WTO's ruling on China raw material exports stinks

A WTO report attacking China’s exports of raw materials has cast doubts of reliability.

Dr Xiaolan Fu, a University Lecturer in Development Studies at the Fellow of Green-Templeton College, University of Oxford has said the World Trade Organisation (WTO) ruling casts aspersions of double standards.

Her comments come as trade judges ruled earlier this week that China violated trade law by restricting exports of certain raw materials, which were crucial for industrial production, as well as in the electronics world.

The WTO was following up on complaints from the US, the European Union and Mexico, which grumbled that the restraints China imposed on the raw materials, including various forms of bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc, were unfair.

They said the restrictions discriminated against foreign manufacturers and gave an unfair advantage to domestic producers who use them. The ruling mostly focused on raw materials, but also touched on rare earth minerals, which are widely used in technology such as smartphones, tablets, cars and PCs.

Due to the restrictions, the claims went, there has been a limited supply in the global market which meant higher prices.

In its findings, the WTO ruled that China’s export duties were inconsistent with the commitments China had agreed to in its Protocol of Accession. It said that the export quotas imposed by China on some of the raw materials were inconsistent with WTO rules.

In its defence, China said it had kept in with the regulations for some of the raw materials. However, it said for other raw materials its export quotas and duties were necessary for the protection of the health of its citizens.  

However, the WTO argued that China was unable to demonstrate its export duties and quotas would lead to a reduction of pollution in the short- or long-term – and therefore contribute towards improving the health of its people.

The rulings, according to Dr Fu, are more than likely to be challenged by China, as well as being questionable.

She tells TechEye: “China in the 80s and 90s was the main exporter of minerals but the economy has now changed. There are many minerals in the world but the ones China exports are needed for the electronics industry.

“The drive for the report seems to be more about the metals needed for this industry, and if this is the case I’m not confident that the report is fair. Despite it claiming to be a general ruling, it seems it was written in light and in target of these materials. If this is the case there are doubts of the reliability of the report,” she said.

“China has always been open about putting bans on certain exports out of the country.

“And there’s also a hint of double standards going on here. It’s been forced to put a limit on the quota of exports such as textiles, but then when China moves to do the same with other materials it’s found in breach of regulations.

“Further research of the report is needed and it is highly likely that China will appeal this.”