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U.S. Wins WTO Dispute with China over Raw Material Export Restraints

The World Trade Organization (WTO) Appellate Body ruled in favor of the United States in a dispute over China's export restraints on several industrial raw materials. WTO officials originally found in favor of the U.S. in July 2011, and this most recent ruling affirms the original one.

"Today's report is a tremendous victory for the United States, particularly its manufacturers and workers," said U.S. Trade Representative Ron Kirk after the appellate ruling. "The Obama Administration will continue to ensure that China and every other country play by the rules so that U.S. workers and companies can compete and succeed on a level playing field."

China had attempted to portray its export restraints as conservation or environmental protection measures taken to manage critical shortages of supply, but the WTO's Appellate Body disagreed, and found the regulations inconsistent with China's WTO obligations.

"During his State of the Union Address last week, the president laid out a blueprint for an economy that's built to last—an economy built with the renewed strength of American manufacturing," Kirk added. "Today's decision ensures that core manufacturing industries in this country can get the materials they need to produce and compete on a level playing field."

Restraints challenged in the dispute included export quotas and export duties, as well as related minimum export price, export licensing and export quota administration requirements implemented by China. Restrains such as these can, according to Kirk, skew the playing field against the U.S. and other countries in the production and export of a number of products. Simultaneously, they can artificially increase world prices for these raw materials while artificially lowering prices for Chinese producers, allowing them to produce lower-priced goods and giving them a significant advantage over other producers, both in China's market and elsewhere.

Mexico and the European Union both joined the U.S. as co-complainants in the dispute.

Jacob Barron, CICP, NACM staff writer