Wednesday, July 6, 2011

China has contravened WTO rules by conserving resources and factoring environmental costs?

"WTO disputes panel has ruled that Chinese export restrictions on bauxite, coke, fluorspar, magnesium, manganese, silicon metal and zinc break global trade rules. The panel noted, however, that China did allow export quotas on coke and silicon carbide. The panel said some export 'red tape' was illegally excessive, such as an insistence that coke, bauxite, fluorspar and silicon carbide exporters had prior export experience or performance; and a minimum registered capital requirement. Also it found that the introduction of a minimum export price (for bauxite, coke, fluorspar, magnesium, silicon carbide, yellow phosphorus and zinc) broke WTO rules."

This is a reversal of previous trends where import restrictions have been censured. Developing countries have long faced insurmountable hurdles of market access for its primary products and labour intensive manufacturing.

Now developed nations are accusing an emerging economy of restricting trade.

China's defence include :
"mining and processing raw materials are highly polluting and energy-consuming, and have serious consequences for the environment and people's health.
As early as 2009, the United States, the European Union and Mexico filed a complaint to the WTO.
the reserves of these raw materials are limited and nonrenewable both in China and in the whole world.

China's export limits on the export of these raw materials are aimed at saving the resources for future generations."

China, however, is less perturbed by the resources boom in Australia, Brazil and African countries. China has accepted that it must pay market rates to access such precious resources for its heavy industries and manufacturing.

In the real world of guarding self interests, the US too has been conserving its oil reserves in Alaska and oceans, prefering to depend on  less reliable and costly supplies in the Middle East.

China is likely to appeal against the WTO dispute settlement ruling in favour of US, EU and Mexico.

the Chinese Mission said in a statement.

"The panel makes findings in favor of China in many aspects, such as the terms of reference, export quota allocation and administration, issuance of export license, etc," the statement said.
In addition, the panel also identifies that China has withdrawn its minimum export price requirement and sympathizes with China's comprehensive administrative measures on bauxite and fluorspar.
both sides of the dispute have the right to appeal to the Appellate Body within 60 days from the release of the panel report.

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