China targeted over rare earth minerals

2012-03-14 08:20

Washington - The US, EU and Japan teamed up to lay assault to China's controls on exports of rare earth minerals, which are crucial in high-tech manufacturing.

The three economic powers lodged a complaint with the World Trade Organisation saying Beijing's restrictions on rare earths mined in China distort trade and unfairly benefit its own industries.

"China continues to make its export restraints more restrictive, resulting in massive distortions and harmful disruptions in supply chains for these materials throughout the global marketplace," said US Trade Representative Ron Kirk.

"Because China is a top global producer for these key inputs, its harmful policies artificially increase prices for the inputs outside of China while lowering prices in China."

The complaint argues that China places restrictions on the export of 17 elements as well as tungsten and molybdenum, critical to the making of high-tech products from iPods to missiles.

Restricted exports

The restrictions are illegal under global trade rules, they said.

The complaint formally requests "dispute settlement consultations" under WTO rules, the first step in any bid to settle trade disputes, according to EU trade officials.

It is the newest complaint by industrial powers at the WTO over Chinese trade in raw materials. In response to an EU complaint, earlier this year the Geneva-based body found China to have illegally restricted exports of raw materials such as bauxite, zinc or magnesium.

"China's restrictions on rare earths and other products violate international trade rules and must be removed," EU Trade Commissioner Karel De Gucht said in a statement announcing the challenge.

"Despite the clear ruling of the WTO in our first dispute on raw materials, China has made no attempt to remove the other export restrictions," said De Gucht.

"This leaves us no choice but to challenge China's export regime again to ensure fair access for our businesses to these materials," he added.

Kirk's office said China's restrictions on rare earths trade come in several forms, including export duties, export quotas, export pricing requirements and other troublesome export procedures and requirements.


China's policy "creates significant advantages for China's producers when competing against US producers", the USTR said. It also as a consequence pressures manufacturers around the world which use rare earths to move their businesses to China.

Beijing has said the restrictions are necessary to conserve the highly sought-after natural resource, limit harm to the environment from excessive mining and meet domestic demand.

"Based on environmental protection and in order to achieve sustainable development, China carries out management policies over the export of rare earths," foreign ministry spokesperson Liu Weimin said on Tuesday.

"We believe such measures comply with WTO rules."

The US side of the complaint comes as Washington steps up pressure in an election-year campaign aimed at the impact of China's allegedly unfair trade practices on the US economy.

The White House in February established a high-level interagency team under the USTR office to expedite trade complaints, with China the primary target.

"The launch of this case against China today... reflects the Obama administration's commitment to make all of our trading partners play by the rules," Kirk said.

  • William - 2012-03-14 09:26

    Western Cape used to have rare mining activity in the 50´s and was closed down due to lower prices and interest. I hope the provincial and national government would take a look on the matter and fast track its mining to pluck the gab in the international market and thus creating jobs and bringing in the desperately sought after foreign currency

      Ray - 2012-03-14 09:30

      There is a company called Rareco[Rare Earth Extraction Company]which has mining operations up the West coast.It has been mothballed for some time but was recently bought out by a Canadian company.

  • ludlowdj - 2012-03-14 11:51

    And in a strange turn of events the US final show its hand, This is simply the proof that was lacking that the US actively involves itself in the domestic affairs of any country which it relies on for resources, Libya explained, South Africa explained, Their biggest set back this time around is that even the "mighty US" knows it cannot win a military confrontation with China. The idea that any international body could force any country to meet minimum export figures in terms of natural or other resources is pathetic, and highlights capitalist mindsets and the pure greed that drives the upper classes. As with every other country China can stop the export of rare earth completely, and the rest of the world would have no recourse. Of course the real concern of the US is that it like most other countries is on the verge of bankruptcy and without the natural resources from foreign imports they would be forced to default on debt repayment within the next year.

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