China

China’s Wuhan Steel plans listing of overseas mines

SHANGHAI, March 8 (Reuters) – China’s third-largest steelmaker, Wuhan Iron and Steel Group Corp (WISCO), may list its overseas iron ore assets as part of its next five-year plan, the China Securities Journal reported on Tuesday.

Wuhan Steel is focused on developing its recently acquired iron ore mines to bring them to full production over the next three to five years and may package these assets into a holding vehicle for listing, WISCO’s President Deng Qilin told the paper in an interview.

Deng said it was still too early to determine where the assets would be listed, or if they would be injected into its current listed subsidiary, Wuhan Steel and Iron Ore Ltd (600005.SS: Quote), on the Shanghai exchange.

Deng also said he has not ruled out making further acquisitions, but that the firm’s main priority now was to develop mines recently acquired in Canada, Brazil, Australia, Liberia and Madagascar.

The Chinese steelmaker, which stepped up overseas acquisitions during the financial crisis, currently imports more than 85 percent of its iron ore needs, but aims to be able to supply all its demand in three to five years to end its reliance on foreign suppliers such as Rio Tinto (RIO.AX: Quote)(RIO.L: Quote), BHP Billiton (BHP.AX: Quote)(BLT.L: Quote) and Vale (VALE5.SA: Quote).

Deng complained on Saturday that China continued to have no say in setting global iron ore prices despite being the world’s biggest consumer of the key steelmaking ingredient.

China is furiously consuming iron ore and other commodities to meet industrial and export demand as the country grows at a breakneck pace. The demand has sent commodities prices soaring, leading China to play an increasingly strategic role in the acquisition and development of resource projects.
Continue with the Article here at Rueters  (Reporting by Fayen Wong, editing by Jonathan Hopfner)

China Launches WTO Dispute Against US Shrimp Duties

The US finds its controversial practice of ‘zeroing’ in the line of fire again, as China on Monday initiated WTO dispute proceedings over Washington’s anti-dumping duties on Chinese shrimp.

Despite having lost several WTO cases on the issue, most recently against Brazil for duties on orange juice, Washington responded coldly to China’s challenge.

“The decision now by China to pursue new claims against the United States on zeroing only complicates resolution of this issue,” said Nefeterius McPherson, a spokesperson for the US trade representative’s office.

WTO rules authorise governments to levy ‘anti-dumping’ duties on goods it determines to be ‘dumped’, i.e., sold abroad for less than the price they command in the exporter’s home market, if they are injuring domestic competitors. ‘Zeroing’ refers to the practice by US commerce authorities of ignoring (or ‘zeroing out’) instances where imported goods cost more in the US than in the exporter’s market. Critics of zeroing argue that it artificially inflates anti-dumping margins, making them even more trade-restrictive. Last December, the US Department of Commerce proposed to end the use of zeroing in annual reviews of existing anti-dumping measures, in an effort to stave off retaliation from major trading partners (for more information on that proposal see here). The proposal is still open for public comment, but has drawn the ire of some lawmakers and industry representatives, according to Inside US Trade, a Washington-based trade publication.

China has decided to pursue what it sees as a legitimate claim. “Once the cancellation of zeroing was approved officially, it should have applied to all global trade cases,” Zhang Aiqing, a former director of the department of treaty and law in the commerce ministry, told China Daily.

At issue in the complaint are US anti-dumping duties on Chinese shrimp that date back to 2005. Initially fixed in the realm of 27 to 82 percent, the duties were dropped to 5 to 8 percent after Beijing successfully appealed to the US International Trade Commission (ITC), the quasi-judicial body that determines the rate of duties. Nevertheless, China’s Ministry of Commerce complains that the levies remain in violation of WTO rules, and continue to impair the interests of its shrimp producers.

The US ITC will next month vote on whether to extend its duties on imported shrimp from China and other countries for an additional five years. US shrimpers in the Gulf of Mexico are still reeling from the effects of last year’s massive BP oil spill, and have pushed for the extension of the duties.

China’s request for consultations is the first step in the WTO dispute settlement process. If the two sides cannot reach a negotiated settlement within 60 days, Beijing will have the option of requesting a panel to hear the dispute.

