The US, the EU and Japan have lodged complaints with the World Trade Organization (WTO), stating that China is reducing its exports of rare earth minerals that are of extreme importance to the production of technology components.
China has a monopoly on the worldwide supply of 17 rare minerals that are essential to make high-tech products such as hybrid cars, weapons, flat-screen TVs, mobile phones, and lenses.
But the Communist Nation has cut its export quotas of these compounds over several years to cope with the increased need within its own borders, though the government also cites environmental concerns as the reason for the restrictions.
US industry officials suggest it is an unfair trade practice, against rules established by the WTO, a group that includes China as a member. This is going to be difficult to prove, no one can force a nation to export products it needs at home.
The Obama Administration planned to announce the US’ filing of a complaint from the White House this week.
The fresh action is part of Obama’s broader effort to crack down on what his administration sees as unfair trading practices by China.
Senior administration officials said Beijing’s export restrictions give Chinese companies a competitive advantage by providing them access to more of these rare materials at a cheaper price, while forcing US companies to manage with a smaller, more costly supply.
The three separate but coordinated filings with the WTO formally request dispute settlement consultation, which is the first step in a WTO complaint. The major issue is nationalism and what a country does within its own borders with products from its own borders.
Responding to the complaints, “China defended its curbs on production of rare earths as an environmental measure.”
Global manufacturers that depend on Chinese supplies were alarmed by Beijing’s decision in 2009 to limit exports while it built up an industry to produce lightweight magnets and other goods that use them. At the same time these manufacturers should have never allowed themselves to be at the mercy of a single supplier or government.
China has about 30% of rare earths deposits, but accounts for 97 per cent of the world’s production. China’s Ministry of Commerce confirmed in a statement on its website that it has received the request for dispute settlement.
China “has emphasized repeatedly that the policy aims to protect resources and the environment and realize sustainable development”, the statement said.
A Chinese foreign ministry spokesman, Liu Weimin, said at a briefing that the government believes the policy is in line with WTO rules. Which it seems to be.