China's appeal of a ruling that found restrictions on exports of nine raw materials as breaking global rules has been rejected by World Trade Organization.

The appeal body has asked China to bring its duty and export quota measures on elements including magnesium and zinc into line with its WTO obligations. In its defence, China said measures on some were justified to conserve its natural resources. The EU, the U.S. and Mexico argued that the higher prices that their manufacturers were forced to pay for goods such as bauxite, coke and zinc put them at a disadvantage.

Rare earths became a political and legislative issue after China moved to limit domestic output and slash export quotas in July 2010 by 40 percent. China accounts for more than 90 per cent of global production of rare earth materials.

The raw materials include bauxite, coking coal, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus and zinc, which are vital to the chemical and metal industries.

Karel De Gucht, the EU trade commissioner, urged China to take action. It sends a clear signal that such measures cannot be used as a protectionist tool to boost domestic industry at the expense of foreign competition, Karel De Gucht said.

China respects the rulings of the WTO and will apply reasonable policies to administer resource products in accordance with the WTO rules, so as to realize sustainable development, the Chinese mission in Geneva said in a statement.