On June 14 2011 EU Trade Commissioner Karel de Gucht said that an upcoming ruling of the World Trade Organisation (WTO) is likely to strengthen EU claims regarding Chinese export restrictions. According to de Gucht, who was speaking during a conference of industry representatives and policymakers considering shortages in the supply of raw materials, the findings of the panel in question could spark further
challenges by the European Union on export restrictions, such as those imposed on rare earths, which are crucial for the manufacture of high-tech goods.
De Gucht was referring to a WTO panel ruling which is expected to become public next month, but which has already been circulated among the parties. The ruling concerns a case launched in 2009 by the European Union, together with the United States and Mexico, challenging Chinese restrictions on exports of raw materials.
In its complaint the European Union argued that through various practices, including double pricing, export taxes and quotas, China hindered access for foreign companies to minerals such as bauxite, coke, fluorspar, magnesium, manganese and zinc. This, in the European Union's opinion, resulted in the promotion of higher value-added downstream products of Chinese origin. In addition, the European Union argued that
China had violated a protocol to its 2001 WTO Accession Agreement which limited the circumstances in which export bans could be introduced. An annex to the protocol lists 87 products whose export could be limited by the Chinese authorities. In contrast, in 2009 a total of 373 items were subject to such restrictions.
In response to these claims, China sought to justify its policy on the grounds of environmental protection and the necessity of preserving its own resources. In that regard, it referred to Article XX of the General Agreement on Tariffs and Trade, which allows export restrictions based, among other things, on the grounds of the protection of human health and the preservation of natural resources. However, in the applicants'view this argument does not withstand scrutiny since the export curbs were not linked to environmental concerns.
Speaking before industry executives, de Gucht indicated that he was confident that the findings of the panel would "considerably strengthen the position of the European Union ". He also confirmed that he expects the decision of the WTO to provide guidance on how export curbs should be addressed in the future. Taking into account the fact that the WTO system was conceived mainly to deal with import-related protectionism rather
than export restrictions, the ruling of the panel may set a precedent for similar cases.Indeed, a favourable decision of the panel is likely to boost EU claims related to other types of commodities. In particular, de Gucht said that the European Union would consider challenging Chinese export curbs on rare earths.
