EU, US seek WTO settlement over Chinese export restrictions (Roundup)

Nov 4, 2009, 16:40 GMT

Brussels/Washington - The European Union and the United States on Wednesday called on the World Trade Organization (WTO) to rule against export restrictions applied by China on raw materials used by the steel, aluminium and chemicals industries.

The decision to turn to the WTO's dispute settlement process follows unsuccessful attempts to resolve the issue through talks over the summer in Geneva, officials in Brussels and Washington said.

Mexico supported the EU and US move.

'China's restrictions on raw materials continue to distort competition and increase global prices, making conditions for our companies even more difficult in this economic climate,' said EU Trade Commissioner Catherine Ashton.

'I regret that the formal consultation process and significant EU engagement on this issue has not led to an amicable solution which would have been our preferred course of action,' Ashton said.

China is limiting the export of nine raw materials that are critical for the production of steel, aluminium and chemicals, which in turn are used to manufacture hundreds of different products.

The EU and the US argue that this is giving Chinese companies an unfair advantage over their foreign competitors. Debbie Mesloh, spokeswoman for US Trade Representative Ron Kirk, said the restraints amounted to 'preferential conditions' for China's industries.

We are going to the WTO today to enforce America's rights, so we can provide our country's manufacturers with a fair competitive environment,' Mesloh said.

China's restrictions include quotas, export duties and minimum export prices on raw materials such as yellow phosphorous, bauxite, magnesium, silicon and zinc. Some of these resources are difficult to find outside China, EU officials say.

Wednesday's move focuses on a first batch of measures and products. The US said it was still ready for talks with China, but has also warned of action against other Chinese export restraints in future.

'The EU's concerns are not limited to these measures and further legal action cannot be ruled out if these concerns are not effectively addressed,' officials said in a statement issued in Brussels.

China is the EU's second trading partner after the US and the biggest source of EU imports. The Asian power is the third-largest trading partner for the United States behind the 27-member EU and Canada.

China's non-tariff trade barriers mean that EU companies are denied business opportunities in China worth at least 20 billion euros a year, EU trade experts said.