MOFCOM says tariffs needed to sustain raw materials, protect environment

By Wang Jiamei Source:Global Times Published: 2016/7/14 22:48:00

Copper products for export sit in a factory in Nantong, East China's Jiangsu Province. Photo:IC

China's imposition of export duties on certain raw materials is part of efforts to achieve sustainable development and strengthen environmental protection, the Chinese Ministry of Commerce (MOFCOM) said on Thursday, after the US filed a new trade complaint.

While the US may be again abusing WTO rules, chances are high that China may lose this case, pointing to the necessity for the country to change its way of natural resources conservation, experts said on Thursday.

The US filed on Wednesday another trade complaint against China before the WTO, challenging the latter's export duties of 5 to 20 percent on nine key raw materials, such as antimony, cobalt, copper and graphite.

The US Trade Representative's Office accused China of failing to eliminate export duties on certain products, which China had committed to when it accessed to the WTO in 2001.

The US contends that the export duties charged on the nine raw materials, which it said gives an unfair cost advantage to Chinese manufacturers, have a big impact on its industries such as aerospace, auto, electronics and chemicals.

In response, the MOFCOM said in a statement on Thursday that it is amid the increasing pressure on resources and the environment that China imposed duties on exports of relevant raw materials to achieve sustainable development and strengthen environmental protection, which is in line with WTO rules, according to the statement.

Zhu Haiquan, a spokesman for the Chinese Embassy in Washington, said on Wednesday that the US was abusing the WTO process, the Los Angeles Times reported on Thursday.

It's such an exaggeration that China's export duties could affect their industries, Mei Xinyu, a research fellow at the Chinese Academy of International Trade and Economic Cooperation under the MOFCOM, told the Global Times in an e-mail on Thursday.

"China's output of those raw materials is quite small, and for some materials, the country even relies on imports," Mei said, citing copper.

"As the largest copper importer in the world, there is no need for China to inflate its global prices," Mei noted.

Nothing new

Nevertheless, Wang Zhongmei, a research fellow from the World Economy Institute at the Shanghai Academy of Social Sciences, said this looks like the continuation of a 2009 dispute, which didn't bode well for China.

In June 2009, the US filed a WTO complaint against China over its export restraints on nine raw materials, such as bauxite, coke, fluorspar and magnesium. In July 2011, a panel determined that China's export quota measures were inconsistent with WTO rules, according to the WTO website.

"In the 2009 dispute, China had also argued that some of its export duties and quotas were justified for the conservation of resources, but the panel disagreed. In this connection, there is a high possibility that China may also lose the latest dispute," Wang wrote in an e-mail sent to the Global Times on Thursday.

The 2011 panel report said "even if China were able to rely on certain exceptions available in the WTO rules to justify its export duties, it had not complied with the requirements of those exceptions."

If China wants to use those exceptions, it needs to provide sufficient proof, which requires huge amounts of support data, Wang said.

Since 2009, the US has filed 22 WTO cases against trading partners, of which 16 were aimed at China, Reuters reported on Thursday. It has also imposed dozens of punitive tariffs on Chinese imports in recent years.

"The US has abused WTO rules and will continue to do so," Mei said.

China should change the way it conserves natural resources, strengthen management in the development and production processes and improve environmental protection standards to raise the costs instead of adjusting the volumes, Wang noted.

"The US is the most active user of the WTO dispute resolution mechanism, and it has also been on the receiving end of complaints. It is normal for a large trading country to be involved in many cases," Wang remarked. "China should learn from the US to make better use of the WTO dispute settlement system."

Newspaper headline: China may lose US WTO export duties challenge

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