'China’s raw material imperialism'

from livemint.........

"In a ruling that could have major ramifications for global trade, a dispute settlement panel of the World Trade Organization (WTO) has ruled against China’s policies of imposing export restrictions on a range of raw materials, including certain forms of bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc. The dispute, which was brought before WTO’s Dispute Settlement Body by the US, the European Union and Mexico in 2009, attracted attention since 13 WTO members joined the dispute as third parties. Among them were some of the key global players, India, Brazil, Japan and Korea.

The contention of the complainants was that China had imposed export restraints on raw materials in violation of their WTO obligations that included export duties, export quotas, export licensing and minimum export price requirements. Their arguments were that China was promoting its domestic industry by imposing these restrictions, thus discriminating against its trading partners. Through these arguments the complainants to this dispute challenged the pattern of trade that China has promoted in the past couple of decades wherein it encourages imports of raw materials and intermediates from its trading partners while promoting exports of finished products.

Since the beginning of the last decade, which coincides with its accession to WTO, China has pushed for importing raw materials from the rest of the world, while its exports of raw materials have drastically declined. In 2002, China’s imports of raw materials were 11% of its total imports, which, by 2010 had increased to over 26%. During the same period, its raw materials’ exports had declined from 4.5% to a mere 2%. Since 2002, share of raw materials in its total imports from Organisation for Economic Co-operation and Development countries has doubled, while its share of exports of these products has halved. What is more, China’s trade with most of the emerging economies bears strong resemblance with the “colonial pattern” of trade. More than 84% of China’s imports from Brazil in 2010 comprised raw materials (up from 61% in 2002), while its exports of raw materials to the latter had decreased to a mere 1.4% (from 8.2% in 2002). In case of India, the shift in favour of raw materials is even more drastic. From just over one-third in 2002, the share of raw materials in China’s total imports from India was nearly 70% in 2010. It is, therefore, no surprise that this dispute has so many backers"...............READ MORE