March 13, 2012

U.S. Joins in WTO Dispute with China

Rare earths are focus of complaint by Japan, EU as well

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The U.S. joined Japan and the European Union on Tuesday in filing a dispute at the World Trade Organization with China over restrictions on the export of rare earths used in everything from aerospace components to bicycle frames.

Reuters reported Tuesday that President Barack Obama announced the action as the U.S. sought WTO intervention on China’s restriction of shipments of rare earths. The restriction has caused costs to rise for manufacturers of all sorts of goods, even as China says it must guard against environmental degradation. U.S. manufactures have also alleged that the restrictions provide China with an unfair trade advantage.

China, which has about 33% of the world’s resources of rare earths, produces at least 90% of the supply available for manufacturing. Chinese Foreign Ministry spokesman Liu Weimin was cited as saying that China’s policy regarding rare earths complies with WTO rules.

He added that allegations that China monopolizes rare earth trade are “groundless,” and that for the country to continue to produce 90% of the world’s supply of those resources is not sustainable due to environmental damage from mining.

He was quoted saying, “Despite such huge environmental pressure China has been taking measures to maintain rare earth exports. China will continue to supply rare earths to the international market.”

Rare earths are more common than gold, but according to data from the U.S. Geological Survey, the 17 metallic elements are only economical to mine in a very few areas.

A commentary attributed to a writer named Yu Xhixiao appeared via the Xinhua News Agency on Tuesday that said China’s “excessive exploitation” in the past of rare earths had led to damage to the environment, so its decision to limit production was reasonable. The commentary also characterized the proposed WTO action as “rash and unfair” and likely to harm trade.

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