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November 21, 2009

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China tries to stop WTO action on export tussle

CHINA has earned a temporary reprieve by rejecting requests from the United States, the European Union and Mexico for a World Trade Organization panel to investigate alleged Chinese restrictions on exports of raw materials.

"China is disappointed that the three complainants chose to move forward with requests for establishment of the panel ... and is not in a position to agree to the establishment of a panel at this time," the Chinese delegation said at a meeting of the WTO's dispute settlement body in Geneva on Thursday.

The delegation said "China's measures related to the exports are consistent with the rules of the WTO" and China "consistently respects and abides by the WTO rules and its own commitments," according to Xinhua news agency.

The US and EU filed a WTO complaint against China in June, saying the country should reduce its export tariffs and raise quotas on raw materials, including bauxite, coke, fluorspar, magnesium, silicon metal, zinc and yellow phosphorus. Mexico later joined the complaint.

The materials are used in the production of steel, cars, microchips, planes and other products.

China responded in June by saying the export restrictions on these industrial materials aim to protect the environment and natural resources and that its practices comply with WTO rules.

Two rounds of consultations followed between China and the complainants, but they failed to resolve the issue.

Requesting a panel is the next step in the WTO dispute settlement process after consultations fail. A panel request can be blocked only once, and if the three complainants choose to make a second request at the next meeting of the settlement body on December 21, a panel would be set up automatically.

Zhou Shijian, a former Chinese trade official and now a research fellow at Tsinghua University, said in an earlier interview that there are no grounds to ask China to reduce tariffs or raise quotas as the WTO rules say only that countries could not restrict imports.

Zhao Jinping, an expert with the State Council, said, "Export restrictions on these materials are in accordance with China's aim to establish an environmentally friendly and energy-saving society.

"It is unreasonable for these countries to complain about China's export policy while asking China to reduce emissions and save energy."

China, which surpassed Germany to become the world's largest exporter earlier this year, has been hit with a series of trade complaints in the midst of the global economic downturn. In the first nine months of this year, 19 economies launched 88 investigations into Chinese products, involving US$10.2 billion worth of exports, up 125 percent by value from the same period of last year.


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