Read the rest of this article here

Tilting at Windmills? The USTR, China and the WTO

When is a win not a win? When you’re playing on China’s chess board.

That’s the problem foreign credit card companies face as the U.S. Trade Representative presses forward with a World Trade Organization case against China for failing to open up its electronic payments market to foreign involvement.

Thus far, foreign firms have been reluctant to vocally support the action in part because even if the USTR wins the case they’ll still ultimately have to play by Chinese rules. And China typically doesn’t take too kindly to foreigners it believes have been pushing it around.

So far, that bodes most ill for Visa Inc. While WTO cases can only be brought by governments, Visa is widely perceived in China as being the driving force behind the electronic payments case, and regardless of the truth of the matter, industry watchers worry that could undo the years of goodwill the U.S. firm has been cultivating among Chinese consumers and regulators.

One thing’s for sure: When the case is completed – and it seems the USTR may have a pretty good shot at coming up trumps – foreign firms won’t have carte blanche to do what they want in China. Beijing’s regulators will still get to decide who gets to come in, and on what terms. Foreign card companies are likely already trying to work out where they rank on Beijing’s list of naughty and nice.

What’s unusual about the electronics payment suit is that it seems to be a fairly blatant case of China ignoring its WTO obligations. But even when China has fulfilled its WTO promises and opened up to foreign firms elsewhere in the financial sector, the result hasn’t been exactly what the foreigners were expecting.

China has typically complied more with the letter than the spirit of the WTO rules. The foreign negotiators that hammered out the conditions for China’s accession to the WTO 10 years ago probably assumed that financial liberalization was as much in China’s interests as that of Western countries, and that everyone was broadly on the same page regarding the amount of access foreign firms would get.

Read the rest of this Wall Street Journal article here

China Blocks U.S. Call for WTO Rulings on Credit Cards, Steel

China blocked a request by the U.S. for World Trade Organization judges to rule on the legality of Chinese anti-dumping duties on steel products and restrictions on companies that process credit-card payments.

The U.S. made the request today in Geneva, five months after asking for consultations with China aimed at resolving the two disputes. China can’t block a second request, likely to come in March.

The U.S. is protesting limits on payment processing by companies such as Visa Inc. and MasterCard Inc. because China favors a monopoly provider, China UnionPay Data Co. China prohibits foreign companies from issuing their own bank cards denominated in its currency, building networks to support such cards or processing interbank point-of-sale transactions.

Foreign banks must “co-brand” with Chinese operators to supply these services and execute payments through UnionPay. The U.S. Trade Representative’s office says the rules run counter to the pledge China made when it joined the WTO in 2001 to open up its credit- and debit-card markets to foreign processing companies by the end of 2006.

The U.S. also wants WTO judges to rule on the legality of dumping duties China imposed on more than $200 million of American-made steel products. The complaint involves dumping and countervailing duties China has placed on flat-rolled steel, which is produced by companies such as West Chester, Ohio-based AK Steel Holding Corp., the third-largest U.S. steelmaker.

China, the world’s biggest steel market, said in 2009 it would apply anti-dumping and subsidy levies of as much as 25 percent on flat-rolled electrical steel products, used in transformers, reactors and electric machines. China said the duties aim to counter below-cost or “dumped” imports of the goods.

The U.S. says China didn’t follow WTO procedures by failing to disclose the facts underlying its legal conclusions and not explaining its calculations.

Read rest of the article here on Bloomberg

WTO: Chinese commodity export restrictions are unfair

The WTO is to issue a preliminary report on Friday that concludes China has no right to impose export restrictions on nine raw materials, the Wall Street Journal reported. Many of the industrial ingredients concerned are vital in the production of steel. The restrictions, in the form of quotas, license requirements and other measures, have caused increasing friction in China’s trade relations. The case is not directly related to the sensitive rare earths’ export issue, but a victory in this raw-materials filing could lead to a new US complaint on rare earths, trade analysts said. This is because the ruling will indicate whether the WTO agrees with China’s general assertion that export restrictions are necessary to protect the environment. The final report will be released in April, at which point China can appeal. Should that the appeal fail, the country must remove the restrictions or potentially face sanctions

WTO to Fault China on Raw-Material Exports

WTO to Fault China on Raw-Material Exports- China has no legal right to impose export restrictions on nine raw materials, say trade diplomats and lawyers familiar with the case. "This [case] is a punch against China's trade policy," says Simon Evenett, an economist at the University of St. Gallen in Switzerland. "It means you can't use protectionism as a policy tool on natural resources."

