WTO judges will probe China’s export quotas and tariffs on rare earths, tungsten and molybdenum following complaints by the US, the EU and Japan that the curbs break global commerce rules.
China says the limits are designed to protect dwindling natural resources and the environment. China produces more than 90 percent of the world’s rare earths, 17 chemically similar metallic elements used in the defense, renewable-energy and electronics industries by companies such as Ford Motor Co.
Rare earths became a political issue after China cut domestic output and reduced export quotas in July 2010 by 40 percent, souring ties with major users including the US and Japan, where buyers reduced usage after prices rose in the first half of last year.
The average Chinese export price of rare-earth oxides, a subset of rare earths, soared 537 percent last year from 2010 and was 10 percent higher in the first five months of this year than a year earlier, according to data reported by Global Trade Information Services Inc and compiled by Bloomberg Government. Chinese exports of rare-earth oxides fell 56 percent in the first five months of this year, Bloomberg Government data show.
The Chinese government issued its first white paper on rare-earth industry policies on June 20, describing how a lack of proper regulations has led to excessive mining and environmental degradation in China. The government promised an extensive cleanup and a crackdown on illegal mines.