{"id":18718,"date":"2012-02-02T21:57:44","date_gmt":"2012-02-02T13:57:44","guid":{"rendered":"http:\/\/www.chinahearsay.com\/?p=11871"},"modified":"2012-02-02T21:57:44","modified_gmt":"2012-02-02T13:57:44","slug":"a-brief-note-on-the-wto-raw-materials-case","status":"publish","type":"post","link":"https:\/\/www.chinalegalblog.com\/en\/2012\/02\/02\/a-brief-note-on-the-wto-raw-materials-case\/","title":{"rendered":"A Brief Note on the WTO Raw Materials Case"},"content":{"rendered":"

\"\"<\/a>If you’ve been wondering why I haven’t mentioned anything about this WTO dispute, which involved China versus several other nations, including the U.S., I frankly haven’t found much here that I can say with certainty. (Most of my readers were probably thinking “Thank God he didn’t write a long and rambling techno-legal post on another boring trade fight.)<\/p>\n

Since there isn’t much else going on today, perhaps a quick mention is in order, with an explanation as to why this is rather difficult to deal with.<\/p>\n

I first wrote about the dispute when it was filed in November 2009<\/a>, and then when the panel report was leaked<\/a> to the Wall Street Journal<\/em> about a year ago. The latest news is the judgment of the appellate body (here’s the full report<\/a>), which sided with the nations that brought the case against China (on several grounds, though not all).<\/p>\n

What followed was the usual international trade blah blah blah. The U.S. Trade Rep’s office issued a statement<\/a>, which included this predictable language:<\/p>\n

U.S. Trade Representative Ron Kirk today announced that the World Trade Organization (WTO) Appellate Body found China\u2019s export restraints on several industrial raw materials used as key components in the steel, aluminum, and chemicals industries to be inconsistent with China\u2019s WTO obligations. The Appellate Body affirmed a WTO dispute settlement panel\u2019s July 2011 finding, therefore agreeing with the United States and rejecting China\u2019s attempts to portray its export restraints as conservation or environmental protection measures or measures taken to manage critical shortages of supply.<\/p>\n

\u201cToday\u2019s report is a tremendous victory for the United States \u2013 particularly its manufacturers and workers,\u201d Ambassador Kirk said.\u00a0\u201cThe Obama Administration will continue to ensure that China and every other country play by the rules so that U.S. workers and companies can compete and succeed on a level playing field.<\/p><\/blockquote>\n

China hit back with this extremely terse writeup in\u00a0Xinhua<\/a> <\/em>(the full MOFCOM statement was lengthier), which as usual included its “regrets” about the ruling:<\/p>\n

China\u00a0expressed\u00a0regrets\u00a0over\u00a0the\u00a0World\u00a0Trade\u00a0Organization\u00a0(WTO)’s\u00a0ruling\u00a0against China\u00a0in\u00a0raw\u00a0material\u00a0exports,\u00a0the\u00a0Ministry\u00a0of\u00a0Commerce\u00a0(MOC)\u00a0said\u00a0Tuesday.<\/p><\/blockquote>\n

Mind numbing. At least the Xinhua<\/em> article was blissfully short.<\/p>\n

So why is this tough to deal with? Well, unless you’re a trade lawyer, the issues here are a bit boring and hard to pin down. For example, one concern is whether this ruling will be applied to China’s restrictions on rare earth exports. The arguments made on both sides are similar enough to warrant the comparison and speculation, and this is the issue on which most of the press accounts have focused.<\/p>\n

However, while that’s a valid discussion, it may not matter all that much at the end of the day. Without delving into the legal details, the raw materials case that just wrapped up essentially stands for the idea that WTO members may not improperly restrict exports of these products to the detriment of other members. The appellate body upheld the decision of the panel that China did not have a valid excuse (e.g. conservation efforts, or environmental degradation from mining) for such restrictions.<\/p>\n

Right. So what’s the problem? The issue is exports and the effect on the international market. Taxes and quotas distort that market in favor of domestic firms and to the detriment of foreigners, forcing some firms to move production to China to obtain access. The ruling is good news for those folks.<\/p>\n

But for others who are most concerned with supply\/pricing, the news is not so good. You see, there’s a handy solution here<\/a> that China may use to maintain at least part of the status quo: production quotas. These would not involve exports and would therefore not be in violation of WTO rules.<\/p>\n

As long as all this is not a restraint on exports in favor of domestic firms, China may be able to assert a great deal of the control it seemingly lost from this ruling.<\/p>\n

In that case, this is not such a clear victory for anyone, and it’s therefore very difficult to say anything at this point about the significance of the appellate ruling.<\/p>\n

\n

\u00a9 Stan for China Hearsay<\/a>, 2012. |\nPermalink<\/a> |\nNo comment<\/a> |\nAdd to\ndel.icio.us<\/a>\n\nPost tags: protectionism<\/a>, rare earth exports<\/a>, raw materials exports<\/a>, world trade organization<\/a>, WTO<\/a>\n<\/small><\/p>","protected":false},"excerpt":{"rendered":"

Was this a big loss for China, and does this mean that rare earths are next? Don't get too excited — there is no clear answer.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[177,194,714,1415,346,552],"tags":[7850,7966,3541,7807,7835],"class_list":["post-18718","post","type-post","status-publish","format-standard","hentry","category-international-trade","category-news-chinese-law","category-protectionism","category-rare-earth-exports","category-world-trade-organization","category-wto","tag-protectionism","tag-rare-earth-exports","tag-raw-materials-exports","tag-world-trade-organization","tag-wto"],"_links":{"self":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts\/18718","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/comments?post=18718"}],"version-history":[{"count":0,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts\/18718\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/media?parent=18718"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/categories?post=18718"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/tags?post=18718"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}