US challenges China over raw materials duties at WTO

WASHINGTON, USA – The United States challenged China at the World Trade Organization (WTO) on Wednesday, July 13, over Beijing’s export duties on 9 raw materials, alleging they give an unfair competitive advantage to Chinese companies.

The Obama administration envoy announced the WTO filing, noting that when China joined the WTO in 2001, it agreed to eliminate the export duties on these products but had failed to follow through on the commitment.

The 9 materials – antimony, cobalt, copper, graphite, lead, magnesia, talc, tantalum, and tin – are to key industrial sectors, from aerospace and car manufacturing to electronics and chemicals, the US Trade Representative’s office said in a statement.

China’s export duties range from 5% to 20%, raising the prices on the materials used by manufacturers outside China and allowing Chinese companies to manufacture lower-priced goods, the USTR said.

In addition, the export duties put pressure on non-Chinese manufacturers to shift production, technologies, and jobs to China, it said.

“These duties are China’s attempt to game the system so that raw materials are cheaper for their manufacturers and more expensive for ours,” said USTR Michael Froman in the statement.

“This scheme is directly at odds with WTO commitments China has made, and as we’ve shown time and again, we will hold them accountable to their commitments.”

The WTO challenge is the 13th enforcement action against China brought to the WTO since President Barack Obama took office in 2009. The US has won every case to date, the USTR said.

The challenge is the first step in settling the trade dispute: a request for consultations with China over the matter. If consultations fail, the US could ask the WTO set up a dispute settlement panel to look at the case.

The Obama administration emphasized its commitment to enforcing trade pacts amid a 2016 presidential campaign where anti-trade sentiment has become an issue.

“This case is part of the administration’s continuing work to level the playing field for American workers and manufacturers in order to grow our economy and support quality jobs here at home,” Froman said. – Rappler.com