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China Scraps Coke Export Tax

by Mary Swire, Tax-News.com, Hong Kong

21 December 2012


Within China’s recently-announced new import and export tariff schedules, which will be in effect from January 1, 2013, it has been noted that the current 40% export duty on coke, which is mainly used as a fuel in steel production, is no longer listed and appears, therefore, to have been cancelled.

Coke was amongst the mineral resources included in a World Trade Organization (WTO) ruling earlier this year against the duties, quotas, and price and licensing requirements that China imposes on the exports of some of its raw materials. The ruling followed complaints from a number of sources, including the United States and the European Union (EU), against those restraints, and gave China until the beginning of 2013 for their removal.

The complainants argued that the use of export restraints creates scarcity and causes higher prices in global markets, and provides Chinese domestic industry with a significant advantage by way of a sufficient supply, and lower and more stable prices, for the raw materials.

China had protested that some of its measures were justified because they related to the conservation of exhaustible natural resources, and were necessary for the reduction of pollution and for sustainable development, but those reasons were rejected by the WTO.

While the Chinese decision to remove the export duty on coke should ensure that manufacturing industries in overseas countries will be able to get the materials they need, it is also thought that, with a surge in Chinese exports, other countries’ sellers will be greatly affected.

China used to be the world’s largest exporter of coke, and it now has a significant excess of supply over demand domestically. The cancellation of the export duty is also, in fact, a reaction to appeals from Chinese coke producers and, depending on the strength of the global economy, their total exports could surge to previous levels of more than 10m tonnes next year, after reaching only an expected 1m tonnes in 2012.

TAGS: tax | business | mining | export duty | tariffs | World Trade Organisation (WTO) | China | manufacturing | tax rates | trade

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