VisitCHN

The US and the European Union yesterday raised the stakes in a growing dispute with China lodging a joint case at the World Trade Organisation over export quotas on raw materials in the latest sign of friction over trade.

The move comes as countries look for ways to protect domestic companies during the downturn. The US has introduced controversial “Buy American” legislation and China has responded with “Buy Chinese” provisions with the US stepping up diplomatic complaints over China’s rules on PC sales.

In a co-ordinated filing, the EU and the US complained to the WTO that China’s export duties on raw materials such as coking coal were distorting the global market and hurting their manufacturers of steel and other products.

“We are most troubled that this appears to be a conscious policy to create unfair preferences for Chinese industries by making raw materials cheaper for China’s companies to get and goods more economical for them to produce,” said Ron Kirk, US trade representative.

The US has been negotiating with China on the issue for more than two years, but the decision to bring the protest to the WTO comes as manufacturers suffer from the recession.

“Now more than ever trade is essential to keeping America’s economy afloat,” said Mr Kirk. The WTO case is the first from the US since President Barack Obama took office in January.

Baroness Ashton, the European trade commissioner, said: “The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies.”

The US is stepping up its complaints to China on a separate trade-related issue over censorship software. US officials based in Beijing are lobbying Chinese counterparts to drop a requirement that computers sold in the country carry internet filtering software called Green Dam.

The US is concerned about the censorship the software allows but also that US computer makers will be blocked from the Chinese market. Manufacturers argue the product could damage machines while a California company claims Green Dam is largely copied from its software.

However, there is no immediate threat to take the case to the WTO. “We are still climbing the diplomatic chain right now,” said a US official.

Mr Kirk said he hoped the raw materials complaint could be resolved at the formal WTO consultation stage rather than the next step in which a panel would consider the alleged infringement of trade rules.

The Chinese foreign ministry and embassy in Washington did not respond to requests for comment yesterday.

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