The EU, US and Japan yesterday formally asked the WTO to settle a dispute with China over Beijing’s restriction on exports of raw materials, including rare earth elements critical to major industries.
They said US President Barack Obama would announce the action later in the day in Washington.
The EU’s trade chief, Karel De Gucht, said the three trading powers were making the dispute settlement request, the first step before filing a full trade case, following a successful EU challenge at the WTO on similar restrictions earlier this year.
“China’s restrictions on rare earths and other products violate international trade rules and must be removed,” De Gucht said. “These measures hurt our producers and consumers in the EU and across the world, including manufacturers of pioneering high-tech and ‘green’ business applications.”
China accounts for about 97 percent of the world’s output of the 17 rare earth metals, which are crucial for electronics production and the defense and renewable-energy industries. They are also used in a wide range of consumer products, from cellphones to electric cars.
The dispute is one of several between Beijing and the world’s other three largest economic powers, as China’s rise changes the world economic order. It is the first case to be jointly filed by the EU, US and Japan with the WTO, an EU official said.
The cost to EU businesses of China’s export restrictions runs into the billions of euros, officials say. Trade between the EU and China has boomed in recent years, reaching almost 400 billion euros (US$524.7 billion) in 2010, but EU complaints against Chinese dumping range from the shoe industry to steel fasteners.
Japan has been worried about supply of rare earths, especially after fears that China held back shipments of rare earths as punishment after a territorial dispute last year.
Obama is toughening his stance on China trade ahead of November’s presidential election. He recently created a new interagency trade enforcement center, which is expected to be up and running in the coming months and whose primary focus is to make sure China honors WTO rules. Obama administration officials have also been considering a WTO complaint against anti-dumping and countervailing duties that China imposed late last year on US auto exports.
The US and the EU have long been expected to file a WTO case against China’s rare earth mineral export curbs, but appeared to be awaiting the outcome of a separate case against Beijing’s exports on a long list of other raw materials. That dispute was finally decided in favor of the US, EU and Mexico in January after China lost an appeal to keep its raw material export curbs.
China defended its curbs on rare earths production yesterday.Beijing needs to limit environmental damage and conserve scarce resources, said Liu Weimin (劉為民), a Ministry of Foreign Affairs spokesman.
“We think the policy is in line with WTO rules,” Liu said at a regular briefing.
China would have 10 days to respond to a WTO complaint and would have to hold talks with the US, EU and Japan within 60 days.
Additional reporting by AP
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