WTO rules China's export restriction on Mo, W & Rare Earth as Violation

On August 7, the WTO Appellate Body released its report that it ruled the export restriction on molybdenum, tungsten and rare earths implemented by China as violation.

As is the case in silicon metal and manganese metal whose export duty was removed from January 2013 by recommendation for rectification in 2012, it becomes more likely that the Government of China will remove the export duty on 3 items in the future.

China is a main exporting country for rare earths, tungsten and molybdenum, but has introduced the restriction on quantity to be exported in stages since 1999, on top of which the export duty has been imposed since 2006 and the export quota also has been decreasing year by year. Besides, the export quota was reduced drastically for the latter half of 2010, which caused a market disruption.

Although 3 countries such as Japan, USA and EU held talks on the improvement of the exporting environment on 3 items with China in 2012, the satisfactory solution could not be obtained and it was applied to WTO in June to set up a dispute settlement panel.

Through the trial hearing, although the panel showed its judgement that China's export quota violated Article 11.1 of GATT (Prohibition of restriction on export quotas) and the Paragraph 11.3 of WTO Accession Protocol, China made an appeal to the WTO Appellate Body on 17th and 24th of April and therefore the meeting was held by the WTO Appellate Body in June and its report was released on August 7.

The report made by the WTO Appellate Body totally recognizes what Japan, USA and EU insist and recommends China to rectify in accordance with the WTO Agreement, which is expected to be adopted officially in the meeting of WTO dispute settlement body to be held on August 29.