So, the WTO is strong-arming China in an attempt to extract resources. Is a country not free to refuse to export products at will? This is the sad truth of globalization. If we want what you have, we will force it from you if you do not comply.
In case you missed it, the U.S., along with the European Union and Mexico, won an important ruling at the World Trade Organization earlier this week. The parties had lodged complaints against China, whom they accused of unfairly restricting exportation of a variety of key raw materials commonly found in a wide range of manufactured products from consumer goods to high-tech products. The ruling should result in greater access to Chinese minerals for foreign firms that rely on them, and that's a good thing for U.S. manufacturers, consumers and the global economy.
The gist of the case was that the U.S., EU and Mexico accused the Chinese government of seeking to gain an unfair competitive advantage for its manufacturers by restricting foreign access to Chinese markets for bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc through a series of quotas and duties. China supplies big shares of the global market for these elements, so their actions had the effect of creating artificial scarcity that raised the costs of manufacturing for foreign firms. The Chinese government countered that the measures were necessary due to the toll that extraction of the elements was taking on their environment and the health of their citizens, but after weighing both sides, the WTO quite sensibly ruled against China on the grounds that if the export restrictions were truly about protecting the environment, they would have been paired with domestic measures to the same end. The fact that the measures only applied to exports and not extraction generally revealed their true motive, and since they were also not exempted by the terms of China's WTO accession agreement, the WTO panel ruled against the Chinese.
In times of economic duress, protectionism can be politically appealing, but history tells us that it is not the path to global economic rehabilitation. Our current economic predicament suggests that we will need to be alert to this threat for the foreseeable future, and the U.S. should continue to be a robust proponent of open markets and fair competition in its trade relationships.
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