WASHINGTON — The U.S. has requested that the World Trade Organization establish a dispute settlement panel to review alleged “unfair” export restraints that China imposes on 11 raw materials ranging from antimony to copper that could have implications for the textile, apparel and cosmetics industries.
The U.S. filed a case against China at the WTO in July charging that it is using unfair trade practices that put U.S. companies at a competitive disadvantage.
When the case was filed, the U.S. charged that China maintains unfair duties ranging from 5 to 20 percent on exports of nine raw materials, including antimony, talc, cobalt, copper, graphite, lead, magnesia, tantalum, chromium and indium. The U.S. later added chromium and indium to the list in the WTO case.
In addition, the U.S. said China imposes export quotas on various raw materials and that both policies are “inconsistent” with commitments China made when it joined the WTO.
The two countries held consultations this past weekend, but failed to resolve the dispute, according to the U.S. Trade Representative’s office. Requesting a panel is the next step in the process. The WTO Dispute Settlement Body will consider the U.S. panel request at its meeting scheduled for Oct. 26.
The European Union filed a separate case against China at the WTO shortly after the one filed by the U.S. in July, challenging export restraints on the same nine raw materials.
“We will aggressively pursue this challenge on behalf of U.S. steelworkers, auto workers, aerospace workers, and the many Americans whose businesses, jobs and livelihoods depend on the strength of these and other industries,” said USTR Michael Froman. “China specifically committed to abide by fair, nondiscriminatory access to raw materials when it joined the WTO. We intend to hold them to that commitment to ensure that our workers and businesses get all the economic opportunities they’re entitled to under our trade agreements.”
Many of the raw materials are key inputs that go into several Made in U.S. products, including polyester fabric and apparel, cosmetics and products in other critical industrial sectors such as aerospace, automotive, electronics and chemicals.
USTR outlined several finished products containing the raw materials. For example, 90 percent of indium consumer in the U.S. is used for thin-film coating on flat-panel displays, part of a $10.1 billion computer equipment industry employing 21,000 U.S. workers, USTR said. Citing another example, the agency said 98 percent of the chromium consumed in the U.S. is used for stainless steel, a $6.3 billion industry employing 2,600 American workers.
“Because of China’s position as a leading global producer of these raw materials, its export restraint measures give China the ability to affect global supply and pricing significantly,” USTR said. “These measures can provide important advantages to China’s downstream producers, to the detriment of U.S. and other foreign counterparts. These measures also can create substantial pressure on foreign producers to move their operations, jobs and technologies to China.”
Segments of the industry could see a reduction in input costs if the U.S. is successful at the WTO.
Antimony is a chemical used in the production of polyethylene terephthalate fibers that are used to make polyester fabric. One potential scenario that is happening, reflected by the WTO case, is that U.S. makers of polyester fabrics pay a higher price on exports of antimony from China than their Chinese competitors, who are not taxed when using antimony to make polyester in China.
In addition, U.S. apparel brands that make polyester products outside of China, but export antimony from China, would also be paying higher input prices than their Chinese competitors.
USTR asserted that the WTO ruled against China in two separate disputes with the U.S. and found that China’s imposition of export duties and quotes on two different sets of raw materials was inconsistent with its WTO commitments.
“Through this new WTO action, the United States seeks to extend and reinforce the important victories” the U.S. won in the two previous WTO challenges, USTR said.