U.S., EU, Japan Take Rare Earths Dispute with China to World Trade Organization

By reports, and wire | Tribune-Review/Pittsburgh Tribune-Review, March 13, 2012 | Go to article overview

U.S., EU, Japan Take Rare Earths Dispute with China to World Trade Organization


reports, and wire, Tribune-Review/Pittsburgh Tribune-Review


The United States, the European Union and Japan are taking their dispute with China over its alleged hoarding of rare-earth materials to the World Trade Organization.

China is being asked to participate in consultations -- the first step in the WTO dispute settlement process. If the matter isn`t resolved within 60 days, the United States, the EU and Japan can request the WTO establish a dispute settlement panel.

The United States, EU and Japan said today that China, which controls about 97 percent of the world`s rare-earth materials, is putting unfair export restraints on tungsten, molybdenum and rare earths. The latter are 17 periodic elements that the United States points out in its statement are important for the making of magnets and other materials used in hybrid car batteries, wind turbines, steel, energy-efficient lighting, automobiles, cell phones and other electronics.

What the United States doesn`t emphasize in its prepared statement is that the rare-earth materials are also important for the nation`s military because they are used in missiles, sonar and other electronic weapons production.

President Barack Obama said today during remarks in the White House Rose Garden that he would not allow China to engage in "skirting the rules" to gain a competitive advantage.

"If China would simply let the market work on its own, we'd have no objection," Obama said. "But their policies currently are preventing that from happening. And they go against the very rules that China agreed to follow."

European Union trade chief Karel De Gucht said in a statement that the three trading powers were making the dispute settlement request because "China's restrictions on rare earths and other products violate international trade rules and must be removed."

In response, the official New China News Agency warned that the WTO action could trigger a backlash that would damage relations between the U.S. and China.

"It is rash and unfair for the United States to put forward a lawsuit against China before the WTO, which may hurt economic relations between the world's largest and second-largest economies," the commentary said. "In (the) face of such unreasonable and unfair charges, China will make no hesitation in defending its legitimate rights in trade disputes."

Miao Wei, China`s Minister of Industry and Information Technology, said China has suspended new licenses for rare-earth prospecting and mining and imposed production caps and export quotas in order to reduce environmental damage preserve rare- earths - not because of any trade protectionism or export restriction against any specific country. Without the limitations, Miao said, supplies of some rare earth metals would be gone in 20 years.

While China currently has abundant rare earth reserves, Miao said its reserves only account for about a third of the world`s total. He said the State Council - China`s Cabinet - is trying to ensure its sustainable development.

Liao Jinqiu, an economist at Jiangxi University of Finance and Economics, told the Xinhua paper for a story on March 13 that severe environmental problems have arisen in rare-earth mining areas and the pricing of those materials has not included the cost of dealing with those problems. As a result, price increases have been necessary that the United States and other Western nations have alleged is merely price gouging designed to provide an unfair competitive advantage to Chinese manufacturers.

"Exports have been stable," Foreign Ministry spokesman Liu Weimin said at a regular press briefing Tuesday, according to the Associated Press. "China will continue to export, and will manage rare earths based on WTO rules. …

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U.S., EU, Japan Take Rare Earths Dispute with China to World Trade Organization
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