The United States on Tuesday filed its first unfair trade case against China before the World Trade Organization, accusing the Asian power of restricting exports of key raw materials needed for the production of steel, aluminum and other products.
U.S. Trade Representative Ron Kirk said at a news conference that the U.S. is "deeply troubled at what appears to be a conscious policy to create unfair advantages for Chinese industries."
The European Union also filed its own case on the matter, setting the stage for what could be a key showdown among the world's major trading countries.
The materials at issue include coke, bauxite, magnesium and silicon metal, the U.S. complaint notes. The U.S. and EU complaints say China's export restrictions give its companies an unfair edge over their foreign rivals by giving them access to cheaper materials, despite WTO rules against export curbs.
"The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies in this economic downturn," EU Trade Commissioner Catherine Ashton said in a statement.
Both Ashton and Kirk expressed hope the issue could be resolved during a 60-day negotiating period. But if that doesn't happen, Kirk said the U.S. will go forward with a WTO case because of the issue's importance to American companies and workers.
"Dialogue is our preferred course of action, but despite raising this issue with China repeatedly, China has not changed its policies," Kirk said. "We are committed to enforcing our rights using all of the resources at our disposal, including the WTO."
The American Iron and Steel Institute, whose members include Nucor, United States Steel, the United Steel Workers and other industry groups released a joint statement praising the administration's decision to pursue a WTO case against China.
"When China joined the WTO in 2001, it committed to removing these restrictions," the groups said, calling the barriers on the export of raw materials and minerals "just another way in which China favors its domestic manufacturing industries at the expense of the rest of the world."
The U.S. complaint contends that China maintains a number of measures that restrain the export of raw materials for products for which it is the world's largest producer or near the top, such as coke, a key ingredient in steel production.
A U.S. fact sheet said "a prime example of the highly distorting effects of China's export restraints" was its decision to limit exports of coke from 336 million metric tons in 2008, down to current annual exports of only 12 million metric tons.
Before the export controls were imposed, China accounted for about 60% of global coke production.