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China denounces protectionism as complaint looms

Published 06/12/2009, 05:59 AM
Updated 06/12/2009, 06:08 AM
TGT
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By Lucy Hornby and Yu Le

BEIJING, June 12 (Reuters) - China's Ministry of Commerce on Friday denounced trade protectionism that it says is cropping up internationally, even as Western nations prepared for formal action against China's export policies.

"Countries have issued all types of protectionist measures as the global financial crisis weighs on domestic demand and international trade," the ministry said in a commentary on its website (www.mofcom.gov.cn).

While not naming any specific cases, the statement from the ministry's bureau for fair trade comes the day after European Union sources said the EU and United States were preparing to take action against Chinese export restrictions on about 20 minerals and raw materials.

"As the third biggest trade entity and the second-largest exporting country in the world, China has become a main target of international trade frictions thanks to aggravated protectionism," it said.

Protectionist policies include abusing anti-dumping and anti-subsidy measures, lifting tariffs and banning imports, the commentary said.

"Trade protectionism will make the economic situation, which has been very severe, even worse... All countries should resolve international trade problems through cooperation and negotiation."

The EU and U.S. intend to formally request consultation with China on June 22, and if that fails, will ask a World Trade Organization panel to hear a complaint that export policies unfairly distort the global market.

For instance, export quotas on coke -- imposed after a surge in exports raised domestic prices -- depress costs for Chinese steel mills, the complaint would argue.

The materials expected to be covered by the case include yellow phosphorous, antimony, bauxite, coke, fluorspar, indium, magnesium carbonate, molybdenum, rare earths, silicon, talc, tin, tungsten and zinc.

When China imposed the quotas for antimony, tungsten, indium, molybdenum and rare earths a few years ago, Chinese policy makers argued the move would prevent overly-rapid depletion of these strategic metals. Most global reserves are in Chinese territory.

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