At the request of the United States, the European Union and Japan, the Dispute Settlement Body established on 23 July 2012 a panel to consider China’s export restraints of rare earths, tungsten and molybdenum.

Rare earths are used in magnets electronics and specialty alloying applications among other uses.

The restraints to be investigated include:

  •  Export quotas,
  • Export duties, 
  • Restrictions on the right to export (various)
  • Administrative requirements that limit  China’s exports of these materials ( by increasing the burden and costs for  exporting.)

The European Union said that  export restrictions in this dispute constitute a violation of China’s WTO  commitments undertaken under the General Agreement on Tariffs and Trade (GATT)  as well as commitments undertaken in China’s Accession Protocol specifically  aimed at these types of restrictions.

Japan said that China’s exports  restrictions are inconsistent with China’s obligations under the WTO Agreement.

The WTO members announcing  they wanted to exercise third-party rights were Viet Nam, Norway, Oman, Chinese  Taipei, Korea, Saudi Arabia, Brazil, India, Canada and Colombia.

According to the EU, the export  restrictions significantly distort the market and create competitive advantages  in favour of China’s manufacturing industry to the detriment of foreign  competition.

China said it has no intention of protecting domestic  industry through means that would distort trade.

Note to China: It’s not what you intend, its what you actually do…

Nothing indicating market distortion on this graph. (sarcasm)

WTO report here.

Link to China response.

Nice discussion at Propurchaser blog

Rare Earth Powder

P.S To Baby Boomers: We’re not talking about

That great band of the same name…

Proof the system can work if the Administration has the will.

A welcome victory for Washington.

The WTO Appellate Body on Monday ruled in Geneva that safeguard tariffs imposed by President Obama on China two years ago were legal under WTO rules.

We have followed this case since January 2010 Chinese Tire Appeal.

We advised the follow up:  WTO rules against China

Here is the link to  the WTO page on the dispute, where you can  choose various downloads of their findings WTO CHINA TYRES

While there are many ways that this “win” will be presented to us as “news”- the fact that we think will be ignored by all is that it is the continued “do nothing about the Chinese currency undervaluation” that  is keeping us disadvantaged economically.

This WTO victory shows us that when the administration has the will to pursue relief from unfair trading practices, the system can result in such relief being recognized as lawful.

So while some pundits will characterize this current WTO decision as a “Victory for Obama,” Victory for America,” or Victory for Unions”- the fact is that the real damage to America’s economy is the ongoing,  continued predation caused by the Chinese currency peg to the US Dollar. China devalues the yuan by 40%, making Chinese goods artifically inexpensive, stealing US manufacturing jobs.

We congratulate the Obama Administration for their work on the dumping of cheap Chinese tires. How about getting to work on the dumping of manufactured goods through the use of the undervalued yuan?

Facts for Fairness:  Neither the current  (Obama) nor prior  (Bush) administrations have done anything about the Chinese currency manipulation and its mercantilist consequences except talk. And for the record, the Chinese joined the WTO under the auspices and consent of the Clinton administration.

WTO Summary and findings

PDF Just the conclusions


 News to China: Fair Trade means Trade Fair.

WTO Decision: Chinese Tires Dumped!

 Our original post on this subject: Chinese tire dumping .
 A ruling announced yesterday by the World Trade Organization (WTO)  upheld U.S. tariffs levied on China-made tires entering the U.S.
 Moments after the WTO ruling the Chinese said they would appeal the decision.
Here is a summary of findings and conclusions.
The WTO’s dispute settlement panel rejected China’s position  that U.S. tariffs imposed last September on all Chinese tires violated global trade rules.  
China  retaliated  against the U.S. tariffs by slapping duties on a variety of American-made products, including chicken and nylon. 
So much for a commitment to trade fair under WTO by China.
So much for mature behavior from our “global trading partner” and “manufacturer to the world.”
The decision to impose the tariffs came last September after a complaint brought by the United Steelworkers union was confirmed by the U.S. International Trade Commission and subsequently recommended by the ITC.  The tariffs levied are 35% in the first year, 30% in the second year and drop to 25% in the third year. 
 According to the initial complaint, China has more than tripled its low cost tire exports to the U.S. between 2004 and 2008, costing the U.S. tire industry more than 5,100 jobs.
Maybe that’s why its called Dumping.
 The ITC ruled June 19th that Chinese tire manufacturers were dumping their products on the U.S. market, hurting domestic tire manufacturers and causing increased unemployment in the domestic tire industry. 
And now the WTO agrees.

The World Trade Organization (WTO)  established an expert panel January 19th  to investigate and rule whether punitive U.S. tariffs on Chinese-made tires breach WTO regulations.

