US to File WTO Case Against China Over Rare Earths

Posted March 13th, 2012 at 3:35 am (UTC-5)
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Officials with the Obama administration say the United States will file a new trade case against China over its limits on exports of so-called “rare earth” minerals.

The officials say President Barack Obama will announce Tuesday that the U.S., along with the European Union and Japan, will file the case at the World Trade Organization. China is the world's main exporter of rare earths — 17 minerals used in making many high-tech products including flat screen televisions, hybrid car batteries and wind turbines.

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, tells VOA that 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.”

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.

China controls more than 95 percent of the world's production of rare earths, even though the minerals are found elsewhere. Chovanec said the Chinese restrictions have prompted other countries to begin scrambling for new sources of the materials.

“The reason why China has a monopoly isn't because it has a stranglehold on the supply, its just that it's the lowest-cost producer and everyone else got out of the business. 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.”

Tuesday's planned announcement 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.