The Guardian (UK)
By Heather Stewart
June 23, 2009

China could face censure at the WTO after America and Europe lodged a joint complaint today over its restrictions on raw materials exports.

Europe and the United States have announced co-ordinated action against China for breaking World Trade Organisation rules, raising fears of a damaging trade war in the depths of the global recession.

The US trade representative issued a statement this afternoon criticising restrictions China has placed on exports of raw materials, to the disadvantage of American firms. Together with Europe, the US will start formal "dispute resolution consultations" at the WTO, claiming China has breached the rules of the international marketplace.

The trade representative said: "For American industrial manufacturers, this is a critical step toward market equality. China’s export restrictions on a broad range of raw materials have given unfair competitive advantages to their own manufacturers while raising the costs of doing business for US companies."

Baroness Ashton, Europe’s trade commissioner, said the EU would join the American case.

"The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies in this economic downturn.

"I hope that we can find an amicable solution to this issue through the consultation process," she said.

The complaint concerns the minimum export prices and tariffs China imposes on several resources, including bauxite, magnesium and zinc. The EU claims the restrictions not only break general WTO rules, but specific promises China made when it joined the organisation in 2001, becoming a fully-fledged player in global markets.

If countries cannot reach agreement under consultation, which can take up to 60 days, the WTO can appoint a panel to examine the case and decide whether China is at fault. If Beijing refused to comply, Europe and the US could be given permission to impose trade sanctions.

The US representative said: "As this case proceeds, American businesses can expect USTR to press vigorously for redress that will balance the scales."

With the Doha round of world trade talks at a standstill, the deterioration in trading relations between the world’s major economic powers will underline fears that the march of globalisation has been halted. President Obama’s White House has so far shown little enthusiasm for restarting the talks.