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China removes taxes targeted by WTO case

Keywords: Tags  china export taxes, coke, silicon, magnesium, manganese flake, China Department of Taxation, Ministry of Finance


SHANGHAI — China has apparently decided to heed a World Trade Organization (WTO) ruling by removing a range of raw material export taxes that were the target of a successful complaint.

None of the materials concerned—silicon, magnesium, manganese flake and metallurgical coke—were included in an updated schedule of customs tariffs for 2013 posted on the Chinese Ministry of Finance’s website Monday.

An official at the ministry’s taxation department told AMM sister publication Metal Bulletin that a 20-percent tax on manganese, a 15-percent tax on silicon and a 40-percent tax on metallurgical coke would be canceled as of Jan. 1. Local websites reported that taxes on all nine materials included in the WTO case would be repealed. These also include bauxite, zinc, fluorspar, silicon carbide and yellow phosphorus.

The Chinese government so far has not commented on the cancellations.

The WTO last year backed a complaint by the United States, European Union and Mexico that China’s raw materials export regime distorted international markets in several materials. In January this year, China indicated it would comply with the ruling "in a reasonable period" after losing an appeal.

The removal of the coke tax highlighted the pressure the country was placed under by the WTO, an analyst in Beijing told AMM sister publication Steel First on Monday ( amm.com, Dec. 17).

The repeal should please producers in China, as well as overseas consumers.

"The original goal of the (electrolytic manganese) tax was to curb export and then to suppress the development of the high-polluting industries, but that’s not been the case," Tan Zhuzhong, chairman of the National Association of Electrolytic Manganese Metal Plants Directors, told Metal Bulletin.

The export taxes have fueled widespread smuggling of some materials, meaning that in some markets, output hasn’t been restrained but the government loses out on income anyway.

"There’s usually around 100,000 tonnes of manganese flake illegally exported from China each year, while the formal export volume is about 160,000 tonnes a year," Tan said.

The effect on the overseas market is difficult to gauge, market players said. There is the possibility that the cancellation of taxes could lead to higher prices as smuggling is no longer incentivized and less material is offered from illegitimate sources.

The finance ministry’s website indicated that ferroalloys export taxes will continue at 20 or 25 percent despite some earlier speculation that they could be adjusted ( amm.com, Dec. 13).

A version of this article was first published by AMM sister publication Metal Bulletin.


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