Singapore 21/07/2016 - (Adds detailed targeted products in EU case in par 12)
The European Union has filed a trade case at the World Trade Organisation (WTO) against Chinese restrictions on exports of 11 key metals and minerals, joining the US in a similar legal challenge made against Beijing last week.
The products in the latest case involves copper, lead, tin, chromium, cobalt, antimony, indium, magnesia, talcum, tantalum and graphite, which the EU contends are essential raw materials for European industries.
“We cannot sit on our hands seeing our producers and consumers being hit by unfair trading practices. 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," EU Trade Commissioner Cecilia Malmström said in a European Commission (EC) press release on Tuesday.
This is the EU’s third trade case against China’s restrictions on raw material imports – it achieved two successful legal actions in 2012 and 2014 in similar measures.
The Office of the US Trade Representative (USTR) last week launched a trade enforcement action against China at the WTO, arguing that Beijing's export duties on nine key metals and minerals violated the country's commitment to the WTO.
The case seeks to remove Chinese export duties of 5-20 percent on copper, lead, tin, antimony, cobalt, graphite, various magnesia compounds, talc and tantalum, which the USTR said are key inputs into US industries including aerospace, automotive, electronics and chemicals.
On Tuesday, the USTR added China’s export duties on chromium, as well as export quotas on tin, antimony, indium, magnesia and talc into its last week’s complaint.
China’s export duties and export quotas have distorted the market and favoured Chinese industry at the expense of companies and consumers in the EU, in violation of general WTO rules and also of China's specific commitments from the time of its accession to the WTO, the EC’s statement said.
“Also, 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,” it added.
Beijing’s Ministry of Commerce had said that its export tax and quotas on the raw materials are aimed at protecting natural resources and the environment.
The formal consultations between the EU and China - the first step in the WTO dispute settlement - will 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.
The targeted form of copper, lead and tin in the EU case are the same as those in the US trade action - copper ore, concentrate and matte, and unwrought lead and tin.
Tin and lead are seen as the two base metals most likely to be affected should the legal action lead to the removal of export taxes of both metals. China currently enforces a 10-percent export tax on both lead and tin metal, alongside an export quota for tin.
China was forced to remove its export duties on minor metals such as silicon and magnesium in 2013 after the WTO made a ruling in the previous year that China's restrictions on raw materials were against WTO trading rules.