US, EU, Japan take China to WTO over rare earths restrictions

13 March 2012 15:49  [Source: ICIS news]

WASHINGTON (ICIS)--The US on Tuesday joined Japan and the EU in complaining to the World Trade Organization (WTO) charging that China continues to restrict exports of rare earths critical to refining, petrochemicals production and other industries.

In announcing the WTO complaint, US Trade Representative Ron Kirk said that “America’s workers and manufacturers are being hurt in both established and budding industrial sectors by these policies”.

“China continues to make its export restraints more restrictive, resulting in massive distortions and harmful disruptions in supply chains for these materials throughout the global marketplace,” he added.

The 17 chemical and mineral substances known as rare earths also are crucial to the manufacture of weapons and space systems, lasers and fibre optic communications, to name but a few.

Rare earth elements are not actually rare - most of them are found in almost any soil around the world - but extremely rare are those areas in which these substances can be found in concentrations that make mining them commercially feasible. China supplies about 95% of rare earthy elements worldwide.

In addition to restrictions imposed by Beijing on rare earth elements, the US complained that China puts similar restraints on exports of non-rare earth elements such as tungsten and molybdenum, and on intermediate materials.

In all, said the office of the US Trade Representative (USTR), China restricts exports of more than 100 materials covered under WTO tariff codes.

The new multinational charges against China came just six weeks after the WTO ruled in the US favour in an earlier complaint about Beijing’s trade restrictions.

They also followed charges levelled at Beijing in early February before the congressionally chartered US-China Economic and Security Review Commission (USCC), alleging that China is moving to control critical resources in other countries.

Citing the earlier WTO findings on Beijing’s trade restrictions, Kirk said that “China’s export restraint measures on rare earths, tungsten and molybdenum appear to be part of the same troubling industrial policy aimed at providing substantial competitive advantages for Chinese manufacturers”.

In addition to the key role played by these restricted materials, often as catalysts, in petrochemicals production and refining, rare earths and the other two metals are critical to manufacturing of hybrid auto batteries, wind turbines, steel and advanced electronics, among others.

In the action filed on Tuesday, the US asked the WTO to host consultations between Washington and Beijing on the matter.

That request for consultations is the first formal step in the WTO dispute resolution process.

If those talks do not produce satisfactory results within 60 days, the US would request that the WTO establish a dispute settlement panel to examine the charges against Beijing and rule on their validity.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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