Here is a little secret that folks at the Ministry of Commerce in Beijing do not want the domestic audience to know much about. When it comes to resolving China's trade conflicts with other countries, the ministry's dealings at the World Trade Organisation have been about as good as chimps throwing darts at the board - it has never come out on top at the WTO's Dispute Settlement Body since China's accession to the WTO.
China has faced complaints in 23 cases concerning 14 different issues up to the end of 2010. Each has resulted in either an unfavourable ruling or the ministry giving in during the consulting stage, promising to comply with most, if not all, of the opposing party's requests.
Major cases include one about value-added-tax rebates to domestic integrated circuit suppliers, initiated by the US in 2004, which resulted in China's commitment, during the consultation stage, to eliminating these preferential policies. A more recent case was about China's treatment of audiovisual imports. The WTO again issued a report that was mostly unfavourable to China.
The ministry's track record does not bode well for the prospects of the case initiated by the US, European Union and Japan this year over China's export quota on rare-earth materials, This is especially so given China's defeat last year in a case about export quotas on various forms of bauxite, coke, fluorspar, magnesium and other raw materials, which was brought by the US, EU and Mexico.
World prices of rare-earth metals have risen dramatically over the past few years, but domestic prices have remained more reasonable. China's rare-earth reserves make up just over 30per cent of the world's total, but it supplies nearly 95per cent of global demand. This gives the impression that China has developed near-monopoly control over the world's supply and it has tried to benefit from its market position. It is not surprising, therefore, that the US, EU and Japan are uneasy about the situation, given they are all major consumers of rare-earth materials.
