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China Defends Export Curbs After US, EU Complaints

Wed, 06/24/2009 - 4:43am

JOE McDONALD AP Business Writer - June 24, 2009

BEIJING (AP) — China defended its curbs on exports of industrial raw materials against unfair-trade complaints by the United States and Europe and announced Wednesday it has filed its own challenge to a U.S. ban on imports of Chinese poultry.

The Ministry of Commerce said the curbs comply with Chinese trade commitments and are meant to protect the environment.

The United States and European Union filed World Trade Organization complaints Tuesday accusing Beijing of unfairly favoring its domestic steel, chemicals and other industries by restricting foreign rivals' access to key materials. China is a major supplier of several materials.

"The goal of the Chinese side's policy on the relevant exports is to protect the environment and natural resources, and the Chinese side considers the relevant policy to be compliant with WTO regulations," the ministry said in a written statement. It said Beijing hopes to resolve the dispute through dialogue in the Geneva-based WTO.

The complaints add to tensions over Beijing's industrial policies that have been aggravated by the plunge in world trade.

China has raised taxes on exports of coke, steel, fertilizers and other goods to curb the growth of industries deemed too dirty or enegy-intensive and to ensure supplies at reasonable prices for domestic buyers.

The materials cited in the U.S. and European complaints include coke, bauxite, magnesium and silicon metal. China is the biggest exporter of coke, a fuel made from coal and used in steelmaking and other industries.

The communist government also has rankled some of its trading partners by trying to boost exports through tax breaks and other aid to Chinese producers, which threatens to pump more goods into already glutted global markets.

Analysts expect U.S. President Barack Obama's administration to file more trade cases against China following his campaign promises to take a tougher approach with U.S. trading partners. Pressure to protect American jobs has mounted as the country struggles with its longest recession since World War II.

Both Beijing and Washington have imposed measures favoring domestic industries in their economic stimulus packages enacted in response to the global slowdown.

China criticized Washington's "Buy American" measure favoring U.S.-made iron, steel and manufactured goods in stimulus projects. Beijing announced its own "Buy China" requirement this month for projects to use domestically made goods wherever possible.

Beijing announced this week it will cut some export taxes July 1 but the goods affected did not include materials cited by the United States and Europe and it was unclear whether the step would mollify them.

Taxes on fertilizers will fall from as high as 110 percent to 10 percent, on ammonia from 50 percent to 10 percent and on some types of steel girders from 10 percent to 5 percent. The anouncement did not mention coke, bauxite or magnesium.

The WTO hearing process can take up to a year. If the U.S. and EU prevail and China refuses to lift its restrictions, the two would be receive approval to impose sanctions equal to the harm suffered by their companies.

Separately, the Ministry of Commerce said Wednesday that Beijing has asked the WTO to investigate a U.S. ban on imports of Chinese poultry.

The two countries banned imports of each others' poultry in 2004 following an outbreak of bird flu. Beijing lifted its ban after a few months and complains Washington has failed to follow through on a pledge to open its market to Chinese poultry exports.

"China's poultry products cannot be properly exported to the United States, and this has hurt the legitimate rights of the Chinese poultry industry," ministry spokesman Yao Jian said in the statement.

It said Beijing has asked the WTO dispute resolution mechanism to create a group to investigate the U.S. ban.

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