What's Up at the WTO

Jan. 13, 2010
World Trade Organization continues to mediate U.S.-China disputes of importance to the manufacturing community.

As many U.S. manufacturing plants lay idle during the year-end holiday season, the World Trade Organization (WTO) took some actions that have importance to goods producers across a variety of industry sectors. Two highlight ongoing disputes between the United States and China.

In late December the Geneva-based trade organization's Dispute Settlement Body established a panel to examine China's export restrictions of various raw materials. The panel was created in response to requests by the United States, the European Union and Mexico, who charged that the Chinese restrictions are contrary to WTO rules and unfairly favor domestic manufacturers. China blocked a previous effort to establish a dispute panel in accordance with WTO procedures.

The establishment of a dispute panel is the latest move in a global trade spat that dates back to mid-2009, at least on the United States' part. In June U.S. Trade Representative (USTR) Ron Kirk first filed a WTO case with regard to export restraints on certain raw materials. The materials at issue are bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus and zinc.

These raw materials are key inputs for downstream products in the steel, aluminum and chemical sectors across the globe.

In November, the government agency formally requested a WTO dispute settlement panel when other resolution procedures failed to drive an agreement. "We believe the restraints at issue in this dispute significantly distort the international market and provide preferential conditions for Chinese industries that use these raw materials," said USTR spokesperson Debbie Mesloh at that time.

It may be six months or more before the dispute panel of three to five experts completes its examination of the evidence and issues findings.

At that same December WTO meeting, the United States blocked a request by China to establish a dispute panel with regard to measures taken by the United States that impact the importing of certain passenger and light truck tires from China. The measures were taken in September 2009 with the imposition of three-year tariffs of 35% in the first year, 30% in the second and 25% in the third. China claims the tariffs are illegal.

The United States cannot block a second request by China to establish a dispute panel.

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