UPDATE 1-EU takes WTO action vs China on raw materials

* EU to take China to WTO over raw materials quotas/duties

* EU, U.S. seek consultations at global trade watchdog

* Say China duties/quotas distort market

* Materials used in steel, aircraft, autos, chemicals

(Adds details, background)

By Darren Ennis

BRUSSELS, June 23 (Reuters) - The European Union will take action with the United States at the World Trade Organisation over Chinese export restrictions on around 10 industrial raw materials, the European Commission said on Tuesday.

The Commission -- which oversees trade for the 27-nation bloc -- said it would formally seek consultations with Beijing at the global trade watchdog, confirming a Reuters story from earlier this month. [ID:nLB602939]

If these talks fail, the next step would be to request a WTO panel to hear the complaint, further damaging Washington's and Brussels' brittle economic and political relations with Beijing.

"The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies in this economic downturn," EU Trade Commissioner Catherine Ashton said in a statement.

"I hope that we can find an amicable solution to this issue through the consultation process," she said. The EU and the United States say China has continued to restrict exports of raw materials used in steel, microchips, planes and other products despite Beijing's pledge to eliminate export taxes and charges when it joined the WTO in 2001. The materials covered by the case include yellow phosphorous, bauxite, coke, fluorspar, magnesium rare earths, silicon and zinc.

RISING DISPUTES

Trade disputes between Brussels and Beijing are on the rise since the EU's trade deficit with China has ballooned. The EU has imposed a number of anti-dumping tariffs on imports of Chinese goods ranging from shoes to steel products.

EU exports to China rose to 78 billion euros ($106 billion) in 2008 from 26 billion euros in 2000, while imports from China rose to 248 billion euros from 75 billion euros over the same period.

EU member states backed the move at a meeting of national trade officials earlier this month.

European and U.S. steelmakers accuse China of giving its own steel companies an unfair advantage by restricting exports of coke and other materials used to make steel.

European industry also has objected to what it calls China's use of export curbs to drive down domestic raw material costs at the expense of foreign producers.

Europe's chemical sector is particularly unhappy with Beijing's decision last year to impose a 120 percent tax on exports of yellow phosphorous.

Phosphorus is crucial for the chemical industry and is used in many products including fire extinguishers and detergents. For a factbox, click on [ID:nLN459032] (Editing by Dale Hudson)