U.S. Challenges China’s Export Duties in WTO
U.S. Trade Representative Michael Froman announced last week that the United States has launched a new trade enforcement action against the People’s Republic of China at the World Trade Organization (WTO) concerning China’s export duties on nine different raw materials.
The nine raw materials—antimony, cobalt, copper, graphite, lead, magnesia, talc, tantalum, and tin—are key inputs into aerospace, automotive, electronics, and chemical products. China’s export duties provide an unfair competitive advantage to China, the case alleges, by making these raw materials more expensive for U.S. manufacturers that rely on them to produce their downstream goods.
When China joined the WTO, China agreed to eliminate its export duties on these products, but it has failed to follow through on this commitment, according to Froman.
The latest action is the thirteenth trade enforcement case the Obama Administration has launched against China at the WTO. The U.S. has won every case that has been decided so far.
“These duties are China’s attempt to game the system so that raw materials are cheaper for their manufacturers and more expensive for ours,” said Froman. “This scheme is directly at odds with WTO commitments China has made, and as we’ve shown time and again, we will hold them accountable to their commitments.”
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. In two previous WTO disputes, the WTO confirmed that China is obligated to eliminate export duties on any products other than those listed in the annex.
Consultations are the first step in the WTO dispute settlement process. If the U.S. and China are not able to reach a mutually agreed solution through consultations, the U.S. may request that the WTO establish a dispute settlement panel to examine the matter.
National Association of Manufacturers (NAM) CEO Jay Timmons applauded the administrations action in launching the WTO case against China.
“Export restrictions distort markets, drive up costs for consumers and hurt manufacturers in the United States as well as around the world,” he said. “Bringing this case is important to ensure that China is held accountable to the commitments it made in joining the WTO to eliminate trade-distorting measures that undercut fair competition.”