US, EU and Japan challenging China’s export restrictions on rare earth elements, tungsten and molybdenum
14 March 2012
The US, the EU and Japan are challenging China’s export restrictions on 17 rare earth elements (REE) as well as tungsten and molybdenum by formally requested dispute settlement consultations with China in the World Trade Organisation (WTO). This follows a successful EU challenge at the WTO on similar restrictions for other raw materials earlier this year.
The export restrictions imposed by China on the rare earths, tungsten and molybdenum are mainly quotas, export duties, minimum export price system, as well as additional requirements and procedures for exporters. Rare earths, molybdenum and tungsten have a wide spectrum of applications—in hi-tech and green businesses, cars and machinery manufacturing, chemicals, steel and non-ferrous metal industries:
REE. Rare earth elements include 17 chemical elements in the periodic table, specifically 15 lanthanides (lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium) as well as scandium and yttrium.Rare earths feature unique magnetic, heat-resistance and phosphorescence properties. They are used to directly produce highly efficient magnets, metal alloys, phosphors, optical material, battery material, ceramics, special abrasive powders. These materials are key components of many downstream and consumer products such as: wind power turbines; catalyzers (for automotive exhaust treatment and oil cracking); energy-efficient bulbs; motors for electric and hybrid vehicles; flat screens and displays (LED, LCD, plasma); hard drives; car parts; camera lenses; glass applications; industrial batteries; medical equipment; or water treatment—to name just a few.
While rare earths often constitute a small share of the finished product, they are most of the time non-substitutable (and even if so, with consequences in the form of redesigned and/or more costly final product). Their non-availability can lead to the disruption of whole value chains. China is a monopoly supplier of rare earths with a 97% share of world production.
Tungsten and molybdenum. Tungsten is a very hard metal that makes an important contribution, through its use in cemented carbide and high speed steel tools, to the achievement of high productivity levels in industries. It is used in lighting technology, electronics, power engineering, coating and joining technology, the automotive and aerospace industries and medical technology.
China is the lead producer of molybdenum worldwide and accounts for 36% of the global production.
We want our companies building those [high-tech and clean energy products] right here in America. But to do that, American manufacturers need to have access to rare earth materials—which China supplies. Now, if China would simply let the market work on its own, we’d have no objections. But their policies currently are preventing that from happening. And they go against the very rules that China agreed to follow.
Being able to manufacture advanced batteries and hybrid cars in America is too important for us to stand by and do nothing. We’ve got to take control of our energy future, and we can’t let that energy industry take root in some other country because they were allowed to break the rules. So our administration will bring this case against China today, and we will keep working every single day to give American workers and American businesses a fair shot in the global economy.—President Obama
A request for consultations is the first step in the WTO dispute settlement process. The US, EU and Japan hope to use the WTO consultation process to arrive at a mutually satisfactory solution with China. If no satisfactory solution is being found, the dispute can be transmitted to a WTO Panel for its ruling.
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