Read more...

U.S. files two new trade cases against China with WTO

The Obama administration said Friday that it had launched two new appeals against China to the World Trade Organization as new data showed the trade gap between the two countries rose to a record level last year.

The new appeals to the WTO are part of an evolving administration strategy to press China for better market access while playing down the high-profile dispute over how Chinese authorities manage the value of the country’s currency.

The latest cases attack import duties imposed on certain types of U.S. steel and challenge the virtual monopoly over electronic payment processing granted to a state-owned Chinese company. They come on top of other trade actions filed by the administration, including the tariffs on imported Chinese tires and a high-profile challenge of the subsidies and other support that the country provides to its alternative-energy industries.

“In each of these cases, [the United States] will be pressing to ensure that we obtain the trade benefits provided by the WTO agreement,” U.S. Trade Representative Ron Kirk said in a statement.

Wang Baodong, spokesman for China’s embassy in the United States, said China conducts business “strictly in accordance with its WTO and bilateral commitments.”

“We stand for settling trade disputes with other countries through consultations on an equal footing,” Wang added.

In talks last year, China appealed to the Obama administration to hold off on imposing duties and appealing to the WTO, urging negotiations on trade tensions between the countries.

The WTO and other trade actions come as the Obama administration has become less concerned about China’s management of the value of its currency, the renminbi.

Many economists say the value of the currency is being held at an artificially low level as a way for China to help its exporters, whose goods are comparatively less expensive because of the exchange rate.

The issue has been politically volatile in the United States, and this week members of Congress reintroduced legislation, approved by the House last year, that would impose duties to offset the effects of an undervalued currency.

But Chinese officials have been allowing the renminbi to rise in value, and many longtime critics of China’s currency management say recent signs are encouraging. Including the effect of inflation and a recent drop in the value of the dollar, the Chinese currency is appreciating at a rate of about 10 percent a year.

“We may be on the road” to a renminbi that trades at close to its market value, at least in relation to the dollar, said C. Fred Bergsten, head of the Peterson Institute for International Economics, who has denounced China’s currency management.

There is a similar feeling among U.S. officials that recent changes in how the renminbi can be bought and sold outside China, if sustained and expanded, will lessen central government control over the exchange rate.

China’s central bank controls the exchange rate by actively buying or selling renminbi in exchange for dollars, increasing supply or demand as needed. The more the currency is bought and sold around the world, independent of those transactions, the more difficult it will be for the central bank to manage the rate.

The U.S. trade deficit with China hit a record $273 billion in 2010 as $91 billion worth of U.S. exports to the country were exceeded by Chinese imports.

Read the rest of this article at the Washington Post

WTO Complaint Complicates Chinese-American Cooperation

China’s President Hu Jintao recently ended his 4 day visit to the United States, leaving many questions as to the future of Chinese, American relations over clean energy and climate change mitigation. The U.S. and China have numerous public and private partnerships on energy issues, but a recent complaint to the Word Trade Organization filed by the U.S. Trade Representative (USTR) against China could stall progress.

In September, the United Steelworkers Union (USW) filed a 5,800 page complaint with the US Trade Representative against China. The USW argued that China’s renewable energy policies violated international trade agreements by favoring domestic manufacturers. The USW released a statement saying:

“These practices include discriminatory laws and regulations, technology transfer requirements, restrictions on access to critical materials, and massive subsidies that have caused serious prejudice to U.S. interests. Together, these practices have given Chinese producers an upper hand in accessing investment, technology, raw materials and markets, while foreclosing these same opportunities to U.S.producers.”

