China lost its appeal to the World Trade Organization Monday, which ruled that China must halt export taxes on raw materials, a much-heralded decision according to its western trading partners. The United States, European Union and Mexico filed W.T.O. legal cases in 2009, challenging China's right to restrict exports of materials including bauxite, coke, magnesium, manganese, and zinc.
The Appellate Body of the World Trade Organization, reviewing an earlier decision by a W.T.O. dispute settlement panel, said that the overall effect of China’s export restrictions was harming international trade and those policies must be dropped. The ruling supported a previous finding that export duties, quotas and other policies China imposed to limit the foreign sale of nine raw materials were not justified on environmental or self-sufficiency grounds.
This finding will likely impact moves to impose similar restrictions on the export of a rare earths, a category of 17 elements used in myriad high-tech products. The United States ordered a thorough investigation relating to China's support for its renewable energy industry. China produces in excess of 90 per cent of rare earth minerals. The country that generously loans its pandas to to other countries has acted aggressively to restrict its supply of rare earth minerals.
United States trade representative Ron Kirk made the following statement about the investigation. "The Obama administration will continue to ensure that China and every other country play by the rules so that U.S. workers and companies can compete and succeed on a level playing field."
The European Union touted today's decision as a significant recognition of the interdependence among all World Trade Organization members pertaining to non-discriminatory access to raw material supplies as a fundamental principle underlying the global trading system.
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