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United States Requests Dispute Settlement Panel on China’s Unfair Export Restraints on Key Raw Materials

October 13, 2016

United States Trade Representative takes action to advance challenges to China’s unfair trade practices that put American workers and businesses at a competitive disadvantage

Raw materials included in Obama Administration challenge are vital to a wide range of high-value American products in key industrial sectors

Washington, D.C. – United States Trade Representative Michael Froman announced today the Obama Administration has requested that the World Trade Organization (WTO) establish a dispute settlement panel to examine China’s unfair export restraints, including duties and quotas, on eleven raw materials. The raw materials include: antimony, chromium, cobalt, copper, graphite, indium, lead, magnesia, talc, tantalum, and tin. 

These raw materials are key inputs into a wide range of high-value American products in vital industrial sectors, including: steel, automotive, aerospace, construction, and electronics. For example, ninety percent of the indium consumed in the United States is used for thin-film coating on flat-panel displays, which is part of a $10.1 billion computer equipment industry that employs 21,000 American workers. Ninety-eight percent of the chromium consumed in the United States is used for stainless steel, which is a $6.3 billion industry that employs 2,600 American workers. China’s export restraints on these materials provide an unfair competitive advantage to Chinese industry at the expense of manufacturers and workers in the United States.

“We will aggressively pursue this challenge on behalf of U.S. steelworkers, auto workers, aerospace workers, and the many Americans whose businesses, jobs, and livelihoods depend on the strength of these and other industries,” said Ambassador Froman. “China specifically committed to abide by fair, non-discriminatory access to raw materials when it joined the WTO. We intend to hold them to that commitment to ensure that our workers and businesses get all the economic opportunities they’re entitled to under our trade agreements.”

China’s export restraint measures on antimony, chromium, cobalt, copper, graphite, indium, lead, magnesia, talc, tantalum, and tin appear to be part of a continuing troubling industrial policy aimed at providing substantial competitive advantages for Chinese manufacturers at the expense of manufacturers elsewhere in the world.

Because of China’s position as a leading global producer of these raw materials, its export restraint measures give China the ability to affect global supply and pricing significantly. These measures can provide important advantages to China’s downstream producers, to the detriment of U.S. and other foreign counterparts. These measures also can create substantial pressure on foreign producers to move their operations, jobs, and technologies to China.

Additional Background on the United States’ Challenge

China imposes export restraints, including duties and quotas, on various forms of eleven raw materials: antimony, chromium, cobalt, copper, graphite, indium, lead, magnesia, talc, tantalum, and tin.  Downstream products potentially affected by this challenge include:

China committed as part of the terms of its WTO accession to eliminate export duties for all products other than those listed in a specific annex.  The export duties the United States is challenging are imposed on products not listed in that annex. 

China also imposes export quotas on various raw materials. Article XI:1 of the General Agreement on Tariffs and Trade 1994 (GATT 1994) generally prohibits restrictions on exports other than taxes, duties, and charges. China’s WTO Accession Protocol also includes commitments not to restrict the right to export goods.

In two previous WTO disputes (China – Measures Related to the Exportation of Various Raw Materials and China – Measures Relating to the Exportation of Rare Earths, Tungsten, and Molybdenum), the WTO found that China’s imposition of export duties and export quotas on two different sets of raw materials was inconsistent with China’s WTO commitments. In both cases, the WTO also confirmed that China cannot justify its imposition of export duties not listed in the specific annex under Article XX of the GATT 1994, and rejected China’s attempts to justify its imposition of export quotas as legitimate conservation or environmental protection measures. 

Through this new WTO action, the United States seeks to extend and reinforce the important victories obtained by the United States in those two previous WTO challenges.  

The United States requested consultations with China on July 13 and 19, 2016. The parties held consultations from September 8 to 9, 2016, but did not resolve the dispute. Requesting a panel is the next step in the WTO dispute settlement process. The WTO Dispute Settlement Body will consider the U.S. panel request at its meeting scheduled for October 26, 2016.