WASHINGTON — The U.S. said the World Trade Organization Dispute Settlement Body established a panel to review allegations that China uses unfair export restraints on 11 raw materials that have implications for several U.S. industries, including the textile, apparel and cosmetics sectors.
The U.S. filed a case at the WTO against China in July, charging that the country imposes duties on exports of the 11 raw materials that put U.S. companies at a competitive disadvantage.
Last month, the U.S. requested that the WTO establish a dispute settlement panel to review its allegations, but the U.S. Trade Representative’s office said China “objected to and blocked” that first request.
As a result, the U.S. called on the WTO to hold a special meeting to consider establishing a panel, which it granted and held on Tuesday.
“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 U.S. Trade Representative Michael Froman. “China specifically committed to abide by fair, non-discriminatory 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.”
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.
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.
“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,” the USTR office 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.