EU, US seek WTO settlement over Chinese export restrictions

The European Union (EU) and the US Wednesday called on the World Trade Organisation (WTO) to rule against export restrictions applied by China on raw materials used by the steel, aluminium and chemicals industries.

The decision to turn to the WTO's dispute settlement process follows unsuccessful attempts to resolve the issue through talks in Geneva, officials in Brussels said.

Mexico supported the EU and US move.

"China's restrictions on raw materials continue to distort competition and increase global prices, making conditions for our companies even more difficult in this economic climate," said EU Trade Commissioner Catherine Ashton.

"I regret that the formal consultation process and significant EU engagement on this issue has not led to an amicable solution which would have been our preferred course of action," Ashton said.

China is limiting the export of nine raw materials that are critical for the production of steel, aluminium and chemicals, which in turn are used to manufacture hundreds of different products.

The EU and the US argue that this is giving Chinese companies an unfair advantage over their foreign competitors.

China's restrictions include quotas, export duties and minimum export prices on raw materials such as yellow phosphorous, bauxite, magnesium, silicon and zinc. Some of these resources are difficult to find outside China, EU officials say.

Wednesday's move focuses on a first batch of measures and products.

However, "the EU's concerns are not limited to these measures and further legal action cannot be ruled out if these concerns are not effectively addressed", officials said in a statement issued in Brussels.

China is the EU's second trading partner after the US and the biggest source of EU imports.

China's non-tariff trade barriers mean that EU companies are denied business opportunities in China worth at least 20 billion euros (about $29 billion) a year, EU trade experts said.

Last updated on Nov 4^th, 2009 at 22:56 pm IST--DPA