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Ambassador Kirk Announces WTO Case Against China Over Export Restraints on Raw Materials

06/23/2009 - 9:44am

U.S. Trade Representative Ron Kirk announced today that the United States has requested World Trade Organization (WTO) dispute settlement consultations with the People's Republic of China regarding China's export restraints on numerous important raw materials.  China's measures appear to be part of a troubling industrial policy aimed at providing substantial competitive advantages for the Chinese industries using these inputs.  The materials at issue are: bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus, and zinc.  These are key inputs for numerous downstream products in the steel, aluminum, and chemical sectors across the globe.  China ranks as a top global producer of these materials.  The European Union also requested formal WTO consultations with China on this matter today.

Ambassador Kirk gave the following remarks at the opening of today's press conference:

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

97 percent of America's exporters are the small and medium sized enterprises that employ millions upon millions of our citizens.

And jobs dependent on trade are the better-paying jobs Americans want and need - with salaries 13 to 18 percent higher than the national average.

Access to markets around the world helps us retain and create the good-paying jobs Americans need.

And barriers to trade can slow our ability to recover from the economic crisis.

The Obama Administration has been clear with our trading partners: we wish to work together to keep global trade flowing and provide economic opportunities for all.

But we will always, always, expect our trading partners to play by the rules.

Our preferred tools are those of dialogue - discussions to resolve differences quickly.

But when these talks don't work - we reserve the right to take action. We will enforce the rights of American manufacturers, farmers, ranchers, services providers, and workers using the rules-based global trading system.

Today, the Obama administration is insisting on the rights of American business and workers.

We are initiating formal consultations with China in the WTO, because we see a major problem.

The United States believes that China is unfairly restricting exports of raw materials.

These actions are hurting American steel, aluminum and chemical manufacturers, among other industries, that need these materials to make their products. These actions are endangering the jobs of American workers employed in those sectors.

USTR is very concerned that China appears to be restricting the exports of these materials at the expense of U.S. industries that need these materials, and their workers.

This appears to be occurring despite strong WTO rules designed to discipline export restraints.

And we are deeply troubled that this appears to be a conscious policy to create unfair preferences for Chinese industries... by making raw materials cheaper for China's companies to get, and goods more economical for them to produce.

These export restrictions by China skew the playing field against American workers and businesses. They unfairly advantage Chinese producers.

Under WTO rules, such distortion of the playing field on trade is simply not allowed.

It's not okay in specific cases like the one we are raising today. It is certainly not okay as an underpinning of a country's overall industrial policy regime.

Now, more than ever, we must fight against this kind of domestic favoritism.

Earlier this month, I told the US-China Business Council that the United States wishes to work cooperatively with China to advance our economic relationship. This is particularly true with regard to trade.

But I also said, we will not yield on enforcing the right of American businesses and exporters to compete on a level playing field with China.

I said that if we can do it by trade diplomacy, we will. If we have to file at the WTO, we'll file.

And after more than two years of urging to get China to lift these unfair restrictions, with no result, we are filing at the WTO today.

Before everyone writes that tensions are escalating between the U.S. and China, remember: WTO disputes are a normal part of the relationship among mature trading partners.

The U.S. has previously brought 7 cases against China. China has brought 4 against us.

At this stage, in this case, we have simply requested formal consultations with China in a further attempt to find a negotiated solution to the problem. It is our hope that we will not need to proceed to the next stage, of requesting a WTO panel to examine the matter.

We do not take this step lightly. But we are taking it deliberately.

It is a necessary next step.

And it is the fulfillment of a promise.

In his 2009 trade policy agenda, President Obama promised Americans that his administration, including USTR, would stand up for the rights of American workers and businesses in the rules based global trading system.

We believe that on a level playing field, American workers and businesses can compete and win anywhere in the world.
China's policies on these raw materials seem to put a giant thumb on the scale in favor of Chinese producers.

Today's action is proof of our commitment to level the playing field in this area.

It is our hope that this dispute is resolved speedily and to the fair benefit of U.S. industries and workers.

Our steelworkers, our aluminum producers, and workers in countless other industries deserve the chance to compete fairly with China.

This case is designed to ensure that they have this chance.

I will now take your questions.

See the press release and fact sheet for more information on the case.