EUROPEAN COMMISSION - PRESS RELEASE
WTO rules in favour of EU against China's export
restraints on raw materials
Brussels, 30 January 2012 – The Appellate Body of the World Trade Organisation
(WTO) today confirmed the findings made by a Panel in July 2011 that China's
export restrictions on several industrial raw materials are in breach of WTO rules.
The WTO found that China's export restrictions are not justified for reasons of
environmental protection or conservation policy. Today's final ruling was welcomed
by Europe's trade chief.
"This final ruling is a great success in our efforts to ensure fair access to the much
needed raw materials for EU industry. Today's decision has confirmed that China's
export restrictions on these raw materials are incompatible with the WTO rules. It
sends a clear signal that such measures cannot be used as a protectionist tool to
boost domestic industry at the expense of foreign competition," said EU Trade
Commissioner Karel De Gucht. "China now must comply by removing these export
restrictions swiftly and furthermore, I expect China to bring its overall export regime
– including for rare earths - in line with WTO rules."
The Appellate Body confirmed the clear findings made by the Panel in its report last
summer. The Panel found that the export duties and quotas imposed by China on
various raw materials [various forms of: bauxite, coke, fluorspar, magnesium,
manganese, silicon carbide, silicon metal, yellow phosphorus and zinc] are
protectionist measures in breach of WTO rules and that China failed to justify them.
The Appellate Body in particular upheld the finding that China has committed
unconditionally in its Accession Protocol to the WTO not to levy export duties and
that this commitment cannot be reduced by reverting to the general exceptions of
the GATT.
The EU welcomes today's decision as a significant recognition of the
interdependence of all WTO Members – whether developed or developing – when it
comes to non-discriminatory access to raw material supplies as a fundamental
principle underlying the global trading system.
The EU supports and encourages all countries to promote an environmentally
friendly and sustainable production of raw materials. However, the EU strongly
believes that export restrictions do not contribute to this aim. There are more
effective environmental protection measures that do not discriminate against foreign
industry.
IP/12/87
Background
China applies export restrictions on key raw materials, some of which cannot be
sourced outside China.
Export restrictions 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.
As dialogue has not proven successful, the EU decided to have recourse to the
WTO dispute settlement mechanism for an important set of raw materials.
Restrictions on these materials 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.
The export restrictions challenged include mainly export quotas (bauxite, coke,
fluorspar, silicon carbide and zinc) and export duties (bauxite, coke, fluorspar,
magnesium, manganese, silicon metal, yellow phosphorus and zinc) as well as
some claims related to technical aspects of China's administration of export quotas
and licences and to a minimum export price.
The WTO dispute settlement case was initiated on 23 June 2009 by the EU and
US, followed by Mexico. Consultations were held with China but no amicable
solution was found. A WTO Panel was established on 21 December 2009. A first
ruling by a WTO Panel was issued on 5 July 2011 upholding most of the EU's
claims. China appealed certain aspects of this ruling on 31 August 2011. A hearing
took place before the WTO's Appellate Body on 7-9 November 2011.
The Appellate Body upheld all main claims raised by the EU. For procedural
reasons, the Appellate Body was not in a position to rule on some additional claims
on technical aspects of China's administration of export quotas and licences and to
a minimum export price.
In terms of next steps, the EU (and the co-complainants) will request the adoption
of the reports by the WTO Dispute Settlement Body within 30 days. China will then
have to bring its measures in compliance with the rulings within a reasonable period
of time.
For further information:
Memo:
Memo/12/58
Report of the WTO Appellate Body:
http://www.wto.org/english/news_e/news12_e/394_395_398abr_e.htm
The WTO Panel Report on case China – Measures Related to the Exportation of
Various Raw Materials (DS 394/395/398)
More information about WTO Dispute settlement
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Contacts :
John Clancy (+32 2 295 37 73)
Helene Banner (+32 2 295 24 07)
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