U.S., EU act against China on raw material exports

By Susan Cornwell and Darren Ennis

WASHINGTON/BRUSSELS (Reuters) - The United States and European Union took action against China on Tuesday for restricting exports of industrial raw materials, intensifying a trade struggle at a delicate time for the global economy.

In the United States the decision to bring the dispute before the World Trade Organization was seen as part of a more muscular trade policy promised by the Obama administration, but it added to tensions at a time when Washington counts on Beijing to keep buying its debt.

Europe and the United States had earlier failed to persuade resource-hungry China to reduce its export tariffs and raise quotas on materials like bauxite, coke and manganese that are used in steel, microchips, planes and other products.

Billions of dollars in trade flows are affected, and China gives its industries an unfair edge, U.S. officials said.

"After more than two years of urging China to lift these unfair restrictions, with no result, we are filing at the WTO today," U.S. Trade Representative Ron Kirk told a news conference in Washington.

"We are most troubled that this appears to be a conscious policy to create unfair preferences for Chinese industries" that use the materials, he said.

As a first step, the United States and the European Commission -- which oversees trade for the 27-nation EU bloc -- formally sought consultations with Beijing at the global trade watchdog. If these talks fail, after 60 days the next step would be to request a WTO panel to hear the complaint.

"It is very much hoped that we will not have to proceed to the next stage," Kirk said.