Beijing hits back at WTO with metals export quota

July 9, 2011 (Source: South China Morning Post) — China has announced new export controls on coke and non-ferrous metals in defiance of a recent World Trade Organisation ruling that it was breaching global trade rules on raw materials shipments.

The Ministry of Commerce yesterday said new export quota  arrangements applied to coke – burned to produce steel – and to non-ferrous metals such as molybdenum, antimony, tungsten and silver. These are widely used to produce hi-tech products, catalysts and military weapons.

The controls come three days after the WTO ruled against Beijing’s decision in 2009 to impose export duties and quotas on 20 types of raw materials, including coke, saying it had broken a promise to the body to cut tariffs and trade barriers.

The Ministry of Commerce will have to determine whether to appeal against the WTO ruling but market watchers expect an appeal to be made.

“It is not a surprise,” said Johnson Chan, vice-chairman of the Hong Kong Energy and Minerals United Associations, of China’s latest quota arrangement. “China puts priority on feeding its own needs so that it will meet its objective to be a hi-tech manufacturing hub.”

Chan said China could curb exports by restricting upstream exploration and production of natural resources as well as by imposing export levies and quotas.

China imposed a quota and a 40 per cent export tax on coke in 2009, which saw its exports decline by one-third to 8 million tonnes last year. In the first six months of this year, coke exports stood at 4.6 million tonnes.

Bauxite, the most important ore used in the production of aluminium, is subject to a 15 per cent export tax.

Raw materials including minerals, minor metals and rare earths are in global demand as China, a key exporter, seeks to jump up the manufacturing value chain.

China’s export duties and quotas on the 20 types of raw materials in dispute is a prime example, with the United States, European Union and Mexico claiming initial victory in their complaint following the WTO verdict this week.

They claimed that China was choking off the world’s supplies of these raw materials, which would  result in higher global prices.

The raw materials in question include bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc, which are used to produce everything from electronic goods and aircraft to technology products and detergents.

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