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EU runs to WTO again over China's mineral hoarding

Protests throttled supply for tech-friendly rare earths

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The European Union has joined the United States and Japan in complaining to the World Trade Organisation (WTO) over China’s continued export restrictions on a range of rare earths which are vital to the production of hi-tech kit.

The EU said in a press release that despite the WTO ruling in its favour when it mounted a similar challenge on China’s export restrictions on a different set of raw materials earlier this year, little appears to have changed.

It is complaining that China’s hardline stance on exports of such materials not only violates general WTO rules but also the country’s own commitments on export duties when it signed up to the WTO Accession Protocol.

"China's restrictions on rare earths and other products violate international trade rules and must be removed. These measures hurt our producers and consumers in the EU and across the world, including manufacturers of pioneering hi-tech and 'green' business applications" said EU trade commissioner Karel De Gucht in a prepared statement.

"Despite the clear ruling of the WTO in our first dispute on raw materials, China has made no attempt to remove the other export restrictions. This leaves us no choice but to challenge China's export regime again to ensure fair access for our businesses to these materials.

The export restrictions noted include quotas, export duties and minimum export price systems, the EU said.

The raw materials which the EU, US and Japan are complaining about include 17 rare earths as well as tungsten and molybdenum.

The rare earths, of which China has a 97 per cent global share, are vital ingredients in the production of a range of goods from wind turbines and car catalysers to hard drives and LED, LCD and plasma displays.

China was also in trouble last year when the World Trade Organisation ruled that export restrictions on another set of materials was illegal.

At the time, China's vice commerce minister Zhong Shan was quoted by the state-run Xinhua news agency as saying the country would reform its export rules "according to relevant laws and World Trade Organisation rules”.

However, as The Reg argued at the time, the WTO lacks the legal teeth to enforce any rulings it makes, short of throwing China out of its club altogether.

In the meantime, the People’s Republic is likely to do the minimum possible to appease the likes of the EU and US. Ultimately, it wants to force foreign firms to relocate their manufacturing plants to China close to the source of these vital rare earth elements, and pushing the cost of material exports up is a perfect way to do this.

The only ray of hope for these firms in the long term is that more rare earth materials are found outside the People’s Republic.

For those who are interested here is the full list of rare earth elements: Lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, scandium and yttrium. ®

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