WTO questions China’s barriers

The remarks, in a report prepared for China’s two-yearly trade policy review, constituted a rare comment by the WTO’s secretariat on a current dispute between members.

By cutting off exports of some raw materials, China makes them more expensive for foreign manufacturers who use them while making them cheaper for its own processing industry, which is able to sell finished goods abroad more cheaply than foreign competitors can.

China’s restrictions on raw materials sales have been challenged by the US, EU and Mexico, and the WTO set up a panel in December to rule on the complaints.

The WTO noted that China has continued to open its markets since joining the global trade body in 2001, and its average tariff is now 9.5% against 9.7% in 2007. But it said export barriers have not fallen as fast as import barriers.

China uses restrictions such as prohibitions, licensing, quotas, taxes and partial tax rebates to manage certain exports in order to conserve resources and energy, it said.

The report questioned whether this approach was economically effective, and noted that such restraints tend to reduce export volumes of the targeted products, diverting supplies to the domestic market and depressing their domestic prices.

China was making greater use of trade actions such as duties on unfairly priced imports, while itself remaining the most frequent target of such anti-dumping measures, it said. Since 2008 China has been involved in four disputes as a complainant and 11 as a defendant, it said.

The US said it disagreed with the WTO report’s statement that China was continuing to open its economy.

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