On July 5 2011 a World Trade Organisation (WTO) panel published a report in which it ruled in favour of the European Union in a challenge against export restrictions in China. The ruling could boost further EU claims against export curbs on other commodities.
After hearing the case brought by the European Union, the United States and Mexico, the panel found that Chinese export duties and quotas, as well as export licensing requirements, were in violation of the General Agreement on Tariffs and Trade and China's WTO Accession Protocol. The panel ruled that China had failed to fulfil its obligation to remove export limitations, which it had assumed upon joining the WTO. In addition, the panel found that China could not justify its policy on the grounds of protection of exhaustible resources for two reasons. First, because according to the panel this defence cannot be relied upon with respect to China's commitment to eliminate export duties, as set out in the Accession Protocol. Second, because the limitations in question did not lead to a reduction of extraction of minerals, but rather boosted domestic demand.
A favourable ruling of the panel may spark further actions by the European Union, targeting export curbs on other types of commodities. In this respect, the European Union is already contemplating a challenge to Chinese restrictions on the export of rare earths which are commonly applied in high-technology goods, such as electric cars, smartphones and disk drives.
However, China may still lodge an appeal and request the WTO appellate body to review the panel's findings.
