Rare Earth Saga: China VS the Rest of the World

In continuation of the China vs. the-rest-of-the-world rare earth saga, the US, EU and Japan recently filed separate but coordinated complaints with the World Trade Organization (WTO) on the grounds that China was fortifying its stocks of those rare earth metals that were critical for the manufacture of technology products such as mobile phones, camera lenses, hybrid cars and weapons. The complaint also includes non-rare earth metals tungsten and molybdenum.

While announcing the move, President Barack Obama said, “We’ve got to take control of our energy future and we cannot let that energy industry take root in some other country because they were allowed to break the rules.”

US administration officials have been complaining that while China has access to large stocks at cheaper rates, the US is being forced to manage with small stocks at high prices. US officials claim that WTO forbids such unfair trade practices and since China is a member of the WTO, it must function within the WTO rules and regulations. In the absence of a resolution being found within 60 days, the dispute may be placed before a WTO panel for a ruling. Sanctions against China are a possible outcome of the process.

In spite of China’s repeated claims that restrictions on its export quotas since 2009 have been driven by environmental concerns and the need to conserve scarce resources, nobody has really been buying that argument. Chinese foreign ministry spokesman, Liu Weimin said at a briefing, “We think the policy is in line with WTO rules.”