The USTR investigated the USW’s claims and in December filed an official complaint with the World Trade Organization against China’s wind power subsidies. The complaint lodged by the USTR specifically refers to China’s “Special Fund for Wind Power Manufacturing.” Under this program grants are available to Chinese manufacturers of wind turbines and manufacturers of parts and components for wind turbines ranging from $6.7 million and $22.5 million. Recipients can receive multiple grants as the size of the wind turbine model increases and the USTR estimates that since 2008 the grants awarded under this program could total several hundred million dollars. The USTR claims this program violates WTO regulations because the grants awarded are dependent upon Chinese wind power equipment manufactures using components made in China as opposed to foreign products.
China’s Commerce Ministry responded by saying:

“All countries are developing new energy sources to deal with the climate changes. China’s measures on wind power development help save energy, reduce emission, and protect environment, which are important measures for sustainable development, and comply with WTO rules. China show grave concern on U.S. request , and will make serious study of it., and deal with the request based on WTO rules, and also reserves her relevant rights.”

read the rest of this article here

US Launches WTO Dispute Against Chinese Wind Power Fund

The US last month initiated dispute proceedings against China at the WTO, alleging that Beijing’s special fund for wind power manufacturing is an illegal subsidy under international trade law.

Trade tensions between the two countries have heated up in recent months, as Washington’s request for consultations, dated 22 December, represents the second time in less than four months that it has accused China of violating WTO rules. The Obama administration has also been increasingly concerned that US companies risk falling behind their Chinese counterparts in the area of clean energy.

Beijing insists its policies are both within the bounds of WTO rules and good for the environment. The Chinese commerce ministry said in a statement on its website that it “will conscientiously study the US request for consultations, and will deal with this in accordance with WTO dispute settlement rules.”

The US claims the special Chinese government fund awarding grants to wind power makers is illegal under WTO rules because it seems to benefit manufacturers using parts made in China. Washington argues that Beijing’s grants are inconsistent with WTO rules because they appear to award funds based on the use of domestic over imported goods, a violation of Article 3 of the SCM Agreement. The US has also taken issue with China’s failure to notify the WTO of these measures. Moreover, the US alleges China has violated the commitments it made when acceding to the WTO by not making available translations of the domestic legislation regarding the grant program in English, French, or Spanish (the official languages of the WTO).

“Import substitution subsidies are particularly harmful and inherently trade distorting, which is why they are expressly prohibited under WTO rules, said Ron Kirk, the United States trade representative. “These subsidies effectively operate as a barrier to US exports to China. Opening markets by removing barriers to our exports is a core element of the president’s strategy.”

According to Kirk’s office, total subsidies under the Chinese program, which began in 2008, could amount to several hundred million dollars. The case originated in Mr. Kirk’s office in response to complaints by the United Steelworkers Union (USW). The USW complaint included allegations that China employs a wide range of policies to protect its domestic producers of wind and solar energy equipment, advanced lithium batteries and energy-efficient vehicles, among other products. The US trade office, however, has only filed complaints at the WTO with respect to wind power, and has yet to make a determination on the solar power aspects of the union’s complaint.

Requesting consultations is the first step in the Dispute Settlement process at the WTO. If the US and China fail to reach a solution in 60 days, the US can request the creation of a panel to hear the case.

President Obama is expected to raise the issue with China’s President Hu Jintao at a summit meeting in Washington on 19 January.

ICTSD reporting. “Beijing moves to defuse trade row with US over green technology,” THE GUARDIAN, 24 December 2010; “US says China fund breaks rules,” NEW YORK TIMES, 22 December 2010.

China to meet WTO requirements on rare earth metal exports

BEIJING- China plans to continue export of rare earth metals, but will regulate export quotas in compliance with the requirements of the World Trade Organization, Ministry of Commerce spokesman Yao Jian said on Tuesday.

In late 2010 the country’s government set quotas for the export of rare earth metals for the first half of 2011.

“China’s export of these strategically important materials will total 14,400 tonnes within the stated period. As for the second half of the year the quotas had not been set so far.”

Over eleven months of 2010 China exported 35,000 tonnes of rare earth metals, up by 14.5 percent as against the same period of 2009. At the same time Japan, EU member-states and the United States account for 86 percent of China’s rare earth metal exports.

China’s rare-earth metal reserves comprise approximately 36 percent of the global ones. At present, China accounts for around 90 percent of rare earth metals on the world market. Rare earth metals are used for high-tech production and in the defence industry.