US to WTO: China boosting exports by manipulating markets for raw materials

The United States has accused China of manipulating prices on the raw materials used to produce steel, chemicals, airplanes and automobiles, giving Chinese manufacturers a massive advantage over their American competitors.

But a U.S. trade official said Monday that Washington voiced its objections to the World Trade Organization to get the issue on the record and not necessarily to prepare the ground for a formal complaint.

Beijing, the world's largest producer of a number of industrial commodities, drives up costs for companies outside China by limiting its export of the raw materials, the U.S. told the WTO's 151 members in a submission earlier this month.

At the same time, the export restrictions ensure an oversupply of commodities on the Chinese market, keeping costs low for the Asian country's producers of ceramics, semiconductor chips, fiber optic cables and numerous other goods, according to Washington.

The result is that American companies are forced to pay significantly more than Chinese firms for key steel industry ingredients such as coke, tin, zinc and rare earths; semiconductor materials such as antimony and silicon; tungsten for mining and construction; and fluorspar, magnesium carbonate and talc.

"China's export quotas on these raw materials significantly disadvantage U.S. and other foreign producers, which use these raw materials to make a wide range of (finished) products," the U.S. submission said.

American makers of gasoline, motor oil, auto parts, medical imagery and refrigerants are among the companies being hampered by the Chinese export controls, it said.

Stephen Norton, a spokesman for the U.S. trade representative in Washington, said Washington submitted its concerns as part of a review mechanism created when China entered the WTO in 2001.

"We are trying to work out our problems through dialogue," Norton said Monday. "It does not mean a WTO case is imminent or being planned."

The WTO opened a formal investigation last month into American and Mexican allegations that China is providing illegal subsidies for a range of industries. The U.S. and Mexico accuse Beijing of using WTO-prohibited tax breaks to encourage Chinese companies to boost exports, while imposing tax and tariff penalties to limit purchases of foreign products in China.

Washington has filed three other WTO complaints against China since 2006.

Last week, speakers at a U.S. steel industry conference in Washington urged greater trade restrictions against China despite a recovery in the American steel sector that brought record revenues and profits in 2006 after a deep slump earlier in the decade.

Andrew Sharkey, president of the American Iron and Steel Institute, said China's government has subsidized the creation of a large steel industry that is now exporting large amounts of cut-price steel to the United States. The subsidies, including discounted prices for land and energy, low-cost loans and debt forgiveness, represent unfair trading practices that threaten the U.S. industry, he said.

The AISI represents 31 steel makers, including Nucor Corp., U.S. Steel Corp. and Steel Dynamics Inc



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