Editor’s note: the World Trade Organization (WTO) Appellate Body said January 30 in its final ruling that China’s export restrictions for 9 raw materials, which have drawn complaints from the US, EU and Mexico, were inconsistent with WTO rules. SMM provides special analysis on impact of the ruling on relevant Chinese industries.
News Review: WTO Rules against China Export Restrictions on 9 Raw Materials
The WTO Appellate Body maintained core content of WTO Panel’s preliminary ruling on China’s export duties and quotas for several industrial raw materials, after China’s appeal based on environmental protection or supply shortage, saying such restrictions were inconsistent with WTO rules.
The WTO Dispute Settlement Body will decide within 30 days whether to accept opinions of the Panel, afterwards China have to submit proposals to conform to the ruling.
China’s exports for the 9 raw materials involved are not large. Take bauxite as an example: 50% of China’s bauxite demand is met by imports; bauxite export therefore only has limited influence on China’s overall bauxite supply and demand. As China exports no more than 50,000 mt of zinc ingots each year, the WTO ruling will only exert weak impact on China’s zinc ingot export.
The WTO ruling against China’s export restrictions on 9 raw materials have spurred speculation that China’s restriction on rare earth export may be the next target. CNIA Vice President Jia Mingxing said the ruling’s impact on China’s rare earth export polices will also be limited.
If the Chinese government reduces or eliminates export tariffs for zinc or cancels export license, export quotas, minimum export price requirement and other policies amid heavy pressures, domestic zinc market will be affected. Export policy and industrial structure adjustment are closely related, and once China looses policies concerning exports of resource products, it will be more difficult to control the blind expansion of domestic zinc smelters, and China will also face strong pressures from the completion of energy conservation and resource utilization tasks in nonferrous metal industry during the 12th Five-Year Plan period.
If the Chinese government gradually lowers or even remove the 15% silicon metal export tariff, the country’s silicon metal export will expand further, which will in turn inhibit smuggling and protect benefits of trading businesses and silicon metal producers. However, it will also hamper resources protection, energy-saving and emission reduction. If China chooses to keep present export tariff, other countermeasures are expected to be taken.
SMM expects China to gradually lower or even remove manganese export tariff under the WTO ruling, but not excluding possibility that export restriction through other means, such as fees, will be added. Things that are largely determined are that China is not likely to impose tariff on other kinds of manganese and manganese products, while possibility to remove present tariff on EMM export is also temporarily low.
SMM believes World Trade Organization (WTO) ruling may cause China to cancel export tariff for bauxite, but any impact from the ruling on China’s bauxite exports in the future should be very limited.
The WTO ruling against China’s export restrictions on 9 raw materials have spurred speculation that China’s restriction on rare earth export may be the next target.