China to appeal WTO case

Raw materials export ruling can threaten Beijing’s stance on rare earths

BEIJING: China vowed yesterday to appeal a recent World Trade Organisation (WTO) ruling against its raw materials export policy, a case that could threaten Beijing's stance on rare earths, which it defended as falling in line with the trade body's rules.

“First, we will make an appeal. Second, we still think Chinese practice and policies do not violate WTO rules,” Ministry of Commerce spokesman Shen Danyang told reporters at a press briefing when asked whether it would file an appeal.

Shen's comments were the first official acknowledgment that China plans to appeal by the Sept 2 deadline, though most experts had seen it as a foregone conclusion.

In July, a WTO legal panel dismissed China's claim that its system of export duties and quotas on raw materials used in the production of steel, electronics and medicines served to protect its environment and scarce resources.

That ruling was a victory for the United States, the EU and Mexico, which took China to the WTO in 2009 saying export restrictions on raw materials including coke, bauxite and magnesium discriminated against foreign manufacturers and gave an unfair advantage to domestic producers.

It was also seen as a potential precedent against China's stance on its exports of 17 rare earth minerals used to make high-tech goods.

China produces 97% of the world's supplies of the crucial industrial inputs, and has begun cutting exports, to the dismay of importers.

China has long held that its rare earth policies are in compliance with WTO rules, and that restrictions are important in conserving its natural resources and protecting its environment.

But importing countries, including the United States and Europe, have complained that China's rare earth policy is unfair, with uneven quotas on exports and domestic consumption of the valuable minerals.

Some countries have argued that China took advantage of its near monopoly production of rare earths and slashed exports to drive up prices without effectively limiting domestic production and consumption.

US and EU officials have speculated about filing a complaint against China at the WTO, borrowing on the raw materials decision as a precedent. - Reuters