China faces WTO case on rare earth trade

Beijing says export curbs are necessary to control environmental problems caused by rare earth mining [Reuters]

The United States, Europe and Japan have joined forces for the first time to challenge China’s restrictions on exports of rare earth minerals critical to the manufacture of advanced technology.

In a formal complaint to the World Trade Organization on Tuesday, the three trade powers accused Beijing of trying to hold down prices for its domestic manufacturers and to pressure international firms to move operations to China.

Beijing said the export curbs are necessary to control environmental problems caused by rare earth mining and to preserve supplies of an exhaustible natural resource.

“We regret their decision to complain to the WTO,” said China’s Minister of Industry and Information Technology Miao Wei, according to the official Xinhua news agency. “In the meantime, we are actively preparing to defend ourselves.”

China’s export quotas were not trade protectionism and did not target any specific country, he said.

Europe’s trade chief said China’s restrictions violated international trade rules and had to 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 European Union Trade Commissioner Karel De Gucht.

Rare earths are crucial for the defense, electronics and renewable-energy industries and are used in a range of products such as the iPhone, disk drives and wind turbines.

The US is due to make a preliminary decision next week on whether to impose countervailing duties on Chinese-made solar panels, potentially adding to trade tensions.

“We want our companies building those products right here in America. But to do that, American manufacturers need to have access to rare earth materials which China supplies,” US President Barack Obama said at the White House.

The US and Europe have clashed regularly with China over a range of economic issues including the value of the Chinese currency.