President Barack Obama approved punitive tariffs up to 35 percent on all car and light truck tires from China last September in an attempt to “remedy the clear disruption to the U.S. tire industry.”
The expert panel was established at a meeting of the WTO’s Dispute Settlement Body (DSB). China reiterated its position that the U.S. tariffs “run short of factual bases and breached the U.S. obligations under the WTO.”
“The Chinese government deeply regretted the U.S. decision to impose restrictions on Chinese tires and believed it was a departure of international consensus of G20 leaders to fight against protectionism,” the Chinese delegation said.

No word that the Chinese Government had any regret on currency manipulation.
 The WTO expert panel usually consists of three members, and it takes up to 45 days for them to be appointed. The panel will need at least half a year to issue its final report.
Photo credit.

The US, EU and Mexico have just  (2 hours ago) jointly made a formal request to the WTO for a dispute-settlement panel to address China’s export restraints on a number of  raw materials  of interest to our precision machining industry.  Bloomberg coverage here.
Raw materials such as

  • coke ( used in steel), 
  • zinc (used in brass),
  •  bauxite (aluminum ore),
  •  fluorspar (steelmaking slag conditioner),
  • magnesium,
  • manganese (steelmaking ingredient),
  • silicon metal (steelmaking deoxidizer),
  • silicon carbide (desulfurizer)

 These are among the materials listed in the filing. These are important (essential!)  ingredients into the steel and metallic raw materials our industry consumes. We remember reading about this as an emerging concern in June in the Globe and Mail.

How they load steel in Hubei, China.

 The economic issue is that this “resource hoarding” results in artificially lowered cost for these raw materials in China  and in effect becomes a subsidy for those  manufacturing operations that China deems “strategic.”  While at the same time making these materials more difficult (and Expensive) to obtain for non Chinese companies.
Peace” according to Ambrose Bierce, in The Devil’s Dictionary, “in international affairs is a period of cheating between two periods of fighting.”  I think that this is a particularly useful perspective in this situation.
Diplomacy,” according to my 8th grade History teacher, Mrs. Abernathy, “is war by other means.”
Our industry, the EU, Mexico, and the United States- all of us  are certainly looking forward to some diplomatic success. 
The panel is expected to be convened Nov. 19th.
We all live here together. Why not trade fairly?

Steel loading Photo via  Globe and Mail originally Shanghai Reuters.
Earth photo credit: NASA.

The WTO just handed China a 460 page ruling regarding how the country handles American books, movies, and music. Here is a 9-page .pdf of the conclusions and findings.
Dispute DS363 (here’s a summary) has at its core how the Chinese distribute and ‘protect’ from piracy American creative works in that country. So why should  precision machine products manufacturers care about how the Chinese “distribute Hollywood movies, books, and music?”
Sometimes the law defends plunder and participates in it. Sometimes the law places the whole apparatus of judges, police, prisons and gendarmes at the service of the plunderers, and treats the victim – when he defends himself – as a criminal.”- John Frederick Bastiat
Reason 1: Intellectual property rights are at the root of every bit of legitimate commerce. It isn’t just Hollywood movies being pirated across the pacific. Industrial designs, machined parts, counterfeit products are legion from the country  whose premier, Hu Jintao, Mr. Obama will soon host.
Reason 2: This is the portent of the authentic test of President Obama: his dealings with Hu Jintao next month at the G 20 Summit in Pittsburgh Sept 24-25, 2009.  Will he execute the appropriate remedial actions against the Chinese violations recognized and confirmed by due process via the WTO, and ITC, protecting American jobs and interests?
Before that Pittsburgh meeting, the administration must rule on a recommendation by the US International Trade Commission  to impose  up to a 55% tariff on Chinese Tires.  We’ve been following the Cheap Chinese Tires  deaths cases since our ethics class  at Walsh University in July of 2007.  These issues have been around for a long time… the current cheap tire  row is a suit filed by the USW who charged that the flood of cheap Chinese tires had resulted in massive loss of jobs.
Is Obama as wise as Solomon? Will he stand up for American interests? How will he, as one of the world’s leading debtor executives- respond to his legal responsibilities to enforce the trade laws with China, perhaps his largest creditor?
Will he deliver the remedy won by the USW against Chinese dumping, in light of his need for cooperation from China, a leading purchaser of US Treasuries?  Or will he  acquiesce,  complicit in the plunder of American intellectual property rights and jobs?
After 8 years of nonfeasance on the China Currency Issue out of Washington D.C., we’re wondering.
Could this be a Change?
“The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended.” John Frederic Bastiat
Watch these China cases for a glimpse of our industry’s future. And an understanding of what the current administration thinks of manufacturing.