WTO nixes China rare earth bid

China Daily (Canada) - - FRONT PAGE - By LI JIABAO in Bei­jing and WANG ZHUOQIONG in Bao­tou

The World Trade Or­ga­ni­za­tion ruled on Thurs­day against sup­port­ing China’s ap­peal over re­stric­tions on ex­ports of rare earths, tung­sten and molyb­de­num, forc­ing the coun­try to im­prove its reg­u­la­tions on these raw ma­te­ri­als.

“China has not demon­strated that the ex­port quo­tas that China ap­plies to var­i­ous forms of rare earths, tung­sten and molyb­de­num by virtue of the se­ries of mea­sures at is­sue are jus­ti­fied.” the WTO said.

The Com­merce Min­istry said in a state­ment, “China will care­fully eval­u­ate the rul­ing and strengthen the reg­u­la­tion of re­sources with mea­sures con­sis­tent with the WTO rules to boost re­source pro­tec­tion and up­hold fair com­pe­ti­tion.”

China sup­plies more than 90 per­cent of the world’s rare earths — key el­e­ments in de­fense in­dus­try com­po­nents and mod­ern tech­nol­ogy rang­ing from iPhones to wind tur­bines.

Prices of rare earths soared af­ter China, which holds 20 per­cent of the global re­serves, im­posed strict ex­port quo­tas in 2010.

Li Cheng­gang, direc­tor of the De­part­ment of Treaty and Law at the min­istry, said, “We aren’t sur­prised by the rul­ing, as the panel held that China’s ex­port re­stric­tions on these ma­te­ri­als were in­con­sis­tent with WTO rules, but we in­sist that the pur­pose is to pro­tect the en­vi­ron­ment and ex­haustible nat­u­ral re­sources.

“The rul­ing may not be a bad thing in the long term if it can help to in­crease ef­fec­tive global rules on ex­ports of re­sources,” Li said.

“We will use the rul­ing to ex­am­ine whether other coun­tries’ reg­u­la­tory mea­sures on key re­sources are in line with the WTO rules, as China is a ma­jor im­porter of global re­sources.”

In March 2012, the United States, the Euro­pean Union and Ja­pan asked for con­sul­ta­tions with China on its re­stric­tions on ex­ports of the ma­te­ri­als.

A panel was formed in Septem­ber 2012 to look into the dis­pute, and a re­port on March 26 this year found that China’s mea­sures breached the WTO rules. The US ap­pealed on tech­ni­cal grounds on April 8 and China ap­pealed on April 17.

Feng Jun, an an­a­lyst at the Shang­hai WTO Af­fairs Con­sul­ta­tion Cen­ter, said, “The ex­port re­stric­tions on these ma­te­ri­als should have been placed on pro­duc­tion rather than ex­ports.

“The rul­ing will help to re­move bar­ri­ers on trad­ing of the ma­te­ri­als and leave the mar­ket to play a de­ci­sive role in al­lo­cat­ing the re­sources.”

Chen Zhan­heng, deputy sec­re­tary-gen­eral of the China Rare Earths In­dus­try As­so­ci­a­tion, said the rul­ing is “not op­ti­mistic” for the in­dus­try.

“The re­moval of ex­port quo­tas, prob­a­bly next year, will in­crease the en­vi­ron­men­tal pro­tec­tion chal­lenge. Pro­duc­tion will also in­crease with global com­pe­ti­tion in­ten­si­fy­ing.” Con­tact the writ­ers at li­ji­abao@ chi­nadaily.com.cn and wang zhuoqiong@chi­nadaily.com.cn

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