China protects its interior producers, WTO disappointed

China was pressed Monday by the U.S. the EU and Japan to explain why its markets were closed to greater foreign competition.

Photo: China protects its interior producers, WTO disappointed

China protects its interior producers, WTO disappointed

Representatives of the world's three biggest economic powers were disappointed by China's refusal to provide serious explanations of how it was living up to the promises it made when it joined the World Trade Organization in 2001, according to trade officials present at the review meeting at WTO headquarters.

Washington accused China of manipulating prices on the raw materials used to produce steel, chemicals, airplanes and automobiles, giving Chinese manufacturers a massive advantage over their American competitors.

Tokyo complained about Beijing's tariff rates on camera film and export restrictions on the coke used in steel production, while Brussels queried government measures that apparently limit Chinese imports of foreign-made chemicals, cosmetics, pharmaceuticals and other products, officials said.

The EU said in a written submission that it is "very concerned about and is not satisfied with the level of WTO compliance on a number of ... restrictions maintained by China."

Submissions and debates at WTO review meetings do not constitute formal legal complaints, but they often provide an indication of pressing disagreements between WTO members and, sometimes, future trade disputes.

China agreed as part of its WTO accession package six years ago to phase in a number of reforms aimed at liberalizing its agricultural, manufacturing and services markets. It also accepted a decade of annual reviews.

But China provided only limited answers to questions posed by the U.S., the EU and Japan at the meeting, officials said. It also challenged whether the review was the appropriate forum for examining issues it said were not part of its WTO commitments.

Beijing, the world's largest producer of many industrial commodities, drives up costs for companies outside China by limiting its export of the raw materials, the U.S. told the WTO's 151 members in its submission to the review body last month.

It claimed that the export restrictions also ensure an oversupply of commodities on the Chinese market, keeping costs low for domestic producers of ceramics, semiconductor chips, fiber optic cables and numerous other goods.

As a result, American companies are forced to pay significantly more than Chinese firms for key steel ingredients such as coke, tin, zinc and rare earths; semiconductor materials such as antimony and silicon; tungsten for mining and construction; and fluorspar, magnesium carbonate and talc.

"China's export quotas on these raw materials significantly disadvantage U.S. and other foreign producers, which use these raw materials to make a wide range of (finished) products," Washington said in a written submission.

Stephen Norton, a spokesman for the U.S. trade representative in Washington, said last month the objections were outlined to the WTO to get the issues on the record and not necessarily to prepare for a formal complaint.

The global commerce body is already investigating three Sino-American trade disputes. Washington accuses China of illegally hindering the import of foreign auto parts, providing government subsidies to a number of Chinese industries and effectively providing a safe haven for product piracy and counterfeiting through excessively high thresholds for criminal prosecution.

The United States announced last week it would ask for a fourth formal investigation of Chinese trade policy, specifically on restrictions hindering the sale of American movies, music and books.