Northwest Arkansas Democrat-Gazette
3 protest China rare-earths limit
Restrictions hurt high-tech industries, U.S., EU, Japan tell WTO
The U. S., the European Union and Japan complained at the World Trade Organization on Tuesday about Chinese limits on exports of rare-earth minerals that are critical to the world’s hightech industries.
“If China would simply let the market work on its own then we would have no objections,” President Barack Obama said at the White House. The action is a message to economic competitors that “you will not get away with skirting the rules.”
China produces at least 90 percent of the world’s rare earths, 17 chemically similar metallic elements used in Boeing Co. helicopter blades, Nokia Oyj cell phones, Toyota Motor Corp. hybrid cars and wind turbines. China said it curbed output and exports to conserve resources and protect the environment.
Tuesday’s complaint is technically a request for consultations, the first step in the case. Under WTO rules, the four governments must hold talks for at least two months in a bid to resolve the dispute. If the talks fail, the complaining governments can ask WTO judges to rule.
Rare earths became a political and legislative issue in July 2010 when China moved to limit domestic output and lower export quotas by 40 percent, souring ties with major users including the U.S. and Japan, where buyers cut usage after prices soared in the first half of 2011. China said Dec. 28 that it was leaving the 2012 overseas sales caps unchanged.
U.S. Trade Representative Ron Kirk said China’s policies on rare earths result in “massive distortions and harmful disruptions in supply chains for these materials throughout the global marketplace.” Tuesday’s complaint also involves export restraints on tungsten and molybdenum, he said in a statement.
The U.S. Energy Depart-
ment said in January that limited supplies of five rare-earth minerals — dysprosium, terbium, europium, neodymium and yttrium — pose a threat to increasing use of cleanenergy technologies such as wind turbines and solar panels. While prices of rare earths fell in the second half of 2011, they remain volatile, leading some companies to search for ways to consider reducing reliance on the minerals, the Energy Department said.
China’s policy goal is to protect its resources and environment and not to distort the market, the country’s Ministry of Commerce said in a statement.
China’s policy regarding rare earths complies with WTO rules, and allegations the nation monopolizes the trade are “groundless,” Liu Weimin, a Chinese Foreign Ministry spokesman, said Tuesday at a briefing in Beijing.
“Despite such huge environmental pressure China has been taking measures to maintain rare-earth exports,” Liu said. “China will continue to supply rare earths to the international market.”
In a similar case, the WTO found in July that Chinese limits on raw-materials exports broke global rules and gave domestic companies an unfair advantage. WTO appellate judges upheld the ruling, which supported a complaint by the U.S., the EU and Mexico.
The Obama administration has been increasing pressure on China over its trade policies a decade after the nation was accepted into the WTO. Obama signed an executive order two weeks ago creating a panel to investigate unfair trade practices by nations including China. The U.s.-china trade deficit widened to $295 billion last year, and the imbalance is a main source of friction between the two countries.
The U.S. has filed 12 WTO complaints against China while the EU has lodged five. China has complained twice against the 27-nation bloc and five times against the U.S.
“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. “These measures hurt our producers and consumers in the EU and across the world, including manufacturers of pioneering hi-tech and ‘green’ business applications.”
Morgan Stanley said March 5 that demand for rare earths may rebound after a 25 percent slump in prices this year, benefiting producers of the metals such as Molycorp Inc., which owns the largest rare-earth deposit outside of China, located near Mountain Pass, Calif. Information for this article was contributed by Michael Forsythe, Kate Andersen Brower, Margaret Talev, Sonja Elmquist, Jurjen van de Pol and Eddie Buckle of Bloomberg News.