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The World Trade Organization said that China’s restrictions on exports of nine industrial raw materials violate international trade rules, according to the Wall Street Journal.

The materials in question are bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorous and zinc.

The WTO’s decision is in response to a complaint brought by the European Union, the US and Mexico. However it will be years before China agrees to remove the restrictions on the limits it has placed to reserve raw materials as inputs for their domestic industries.

Under WTO law, China can appeal the decision on raw materials. The EU, the US and Mexico could impose tariffs on Chinese goods in retaliation if China doesn’t end the measures, which include export quotas, tariffs and minimum export prices.

Steel and chemical firms are the main consumers of the industrial raw materials, but the materials are also used to make many other products ranging from beverage cans to refrigerators.

EU trade commissioner Karel De Gucht was quoted saying the WTO decision sends a strong signal for countries to refrain from imposing unfair restrictions to trade and takes us one step closer to a level playing field for raw materials.

China had invoked environmental concerns arising from the production of these materials as a reason to restrict their exports. WTO rules allow countries to restrict trade to protect the environment.

But the WTO panel said export restrictions alone, without measures to limit domestic industries from using the materials, don’t effectively protect the environment.

The ruling may also affect another contentious trade issue: China’s limits on “rare earth” exports. These materials are crucial inputs for high-tech products such as batteries, solar cells and wind turbines. — Source: Wall Street Journal

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