China rare earth row rages on

The complaint, the first in the World Trade Organisation’s history to be jointly filed by the three economic powers, centres around the export of 17 rare earth minerals which are used to make a wide range of technological commodities, including LED lights, magnets and batteries. China produces and controls 97 of the world’s rare earth, and was ruled to have illegally restricted exports of a variety of rare earth products (including the valued minerals magnesium, zinc and bauxite) in a WTO verdict earlier this year.

However, despite assurances at the time from Chinese foreign ministry spokesman Liu Weimin that “China will export rare earths based on WTO rules”, EU Trade Commissioner Karel De Gucht issued a statement asserting that the EU believes that China “has made no attempt to remove the other export restrictions”, and this left them “no choice but to challenge China’s export regime again”. President Obama also entered the fray, stating that it was in both UK and US interests to “take control of our energy future”, and that they could not “allow that energy industry to take root in some other country because they were allowed to break the rules”.

The trio asserted that the quotas China has imposed on exports equate to rigid protectionism, which the WTO explicitly seeks to expunge. Beijing, however, has stated that the quotas exist to ensure that environmental damage is not caused as a result of mining for rare earth minerals, and has denied the allegations leveled at them.

The WTO’s Director-General, Pascal Lamy, sought to play down the significance of the dispute, saying it was predictable that disagreements would arise between WTO mainstays such as the US and new members like China – and that “headlines about trade wars” were “not reality”.