Tuesday, July 07, 2009

Morning News

The Office of the USTR has ask for WTO consultations on Chinese policies limiting the export of various forms of bauxite, coke fluorspar, and other minerals. Bauxite is an important industrial material in that it is the basic form of aluminum ore. Coke is a coal-derived fuel that is useful, among other things, in the smelting of iron. Fluorspar (or fluorite) is used as flux to lower the melting point of materials used in the production of iron. Do you see the pattern? It seems evident that if a major source of these important industrial materials limits their export, there will be trade distorting effects. Higher demand, higher price. Plus to the extent these are strategic materials needed for infrastructure and defense, it seems other countries might have an interest in a ready supply.

Given those factors, it's easy enough to understand the request for consultation. What remains to be seen is whether the measures China has put in place do, in fact, violate its obligations to the WTO. According to the USTR, the limitations violate a number of provision of China's WTO accession agreement. The request can be found here.

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