Material Harm
Chinese bauxite
Quiet consultations have failed (at least so far), and the United States, Mexico and the European Union have joined together to bring a new case against China in the World Trade Organization. Seems that China has been restricting its exports of raw materials that are crucial to the world’s steel, aluminum and chemical industries. This is likely due to a perceived need in Beijing to preserve its stocks of these materials as shortages develop, looking forward not only to China’s future needs, but also to likely rising prices for these commodities as the world begins to pull out of recession. Unfortunately, what may seem a conservative approach to Beijing puts a crimp on other countries that use these materials. The raw materials in question are bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus and zinc. The Chinese restrictions are definitely going to raise the prices of the myriad products made from these.
The United States and the European Union first raised this issue in the WTO back in June, and Mexico joined the complaint in August. Under the WTO’s dispute settlement mechanism, the first step was for the complainants to talk to the Chinese and try to resolve the problem out of court. That hasn’t worked, so the three went back to the WTO last night to ask that a formal dispute settlement panel of experts be organized to look at the case and the legal positions of all the parties. This starts a multi-month process that could lead to retaliation against China, but, more likely, will put pressure on Beijing to reach some sort of compromise. Cases like this go on all the time and are actually a healthy sign of mature relationships between countries. I bring it to your attention because this is potentially a big one.
Posts may be sporadic the next few days. I’m traveling and am not sure when I will be able to post. I am currently in Washington, DC for meetings at the Commerce Department, the World Bank and the InterAmerican Development Bank. I’m picking up some interesting stuff that I will share with you.
