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Category: International Trade Sub-category: Foreign Trade by Country
Document type: news
The U.S. is about to file a complaint at the World Trade Organization against the Chinese limits on exports of rare earth minerals used in high-tech products.
The U.S will be joined by Japan and the European Union in requesting consultations with China at the Geneva-based trade arbiter over rare-earths shipments.
Japanese Chief Cabinet Secretary Osamu Fujimura said the government is considering bringing China to the WTO. Fujimura, speaking to reporters today in Tokyo, said no decision has yet been made. An EU official confirmed the bloc will be part of the joint complaint.
The U.S. argues that China's curtailment of the exports has given the Chinese companies an unfair advantage by increasing production costs for American firms that use these materials.
Chinese Foreign Ministry spokesman, however on the other hand, says at a briefing that its policy regarding rare earths complies with WTO rules, and the allegations that it monopolizes the trade are "groundless". Moreover, the fact that China has about a third of the world's rare-earth resources and produces about 90 percent of supply isn't sustainable given the environmental damage that results from mining the metals.
Despite such huge environmental pressure, China has been taking measures to maintain rare earth exports and has decided that it will continue to supply rare earths to the international market.
However, it might be interesting to note that the US administration, under the presidency of Barack Obama, has filed five WTO complaints against China since he has taken office three years ago, compared to seven George W. Bush filed from 2001, when China joined the Geneva-based trade arbiter, through the end of his term in early 2009.
The United States and the EU have long awaited to file a WTO case against China's rare earth mineral export curbs, as they were awaiting the outcome of a separate case against Beijing's exports on a long list of other raw materials.
That dispute has been finally decided in favor of the United States, EU and Mexico in January, 2012 after China lost an appeal to keep its raw material export curbs. Beijing has not yet announced how it intends to comply with the January ruling.
However, before taking any action, the WTO members must speak to each other to see if they can settle their differences. The organization's rules require China to hold talks with the U.S., the EU and Japan within two months. The U.S. and its partners may ask for the appointment of a formal WTO panel if the consultations fail to resolve the issue.
Meanwhile, the demand for rare earths may rebound following a 25% slump in prices this year, benefiting producers of the metals such as Molycorp Inc
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Rare earth mineral is a mineral which contains one or more rare earth elements as major metal constituents. Rare earth minerals are usually found in association with alkaline to peralkaline igneous complexes, in pegmatites associated with alkaline magmas and in or associated with carbonatite intrusive.
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