 394/395/398):
http://www.wto.org/english/news_e/news11_e/394_395_398r_e.htm
Contacts :
John Clancy (+32 2 295 37 73)
Helene Banner (+32 2 295 24 07)
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