Today, following requests from the USA, the EU and Mexico, the WTO decided to establish a panel for the purpose of determining whether China restricts the export of raw materials contrary to WTO rules.
The raw materials at issue are: bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc. Alleged export restraints include duties, quotas, minimum prices, high customs fees and licensing requirements.
The USA, the EU and Mexico claim that the export restraints complained about increase global prices, favour Chinese companies and harm their own domestic industries. On its part, China has stated that its export restrictions are justified by natural resource and environmental conservation considerations.
A final decision will probably be rendered sometime in 2011. If the WTO ultimately finds against China, it will be required to remove any WTO-inconsistent export restrictions or face countermeasures from the USA, the EU and Mexico. A negative finding against China could also lead to future challenges against other Chinese export restrictions, e.g. those imposed on rare-earth elements (many of which are used in the production of "green" products such as hybrid cars and wind turbines).
More information about export restrictions
Although it is well-known that WTO rules aim to reduce protectionism on the import side, the rules concerning export restrictions are less known. In an article recently published in the Antitrust & Trade Law Report, Lode Van Den Hende and Jennifer Paterson from Herbert Smith's trade practice in Brussels provided an overview of WTO rules concerning export restrictions, including special rules applicable to China. They also discussed potential WTO means to remedy harm caused by export restrictions. A version of this article is now available on Herbert Smith's website and can be found here.