The World Trade Organization (WTO) ruled this week that China violated global rules by restricting exports of nine raw materials used in the manufacture of high technology products. The case, which dates from 2009, was lodged by the United States, the European Union and Mexico. The ruling strengthens other European arguments against Chinese restrictions on another category of exports – rare earths. The WTO panel rejected the Chinese argument that its restrictions were motivated by a desire to protect the environment and prevent a critical shortage of the materials, saying instead that the country’s quotas, export duties and license requirements were discriminatory. Karel De Gucht, the European trade commissioner, said, “This is a clear verdict for open trade and fair access to raw material. Furthermore, in the light of this result, China should ensure free and fair access to rare earth supplies.” Ron Kirk, the U.S. trade representative, called the ruling a significant victory, adding, “China’s extensive use of export restraints for protectionist economic gain is deeply troubling. China’s policies provide substantial competitive advantages for downstream Chinese industries at the expense of non-Chinese users of these materials. They have also caused massive distortions and harmful disruptions in supply chains throughout the global marketplace.” China must now either appeal the ruling, or comply with it, or face equivalent trade sanctions from the U.S., Europe and Mexico.
http://www.nytimes.com/2011/07/06/business/global/06wto.html?_r=2