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WTO Case Filed Against China Over Rare Earth Metals

Rare earth oxides from top center clockwise: praseodymium, cerium, lanthanum, neodymium, samarium, and gadoliniun, October 7, 2010.
Rare earth oxides from top center clockwise: praseodymium, cerium, lanthanum, neodymium, samarium, and gadoliniun, October 7, 2010.

The United States, the European Union and Japan are accusing China of unfairly limiting its exports of so-called "rare earth" minerals that are key components of many high-technology products.

It is a contention that Beijing rejects.

The U.S., Japan and the 27-nation EU filed a complaint against China on Tuesday with the World Trade Organization in Geneva to seek a resolution of the dispute. They alleged that China, which controls 95 percent of the world's supply of rare earth metals, has imposed export restrictions that violate world trade rules.

U.S. President Barack Obama said that is an unfair restriction of trade, and he is warning China to stop. “And as they ramp up their efforts, our competitors should be on notice: You will not get away with skirting the rules,” said Obama.

Five rare earths and their uses

  • Scandium: Discovered in 1879, the silvery-white metallic element is used as a tracer in studies of oil wells and pipelines.
  • Promethium: A radioactive element sometimes obtained as a fission product of uranium. It is used in the production of nuclear batteries.
  • Lanthanum: A silvery-white metallic element used to make carbon arc lights for the motion picture industry. Also used to produce flints for lighters and glass in camera lenses.
  • Yttrium: Used in manufacturing televisions, producing the red color in television pictures, and in production of microwaves.
  • Praseodymium: Used as an alloy with magnesium to create high-strength metals in aircraft engines. Also used to magnify sounds in fiber optic cables, give glasses and enamels a yellow hue and to make some types of goggles.

The president said he is pursuing the trade complaint so American companies can compete fairly against foreign businesses in the production of goods that require the use of the rare earths. He accused China of violating trade rules by limiting export of the minerals.

“Now, if China would simply let the market work on its own, we would have no objections," the president said. "But their policies currently are preventing that from happening, and they go against the very rules that China agreed to follow.”

The rare earth minerals are essential to the production of such common consumer items as flat-screen televisions, smartphones and hybrid cars, as well as advanced weaponry, small motors that raise and lower car windows, and wind turbines.

China says it adheres to WTO rules in exporting the minerals. But U.S. Trade Representative Ron Kirk said that China has reduced its export of the minerals in recent years, giving Chinese companies an unfair advantage in the production of high-technology products. He said China's export restraints result in massive distortions and harmful disruptions in the supply of the rare earths throughout the world.

The mineral bastnasite can contain 15 or even 17 rare earth metals. But chemically separating the elements is costly and difficult.
The mineral bastnasite can contain 15 or even 17 rare earth metals. But chemically separating the elements is costly and difficult.

China says it has restricted the exports in recent years in order to meet its own domestic manufacturing needs, and to ease the environmental impact from excessive mining.

But Patrick Chovanec, a professor at Beijing’s Tsinghua University School of Economics and Management, said the WTO has already ruled against China in a similar case.

“The WTO ruled, in a ruling last year, regarding other raw materials, not rare earths but other similar raw materials, that if China wanted to conserve natural resources, or it wanted to protect the environment, that export constraints were not a legitimate way of doing so," said Chovanec.

Washington says the restrictions give Chinese companies an unfair advantage by increasing production costs for foreign firms, and Chovanec suggests Beijing is trying to force high-tech manufacturers to relocate their operations to China.  

Chovanec said the Chinese restrictions have prompted other countries to begin scrambling for new sources of the materials.

A Chinese worker waters the site of a rare earth metals mine at Nancheng county, Jiangxi province, December 29, 2010.
A Chinese worker waters the site of a rare earth metals mine at Nancheng county, Jiangxi province, December 29, 2010.

"The reason why China has a monopoly isn't because it has a stranglehold on the supply, it's just that it’s the lowest-cost producer and everyone else got out of the business," Chovanec added. "There are Australian companies, American companies, Japanese companies are looking around in Central Asia and other places and even on the ocean floor for these materials."

The complaint over rare earths is the latest action taken by the Obama administration against Beijing over what it claims to be unfair trading practices. The administration imposed a series of tariffs on Chinese tires in September 2009, claiming that surging imports of Chinese tires were hurting U.S. tire manufacturers and threatening jobs.

Mr. Obama has also announced the creation of a new trade enforcement center to ensure that China and other nations abide by WTO rules.

Our White House Correspondent Kent Klein contributed to this report.

Some information for this report was provided by AP, AFP and Reuters.

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Comment Sorting
Comments page of 2
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by: James
March 21, 2012 6:02 PM
The USA gays are so selfish that I contempt you all! I protest ,again and again.

by: Liang
March 15, 2012 12:17 AM
Do not do to others what you would not have them do to you

by: LQJ
March 14, 2012 11:58 PM
Do not do to others what you would not have them do to you. Since it is China's natural resource, China has the right to protect the environment. People who always blame others should introspect their behaviors firstly! Yes, Japan has helped China so much in history! China will win respect through insisting justice and standing on his own feet rather than showing his strength and interfering others everywhere.

by: Jonathan Huang
March 14, 2012 8:11 PM
Brazil and Australia increase iron ore price every year, one year even increased 47%. They knew China has to buy it no matter how much the rice increased. And now China can't increase the price of rare earth, why? Is that then fair, China has to always pay the price? we pollute our country, we pay high price for the resources and we have to supply cheap products? enough is enough! its the time to say NO to the west!

by: Xing
March 14, 2012 8:33 AM
@Samurai: Read it carefully. It is our resource. We just do not want sell it to you more. Unfortunately, you can not loot it from us like World War 2.

by: Qijun Liang
March 14, 2012 7:55 AM
Rare earth is natural resource of China, we have the right to handle it in our own way. You’re not qualified to blame “robbing”. China always observes international rules, at least we didn’t bully the weak. China needs not to beg "respect" from outside, we will remember the teaching of Confucius Country which is ruled by moral force is like the pole-star,which remains in its place while all the lesser stars do homage to it.) forever.

by: Samurai
March 14, 2012 12:03 AM
A good cooperation among USA, EU, and Japan! Communist Chinese must learn the teaching of Confucius (放於利而行、多怨= Greed invites grudge). Instead of just robbing others of their natural resources, China must do a favor to other countries, because other countries have helped China so far. China must observe internal rules. Otherwise, no one will respect China. Don’t make Confucius grieve.

by: Yang Gao
March 13, 2012 11:38 PM
The United States is rich in so-called "rare earth " minerals,Why should rely on imports ? It is unreasonable !

by: Blogifer
March 13, 2012 10:23 PM
China's behavior is allegedly very evil. They allegedly cornered the market by undercutting everyone else on price, which put everyone else out of business. Then they raised prices. Now they are lowering prices again to put the new start up companies out of business like they did the first time.

by: fy
March 13, 2012 8:50 PM
Maybe you could try to get some rare earth from the moon or other planets.
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