EU welcomes WTO ruling against Chinese export restrictions

EU Trade Commissioner Karel de Gucht Thursday welcomed the ruling of World Trade Organisation (WTO) in the EU's favour against Chinese exports restrictions on rare earths and other raw materials "This ruling sends a clear signal that export restrictions cannot be used to protect or promote domestic industries at the expense of foreign competitors," he said in a statement. "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," he affirmed. China has argued that its export restrictions on rare earths are part of its conservation policy. But the WTO ruled that 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. The WTO clarified that 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, said the Geneva-based body.
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 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. The EU, together with the US and Japan, launched a WTO dispute settlement case against China in March 2012.