Obama administration complains to WTO about China

China's being unfair to U.S. steel producers by restricting access to raw materials, the U.S. says. The complaint is the first to be filed after Obama promised aggressive action in his campaign.
Reporting from Washington -- The Obama administration today demonstrated its intent to be tougher on major global trading partners, filing a complaint against China for restricting access to raw materials important for U.S. producers of steel, aluminum and chemicals.



The request to the World Trade Organization to begin dispute resolution talks is the first trade complaint by the administration after President Obama promised more aggressive action on such issues during the campaign. It accuses China of placing unfair export restraints on nine materials that it is a major producer of, including coke, a key component to making steel.
The restrictions have driven up the prices of those materials for U.S. manufacturers while reducing the costs to Chinese companies, said U.S. Trade Representative Ron Kirk.

"China's policies on these raw materials seem to be a giant thumb on the scale in favor of Chinese producers. It's our job to make sure we remove that thumb from that scale," Kirk said at a news conference. "Today's action is proof of our commitment to level the playing field in this area."

The European Union also filed a WTO complaint against China today on the same issue.

Kirk said the U.S. decided to act after talks with China during the past two years over the issue failed to lead to the removal of the export restrictions.

Those talks were largely conducted by the Bush administration, which had opted against filing a formal complaint with the WTO, which governs global trade among nation's who are members. Since China joined the WTO about 10 years ago, the United States has filed 7 cases against the country. China has filed four cases against the United States during that time.

Kirk said that ensuring countries do not impose unfair trade practices is crucial as the United States tries to emerge from the severe recession.

"Now more than ever trade is essential to keeping America's economy afloat," Kirk said.

As an example of the impact of China's trade practices on the materials, Kirk cited coke, which is a key component to producing steel. In 2008, China was the world's leading producer, with 336 million metric tons. But export duties the reached 40% limited annual exports to 12 million metric tons, he said. The restrictions meant that the world price for coke in August of 2008 was $740 per metric ton while in China it was only $472 per metric ton.

China has said WTO rules allow it to place the restrictions on the materials, which also include zinc, magnesium and yellow phosphorous, because they are exhaustible natural resources of the country.