China’s Rare Earths Export Restrictions Defy Rules – WTO

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By Esther Tanquintic-Misa | October 31, 2013 1:21 PM EST

After more than a year, the World Trade Organisation has finally ruled that the rare earths exports restrictions placed by China, the world's dominant supplier of the precious elements, defies the very core rules of the organisation. The ruling, however, comes a tad late just when the world has learned to adjust to the apparent supply nightmare, including recycling the precious commodity and scouting other potential suppliers, effectively lessening dependence on China.

China had rationalised the export restrictions were meant to protect its environment, which has taken a beating due to excessive as well as illegal mining of the precious rare earths elements.

"China should focus on bringing order to its domestic rare-earth mining industry," Jin Bosong, deputy director of China's Ministry of Commerce's International Trade and Economic Cooperation Research Institute, told the Wall Street Journal.

The U.S., Japan and European Union had long believed China's rare earths exports restrictions were placed not to protect its environment but to control world prices.

The alleged global price monopoly seemed to have come as an exaggeration. Quoting figures sourced from Australian rare-earth producer Lynas Corp, the Wall Street Journal said prices of neodymium oxide, an essential rare earth needed to create magnets used in computers, cell phones, medical equipment, toys, motors, wind turbines and audio systems, is now $65.71 a kilogramme in China in the second quarter of 2013, dwindling down half from the previous year's average.

China is expected to appeal the WTO decision to relax its exports restrictions of the precious elements.

"I think we will appeal, and we will win, or at least get some adjustment time," Mei Xinyu, a policy analyst with the commerce ministry, told the Wall Street Journal. "If we fail, we may remove the export quota policies, but use other methods to control."

The three economic leaders had strongly contested that environmental concerns must not be used as a "pretext for gaining advantage or increasing economic returns." They further stressed that when China joined the WTO in 2001, it agreed to abolish export duties for rare earths and most other products.

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