China temporarily blocks WTO arbitration on rare earths dispute
Washington (Platts)--10Jul2012/327 pm EDT/1927 GMT
China on Tuesday formally rejected a request by the US, European Union
and Japan to have a World Trade Organization panel arbitrate a dispute
over rare-earth export quotas.
The US, EU and Japan claim that China's export policies have distorted
the market for rare-earth metals, tungsten and molybdenum, and unfairly
advantaged Chinese manufacturers.
Earlier this month, they asked the WTO's Dispute Settlement Body to
establish a panel to address their complaint, but China's formal objection
means the parties have two weeks to resolve their issues before the DSB is
scheduled to meet again on July 23.
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Under WTO rules, China is allowed to object once to the creation of a
panel, but cannot block it again when the DSB meets on the issue for a
China "said it was puzzled by the complainants' initiation of the panel
process as it has no intention of protecting its domestic industry through
means that would distort trade," DSB said Tuesday in a statement announcing
China's objection. "It added that at the present meeting, it was not in a
position to accept the establishment of a panel."
Rare earths, which include the 15 members of the lanthanide family on
the Periodic Table of Elements, plus scandium and yttrium, are used in a
number of clean-energy technologies including wind turbines, solar panels,
efficient lighting and electric-vehicle batteries. They are also used in
petroleum refining, cell phones and other advanced electronics, steel
manufacturing and several military applications.
Though rare earths are not actually rare, they are spread out in small
concentrations and are difficult to extract. China supplies about 95% of the
global market in rare earths.
The US has charged that in addition to export quotas, China has imposed
export duties and minimum export prices on rare-earth minerals in violation
of WTO rules.
The US, EU and Japan first filed their complaint with the WTO in March,
accusing China of using its near-monopoly to subsidize domestic manufacturers
and to pressure foreign manufacturers to move their operations there.
After unsuccessful WTO consultations with China in April, the US, EU and
Japan requested the panel in July.
China has said its rare-earth export quotas are fair and transparent and
are justified on environmental and sustainability grounds.
Chinese officials have cited a clause in Article XX of the WTO's General
Agreement on Tariffs and Trade, which provides an exemption if a quota is
imposed "relating to the conservation of exhaustible natural resources if
such measures are made effective in conjunction with restrictions on domestic
production or consumption."
--Herman Wang, email@example.com
--Edited by Lisa Miller, firstname.lastname@example.org