European Commission, Press release, Brussels, 7 August 2014:
The Appellate Body of the World
Trade Organisation (WTO) today ruled in the EU’s favour. It confirmed
the findings made by a Panel in March 2014 that China’s export
restrictions on rare earth, as well as tungsten and molybdenum, are in
breach of WTO rules. Backing the claims of the EU and its
co-complainants, the US and Japan, the WTO found that China’s export
duties and quotas were not justified for reasons of environmental
protection or conservation policy.
EU Trade Commissioner Karel de
Gucht qualified the ruling as “another milestone in the EU’s efforts to
ensure fair access to much-needed raw materials for its industries”.
“This ruling sends a clear signal that export restrictions cannot be
used to protect or promote domestic industries at the expense of foreign
competitors. I now look forward to China swiftly bringing its export
regime in line with international rules, as it did with other raw
materials under the previous WTO ruling,” Commissioner said.
In 2012, China lost another WTO
case, brought jointly by the EU, US and Mexico, on export restrictions
on raw materials. It subsequently lifted those restrictions. However, it
did not lift similar measures, export quotas and duties, applying to
other raw materials, such as tungsten, molybdenum and rare earths. The
EU and its co-complainants were therefore left with no option but to use
the WTO’s dispute settlement mechanism again.
China has argued that its export
restrictions on rare earths are part of its conservation policy. But
the WTO’s position today is clear: export restrictions cannot be imposed
to conserve exhaustible natural resources if the domestic production or
consumption of the same raw materials is not restricted at the same
time for the same purpose.
Neither the complainants nor the
panel contest China’s right to put in place conservation policies.
However, as the WTO clarified, the sovereign right of a country over its
natural resources does not allow it to control international markets or
the global distribution of raw materials. A WTO Member may decide on
the level or pace at which it uses its resources but once raw materials
have been extracted, they are subject to WTO trade rules. The
extracting country cannot impose restrictions only on foreign users.
Background
The raw materials involved in
this case are several rare earths, as well as tungsten and molybdenum.
They have a wide range of uses in hi-tech and green goods, automotive
and machinery manufacturing, chemicals, steel and non-ferrous metal
industries.
Chinese export restrictions have
been mainly export duties or export quotas, as well as additional
requirements and procedures for exporters. They create serious
disadvantages for foreign industries by artificially increasing China’s
export prices and driving up world prices. Such restrictions also
artificially lower China’s domestic prices for raw materials. As they
increase domestic supplies. This gives China’s local industries a
competitive advantage and puts pressure on foreign producers to move
their operations and technologies to China.
The EU, together with the US and
Japan, launched a WTO dispute settlement case in March 2012. Initial
consultations with China did not bring an amicable solution. As a
result, the WTO set up a panel in June 2012. The Panel report was issued
on 26 March 2014 and was full victory for the EU and its
co-complainants. China appealed the report on 25 April 2014. The reports
will be adopted by the WTO Dispute Settlement Body within 30 days and
China will have to comply with the ruling immediately or within a
reasonable period of time that it can request for implementation..................http://europa.eu/rapid/press-release_IP-14-912_en.htm?locale=en
7/8/14
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