WTO Final Export Restrictions On Raw Materials

For two and a half years, the US and Europe ink export to China (DS394/395/398) ended in China's defeat. The head of the treaty and Law Department of China's Ministry of Commerce said in a statement that it will seriously assess WTO's rulings and implement resources products according to WTO rules. science Management to achieve sustainable development.

In January 30th, the Appellate Body of the World Trade Organization (WTO) issued a ruling report, which maintained the export of raw materials from the US and Europe to China. Restriction case The core content of the preliminary ruling is that China's export duties and quotas for various industrial raw materials violate the WTO rules and reject China's environment based environment. protect Or the supply shortage is appealed against the preliminary ruling.

However, the WTO appeals panel did not maintain all the contents of the preliminary ruling, supported China's appeal request on several important issues, and corrected some of the previous decisions of the panel, including ruling that the expert group of the prosecution requested a violation of the relevant understanding of the understanding on the rules and procedures for dispute settlement, that is, the overall invalidity of the expert group's rulings on quota allocation management, export license, export minimum price and quota bidding; and the ruling expert group's interpretation of the twentieth articles of the general agreement on Tariffs and trade (GATT).

The ruling is not unexpected.

"The ruling is not good for China." Tu Xinquan, vice president of China WTO Research Institute of foreign trade and economics university, told reporters, but this is also the expected result.

Yuan Zhibin, a researcher in the metallurgical industry of CIC, told reporters that according to the ruling, China needs to reduce export tariffs on 9 kinds of raw materials and lift export quotas. But this obviously will encourage the exploitation of the 9 kinds of raw materials, which will have a greater negative impact on the natural environment. In addition, the low prices of these raw materials will continue to lead to insufficient discourse power on these raw materials in China.

In June 23, 2009, the United States and the European Union formally submitted a request for consultations to China within the framework of the WTO, saying that China took control of 9 raw materials such as bauxite, coke, fluorite, magnesium, manganese, metal silicon, silicon carbide, yellow phosphorus and zinc by export quotas, export tariffs and other price controls, violating China's commitment to join the WTO in 2001 and causing other countries to be in a disadvantaged position in the production and export of steel, aluminum and other chemicals. In August 21st of that year, Mexico also submitted a request for consultations on similar grounds.

In December 21st of that year, the World Trade Organization decided to set up an expert group to investigate the three party's allegations against China's export of raw materials.

In April 1, 2011, the expert group made a ruling that was not conducive to China.

In August 31st of that year, China appealed to the WTO dispute settlement body.

After the WTO announced the final report, EU Trade Commissioner Carlo Degucht said: "now China must cancel these export restrictions as soon as possible. In addition, I hope China will make policy adjustments to the entire export system, including rare earth, in order to meet the requirements of WTO. " US trade representative Ron Kirk called the ruling "a great victory, ensuring that the core manufacturing industry of the United States can get the raw materials needed".

The head of the treaty and Law Department of China's Ministry of Commerce said in a statement that China welcomes the appeal made by the WTO appellate body on several important issues to support China's appeals and correct some of the previous decisions of the panel. At the same time, we regret that the WTO appellate body has maintained the expert group's partial decision on GATT twentieth not applicable to export tariff defense.

The official pointed out that China will seriously assess the WTO ruling and implement scientific management of resource products according to WTO rules so as to achieve sustainable development.

It is reported that the WTO Appellate Body report and the panel report will be effective after the adoption of the WTO dispute settlement body.

The ends of trade friction

9 kinds of raw materials, bauxite are widely used in aluminum smelting industry, precision casting, refractory products, ceramic industry, and various kinds of compounds which can make aluminum in the chemical industry. Fluorite is widely used in metallurgy, aluminum, glass, ceramics, cement and chemical industry; magnesium can be used as alloy material for aircraft and missiles; silicon carbide has broad prospects in military industry, and silicon metal can be used to make semiconductor devices and integrated circuits, and can also be used in automobile and mechanical parts in alloy form. "These resource products are non renewable products." Zhang Hanlin, President of the China WTO Research Institute of the University of foreign trade and economics, said at a forum that "most of the resource products are limited in reserves, and some products are on the verge of exhaustion in the near future."

And these resources of industrial raw materials, China's total production and trade volume in the world occupies an absolute share. Take yellow phosphorus as an example, China's total output ranks first in the world, and it is the largest exporter of yellow phosphorus in the world. Its annual exports account for more than 6 of the total export volume of the world. The US and Europe rely on importing these resource products from China at a low price.

Zhang Hanlin said that the strategy of resource-based products in the US and Europe, in general, is to make use of global resources first, and finally to develop their own resources. "Safeguarding interests through disputes is a common strategy." According to Zhang Hanlin analysis, the US and Europe have repeatedly adopted anti-dumping restrictions and export control appeals against the export of China's resource products according to their own needs, and the coke since 2000 has become a typical case. This is the end of trade friction.

On the other side of the trade friction, from the point of view of China itself, regarding the minimum export price, the expert group has considered that China's relevant measures require export enterprises to engage in export at a set or coordinated export price, otherwise they will face penalties, including the cancellation of export rights. This constitutes the "export restriction" referred to in the eleventh first paragraphs of GATT, because it requires the export at the lowest price to have the effect of restricting trade. In addition, China did not publish relevant measures immediately, nor did it comply with the tenth first articles of GATT. "Low price exports have always been the cause of trade friction." Zhang Hanlin said that due to low price exports all year round, China's resource products are often subject to anti-dumping investigations.

In order to change the reality of excessive low price export and stabilize and purify the market order, China began to implement export control measures under the background of "reducing the favorable balance". But this has further led to trade friction.

Export control should not be excessively dependent.

The fundamental reason for the low price export is scattered and overcapacity. The reason behind this is that the investment policy is inappropriate because of the imperfection of market entry and exit policy. Zhang Hanlin thinks.

Tu Xin Quan also believes that government management thinking needs to be changed. Regulation of resource products can be regulated from production links and should not be overly dependent on trade control. It is unreasonable to solve the contradictions accumulated from the production link by trade links. Tu Xinquan said.

He believes that if we integrate and control the upstream production links and strictly enforce the laws and regulations of environmental protection, the elimination of export control will not cause too much impact on the industry.

For example, the rare earth industry, known as the next target after the raw material case, is now making such a shift.

Yuan Zhibin said that the situation of rare earth and the 9 kinds of raw materials is very similar, but to a certain degree, it is even higher. The ruling of the WTO on China's export restrictions on raw materials has clearly provided reference and assistance for the US and Japan to take actions to restrict China's export of rare earths, and may impose more pressure on China to relax restrictions on rare earth export restrictions based on this direction.

China made great efforts to rectify the rare earth industry in 2011. The ministries and commissions jointly issued heavy punches, closed down illegal mines, smuggled and reduced the quota of domestic rare earth production, and forced some processing enterprises to stop production to upgrade their technology, control production from the aspects of industrial restructuring and environmental protection, and export the quota system of rare earth export, implement the division of light and weight, and increase quotas, indicating that the quota in 2012 will be 31130 tons, an increase of 3% over 2011.

Mei Xinyu, an expert from the Ministry of Commerce, told reporters that after two to three years of upstream integration and production control, even if rare earth is the next raw material seized by Europe and the United States, it will not have a big impact on the industry.