Unsurprisingly, China didn’t take kindly to being tag-teamed over its rare earth element export regime at the World Trade Organisation yesterday. In relatively polite terms, China fought back, but hinted at a backlash. Besides, stated Xinhua, China is merely following USA precedent on “exhaustable resources of great strategic importance
should have not been applicable to free-trade theories when “national security” is concerned.”
With Molycorp and Germany leading the charge to lock up long tern non-Chinese supply of REEs and their products, my guess is that recent developments will set off a 2012 consolidation wave.
March 13, 2012, 11:18 p.m. ET
Beijing Defends Stance on Minerals
State-Run News Agency Says West’s Trade Action May Trigger ‘Backlash’; Investments Ramp Up in Sector Outside China
Beijing’s tough defense of its rare-earths export quotas is expected to escalate trade disputes over the minerals and spur mining investments—although China has strengths in the industry that are potentially long-lasting.
The U.S., the European Union and Japan Tuesday filed a complaint against China at the World Trade Organization over Chinese restrictions on shipments of raw materials, including rare earths, a category of 17 mineral elements and alloys essential to high-tech goods from iPads to the Toyota Prius hybrid car. The complaint, which will be ruled on around the end of 2012, demands that China remove its export restrictions or face trade sanctions. Some uses are more esoteric: Europium is an antiforgery marker in euro banknotes.
China’s Ministry of Commerce said in a statement late Tuesday that it is ready to respond at the WTO, noting that it has repeatedly explained to other governments already that its raw materials export policy “aims to protect resources and the environment,” not distort industry.
Xinhua, China’s state-run Chinese news agency, was more pointed in a commentary Tuesday, warning the move could “trigger a backlash from China instead of settling the rift.”
West’s rare earth accusations against China unfair
BEIJING, March 13 (Xinhua) — Rash as it is, the United States’ latest decision to enlist World Trade Organization (WTO) support against China’s rare earth policy is based upon unfair accusations.
—- If following the precedents set by the United States, exhaustable resources of great strategic importance should have not been applicable to free-trade theories when “national security” is concerned.
However, for decades, China has been feeding most of the world’s demand for the metals. Excessive exploitation, antiquated mining technologies and previously lax environmental standards have taxed the country’s environment.
In some small towns in east China’s Jiangxi province, where reserves of precious ion-absorbed-type rare earths abound, lavish exploitation of the metals since the late 1980s has not only destroyed local landscapes, but also poisoned streams and crops.
Therefore, China’s rare earth policies — implementing domestic production caps, export quotas, stricter environment standards and resource taxes, are reasonable.
Pressing China to abort these policies is like building a greener and cleaner future by exploiting China’s environment.
As a rule, the WTO allows its members to take necessary measures to protect resources and environment, and considers it fair if export restraints are accompanied by simultaneous restrictions over domestic production or consumption.
China’s policies, in line with the WTO rules, should not draw criticism.