A WTO panel has ruled China’s export limits on raw materials, including some with pharma uses, are unfair after claims they drive up prices.
Mexico, the US, and the European Union (EU) filed complaints with the World Trade Organization (WTO) about duties and quotas imposed by China. A panel has sided with the complainants and recommended the WTO asks China to drop its export duties and quotas.
“The panel found that the series of measures operating collectively has resulted in the imposition of export duties or export quotas that are inconsistent with China's WTO obligations”, said the report .
China joined the WTO in 2001 and made certain commitments. In 2009, the US and EU, followed by Mexico, began a WTO dispute claiming export restrictions disadvantage foreign companies by driving up prices. This, in turn, gives Chinese companies an advantage, said the complainants.
Ron Kirk, US trade representative, said: “China’s policies provide substantial competitive advantages for downstream Chinese industries. They have also caused massive distortions and harmful disruptions in supply chains throughout the global marketplace.”
China said the export restrictions are intended as environmental standards to preserve natural resources. However, the panel has sided with the complainants and, pending a possible appeal, the WTO is expected to ask China to drop its export duties and quotas.
"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 Karel De Gucht, EU trade commissioner.
Raw materials covered by the ruling include zinc, magnesium, manganese, bauxite, coke, fluorspar, silicon carbide, silicon metal, and yellow phosphorus.