The WTO ruled against China's export restrictions of certain raw materials backing a case jointly brought by the EU, US and Mexico. The WTO Panel has found that China's export restrictions were not justified on environmental grounds and should be removed.

The Panel's report clarifies the WTO rules on export restrictions. The Panel assures that export restrictions on trading these materials are not effective to ensure environmental protection because the production of these materials is not similarly restricted. Without effective domestic measures to manage the supply of its natural resources in a sustainable and environmentally friendly way, the WTO considers that a country cannot rely on the exceptions allowed under WTO law. Therefore, the Panel states that such exceptions cannot justify measures that shield domestic producers from foreign competition in the name of conservation.

China applies export restrictions on key raw materials, such as bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorous and zinc. Some of these resources cannot be found outside China. The export restrictions are mainly quotas, export duties, a minimum export price system, as well as additional requirements and procedures for exporters. Export restrictions can create serious disadvantages for foreign producers by artificially increasing China’s export prices and driving up world prices. At the same time, such restrictions artificially lower China’s domestic prices for the raw materials due to significant increases in domestic supply. Thus, this gives China’s domestic downstream industry significant competitive advantages and puts pressure on foreign producers to move their operations and technologies to China.

The panel's findings constitute a significant recognition of the interdependence of all WTO Members when it comes to raw material supplies as a fundamental principle underlying the global trading system. All countries will benefit when access to raw materials is ensured on a level and non-discriminatory basis.