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EU takes action at WTO over Chinese raw materials

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EU takes action at WTO over Chinese raw materials

Cecilia Malmstroem - Photo EC

(BRUSSELS) - The EU launched its third action against China at the World Trade Organization Wednesday, this time against Chinese restrictions on export of raw materials essential for European industries.

The EU action focuses on restrictions concerning graphite, cobalt, copper, lead, chromium, magnesia, talcum, tantalum, tin, antimony and indium.

The past two legal actions at the WTO, in 2012 and 2014 on similar measures, were both successful.

European producers and consumers have been hit by what the EU sees as unfair trading practices, and the EU Commission had no alternative but to take action, said the EU's Trade Commissioner Cecilia Malmstroem.

"The past two WTO rulings on Chinese export restrictions have been crystal clear - these measures are against international trade rules. As we do not see China advancing to remove them all, we must take legal action, " she said.

China currently imposes a set of export restrictions, including export duties and export quotas that limit access to these products for companies outside China. These measures distort the market and favour Chinese industry at the expense of companies and consumers in the EU, says the Commission, which is in violation of general WTO rules and also of China's specific commitments from the time of its accession to the WTO.

It adds that their alleged aim to support an environmentally friendly and sustainable production of raw materials could be achieved more effectively with other measures, without negative impact on trade.

Formal consultations between the EU and China – the first step in the WTO dispute settlement - will now be conducted in parallel to a similar procedure initiated by the US. In absence of a satisfactory solution within 60 days, the EU may request the WTO to set up a panel to rule on the compatibility of China's measures with WTO rules.

China's total exports of these products are worth around €1.2 billion, one sixth of which comes into Europe.

A first analysis suggests that removing the export duties imposed by China could allow an additional supply of these raw materials to the EU economy worth around €19 million, i.e. an increase of 9.2%. However, the real increase of China's supplies to the EU is likely to be much higher if the other instruments that China is currently using to restrict its exports were also removed.

WTO dispute settlement in a nutshell


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