On July 13, 2016, U.S. Trade Representative Michael Froman announced that the United States has launched a new trade enforcement action against the People’s Republic of China at the World Trade Organization (WTO) concerning China’s export duties on nine different raw materials. 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 announcement stated in part:
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. These nine raw materials – antimony, cobalt, copper, graphite, lead, magnesia, talc, tantalum, and tin – are key inputs into high-value Made-in-America products in vital industrial sectors, including aerospace, automotive, electronics, and chemicals. China’s export duties provide an unfair competitive advantage to China at the expense of American workers and manufacturers.
China’s export duties on these raw materials, which range from 5 to 20 percent ad valorem, disadvantage U.S. producers by raising the prices of these raw materials for downstream manufacturers outside of China, while lowering the prices paid by China’s manufacturers that use these same raw materials. These Chinese manufacturers are able to manufacture lower-priced goods using these unfairly priced raw materials, creating an uneven playing field for U.S. competitors. In this way, China’s export duties create pressures on U.S. and other non-Chinese producers to shift production operations, technologies, and jobs to China.