Taking a cue from the US, the European Union (EU) has launched a new legal challenge at the World Trade Organization over duties and quotas China imposes on its raw materials exports. The EU says, China has been violating WTO rules with restrictions on exports of key materials such as graphite, cobalt, chromium and magnesia which help Chinese industry at the expense of European companies and consumers.

By filing a similar action last week before the WTO, the US government observed that when China joined the WTO in 2001, it agreed to eliminate such export duties but had failed to follow through on the commitment. The US has said that it had expanded its complaint to include all the same materials covered in the European action.

These raw materials are essential for a broad range of industries from aerospace and car manufacturing to electronics and chemicals. In Washington, the US trade representative’s office said China’s export duties ranged from five to 20 per cent, raising prices for overseas buyers while Chinese companies paid much less and had more secure supplies. In addition, the export duties put pressure on non-Chinese manufacturers to shift production, technologies and jobs to China.