WTO rules against China for unfair trade practices

Rob Schmitz Jan 30, 2012

Adriene Hill: The U.S. has scored a major trade victory over China. The World Trade Organization has ruled that China must immediately drop its system of export taxes and quotas on a range of raw materials. The minerals are essential for the U.S. industrial sector. The trade dispute was one of the most widely-watched in years.

Marketplace China bureau chief Rob Schmitz tells us why it matters.

Rob Schmitz: It’s not common that bauxite, yellow phosphorous and fluorspar make international headlines. But the U.S. government says China’s illegal export restrictions on these minerals have forced American companies to move their factories to China.

Damien Ma is a China analyst at the Eurasia Group. He says the WTO ruling against these types of export taxes was important for an even bigger reason.

Damien Ma: I think if you’re either the commerce department or the U.S. trade agencies and you looked at this case, you probably thought it was fairly good news and could allow you to build a solid case on rare earths.

Rare earth metals are in everything from iPhones to electric car batteries. China restricts exports of rare earths as well. But there’s a problem: China produces 90 percent of their global supply — a virtual monopoly.

Yesterday’s WTO ruling means it’s just a matter of time before another case is filed against China for rare earth metals. If China loses, that will mean cheaper materials for the tech industry and cheaper prices for any computer product with a battery.

In Shanghai, I’m Rob Schmitz, for Marketplace.

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