The US, EU and Mexico have just (2 hours ago) jointly made a formal request to the WTO for a dispute-settlement panel to address China’s export restraints on a number of raw materials of interest to our precision machining industry. Bloomberg coverage here.
Raw materials such as
- coke ( used in steel),
- zinc (used in brass),
- bauxite (aluminum ore),
- fluorspar (steelmaking slag conditioner),
- magnesium,
- manganese (steelmaking ingredient),
- silicon metal (steelmaking deoxidizer),
- silicon carbide (desulfurizer)
These are among the materials listed in the filing. These are important (essential!) ingredients into the steel and metallic raw materials our industry consumes. We remember reading about this as an emerging concern in June in the Globe and Mail.
How they load steel in Hubei, China.
The economic issue is that this “resource hoarding” results in artificially lowered cost for these raw materials in China and in effect becomes a subsidy for those manufacturing operations that China deems “strategic.” While at the same time making these materials more difficult (and Expensive) to obtain for non Chinese companies.
“Peace” according to Ambrose Bierce, in The Devil’s Dictionary, “in international affairs is a period of cheating between two periods of fighting.” I think that this is a particularly useful perspective in this situation.
“Diplomacy,” according to my 8th grade History teacher, Mrs. Abernathy, “is war by other means.”
Our industry, the EU, Mexico, and the United States- all of us are certainly looking forward to some diplomatic success.
The panel is expected to be convened Nov. 19th.
We all live here together. Why not trade fairly?
Steel loading Photo via Globe and Mail originally Shanghai Reuters.
Earth photo credit: NASA.
Speaking of Precision Blog 
[…] China Resource Hoarding- WTO Panel Convened The World Trade Organization has agreed to investigate whether China’s export duties on nine commodities that are used as raw materials for various basic industries ( including aluminum and steel) provide a trade-distorting competitive advantage to Chinese producers. Resource hoarding protects high cost low efficiency producers. The investigation was prompted by complaints from the US, the EU, and Mexico that Chinese export restrictions were discriminatory and violated WTO rules. The Chinese government defended the tariffs saying they are intended to inhibit overproduction and emissions as well as conserve scarce natural resources. Read Steel Industry Analyst Michelle Applebaum’s update on this hoarding dispute here. Our original post from November 4, 2009, explaining this dispute can be found here. […]
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