WRAPUP 2-China defends export policies against WTO complaint

* China agrees to WTO consultation process over complaint

* Complaint may become another irritant in Sino-U.S. ties

* China requests WTO panel on its poultry exports to U.S.

BEIJING, June 24 - China on Wednesday rejected charges from the United States and Europe that its restrictions on raw materials exports violated international trade rules, saying that its policies were in keeping with WTO regulations.

The European Union and the United States said on Tuesday they were taking a complaint to the World Trade Organisation over China's export curbs on some industrial raw materials used in steel, cars, microchips, planes and other products. Washington and Brussels have launched the WTO case while they are also looking for China's cooperation in pulling the world economy out of a slump. The complaint may become another irritant in ties alongside recent friction over military modernisation, Internet controls and the United States' own economic policies.

In the first official Chinese response, the Ministry of Commerce rejected the complaint but said it would go along with the consultation procedures required under WTO rules.

"The main objective of China's relevant export policies is to protect the environment and natural resources. China believes the policies in question are in keeping with WTO rules," the press office of the ministry said in a faxed statement.

"Following the WTO procedures for dispute resolution, China will appropriately handle the request for consultations."

The EU and United States argue that China is restricting access to materials such as bauxite, coke and manganese -- of which it is a top producer -- and thereby giving an unfair advantage to its own manufacturers.

For its part, China on Tuesday took to the next level a complaint it has brought against the United States at the WTO, over U.S. laws affecting imports of Chinese poultry products, by requesting that the WTO Dispute Settlement Body set up a panel of judges to review the case and issue a verdict.

The Commerce Ministry said on its website on Wednesday that it was requesting the panel because it had been unable to resolve its differences with the United States through consultations, started after Beijing launched the WTO case in mid-April.

"We hope the U.S. side can pay attention to China's intense concern, and appropriately solve this problem at an early date under the framework of WTO dispute settlement," ministry spokesman Yao Jian said in the statement.

WESTERN HYPOCRISY?

Still, China's initial response on the new case against it was relatively mild compared with its vehement reaction to earlier WTO complaints. And traders said the move would have little immediate impact on trade flows.

"I don't think it will impact exports as steel wire rod has already carried a 15 percent export tax, therefore no one can ship any anyway," said a senior executive at Sinosteel Corp, the country's largest state-owned steel trader. He spoke on condition of anonymity.

Brussels and Washington say Beijing continues to restrict exports of raw materials used in steel, semiconductors, aircraft and other products despite China's pledge to eliminate taxes and charges on exports when it joined the WTO in 2001.

This hurts foreign "downstream producers" of goods, such as aluminium producers and steelworkers, since the export restraints limit their access to raw materials and raise world market prices for the materials while lowering the prices that domestic Chinese producers have to pay, U.S. officials said.

Included in the materials covered by the case is a range of strategic minor metals used in applications such as alloys, ceramics, mobile phones and light bulbs.

Zhou Shijian, a former Chinese trade official, said the U.S. and EU were guilty of hypocrisy.

"Protecting natural resources is perfectly reasonable, and all countries in the world, including the United States, protect their national resources," Zhou told the Global Times, a Chinese-language paper.

"The WTO stresses one cannot restrict imports and should open markets, but it doesn't have specific rules on what should be done about exports," said Zhou.