US, EU act against China on raw material exports

WASHINGTON/BRUSSELS, (Reuters) – The United States  and European Union took action against China yesterday for  restricting exports of industrial raw materials, intensifying a  trade struggle at a delicate time for the global economy.

In the United States the decision to bring the dispute  before the World Trade Organization was seen as part of a more  muscular trade policy promised by the Obama administration, but  it added to tensions at a time when Washington counts on  Beijing to keep buying its debt.

Europe and the United States had earlier failed to persuade  resource-hungry China to reduce its export tariffs and raise  quotas on materials like bauxite, coke and manganese that are  used in steel, microchips, planes and other products.

Billions of dollars in trade flows are affected, and China  gives its industries an unfair edge, U.S. officials said.

“After more than two years of urging China to lift these  unfair restrictions, with no result, we are filing at the WTO  today,” U.S. Trade Representative Ron Kirk told a news  conference in Washington.

“We are most troubled that this appears to be a conscious  policy to create unfair preferences for Chinese industries”  that use the materials, he said.

As a first step, the United States and the European  Commission — which oversees trade for the 27-nation EU bloc —  formally sought consultations with Beijing at the global trade  watchdog. If these talks fail, after 60 days the next step  would be to request a WTO panel to hear the complaint.

“It is very much hoped that we will not have to proceed to  the next stage,” Kirk said.

In Brussels, EU Trade Commissioner Catherine Ashton said:  “The Chinese restrictions on raw materials distort competition  and increase global prices, making things even more difficult  for our companies in this economic downturn.”

“I hope that we can find an amicable solution to this issue  through the consultation process,” she said in a statement.

The EU and the United States say China restricts exports of  raw materials despite a pledge to eliminate export taxes and  charges made when it joined the WTO in 2001.