The EU and the US will take action against China at the WTO this month over export restrictions on around 20 industrial raw materials, EU and industry sources said.
The sources said Brussels and Washington would formally request consultations with Beijing on the issue on June 22.
If these talks fail, the next step would be to request that a WTO panel hear the complaint. Such a step could prove costly for both sides in terms of litigation.
The action is expected further to damage already brittle trade relations with China. Trade disputes between Brussels and Beijing are on the rise since the EU’s trade deficit with China has ballooned. Brussels has imposed a number of anti-dumping tariffs on imports of Chinese goods ranging from shoes to steel products.
EU exports to China rose to 78 billion euros (US$106.3 billion) last year from 26 billion euros in 2000, while imports from China rose to 248 billion euros from 75 billion euros over the same period.
The EU and US say China has continued to restrict exports of raw materials used in steel, semiconductors, aircraft and other products despite Beijing’s pledge to eliminate taxes and charges on exports when it joined the WTO in 2001.
The materials expected to be covered by the case include yellow phosphorous, antimony, bauxite, coke, fluorspar, magnesium carbonate, molybdenum, rare earths, silicon, talc, tin, tungsten and zinc.
“China has been placing unfair export quotas and taxes on these raw materials which are distorting the global market and hindering European and US companies,” an EU source said.
“It is violating its commitments as a member of the WTO,” the source said.
The sources said the list of materials had yet to be finalized by Brussels and Washington. The number “will be in the region of 20,” one source said.
The European Commission will inform member states at a meeting today of its decision to challenge China at the WTO.
“Member states, notably Germany and France, have been chomping at the bit for over a year to mount a case,” a diplomat familiar with preparations for today’s meeting said.
European and US steelmakers accuse China of giving its own steel companies an unfair advantage by restricting exports of coke and other materials used to make steel.
European industry also has objected to China’s use of export curbs to drive down domestic raw material costs at the expense of foreign producers.
Europe’s chemical sector is particularly unhappy with Beijing’s decision last year to impose a 120 percent tax on yellow phosphorous.
Phosphorus is crucial for the chemical industry and is used in many products including fire extinguishers and detergents.
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