On Wednesday, June 25, China defended its export policy after the US and the EU filed a complaint with the World Trade Organization (WTO) on Tuesday this week, accusing China of restricting exports of some raw materials in order to help Chinese manufacturers.
On its website China's Ministry of Commerce rejected the allegations from the US and the EU that it violated export regulations on raw materials, but confirmed it would seek consultations on the issue to avoid a trade row.
The charges concern 10 raw materials, on which China has raised its export taxes, including coke, manganese, zinc, bauxite, magnesium, silicon, and other industrial minerals and chemicals used in steel, aluminum and other industries
China's relevant export policies are in line with WTO rules and the restrictions are aimed at protecting the environment and natural resources, China's Ministry of Commerce said.
The ministry went on to say, "China believes the policies in question are in keeping with the WTO rules. Following the WTO procedures for dispute resolution, China will appropriately handle the request for consultations."
However, US trade representative Ron Kirk claimed, "China is unfairly restricting exports of raw materials."
Commenting on the filings, Mr. Kirk said, "China's actions are hurting American steel, aluminium and chemical manufacturers, among other industries, that desperately need these materials to make their products. Now more than ever, trade is essential to keep America's economy afloat."
According to Mr. Kirk, this was the first time the US had complained about China to the WTO since President Barack Obama took office this year. China had pledged to remove export duties in 2001 after it joined the WTO.
Meanwhile, EU trade commissioner Catherine Ashton said in a statement, "The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies in this economic downturn."
From the European Commission's side, China's move to reduce material exports may affect four percent of the EU's industrial output, or 500,000 employees. The EU imported €4.5 billion of these materials from China in 2008.
In terms of the WTO's dispute settlement mechanism, China, the US and the EU will have a 60-day period to consult. If the trade consultations with Beijing fail, the complaint will be sent to a WTO panel for a decision.