WTO Confirms China Rare Earth Trade Limits Break Rules

Aug. 7, 2014
World Trade Organization upheld its ruling that China's use of duties, quotas and control over critical rare earth export violated global trade rules.

GENEVA - The World Trade Organization on Thursday upheld its ruling that China had violated global trade rules by restricting exports of rare earths, used in hi-tech goods like mobile phones and televisions.

Beijing had appealed a decision by a WTO panel in March that its use of export duties, quotas and control over who could export the metals had skewed global commerce.

That panel of independent trade and legal experts backed a complaint lodged with the WTO by the United States, the European Union and Japan in 2012.

They claim China was limiting exports in a bid to drive up prices and gain market advantage for domestic producers with cheaper access to the raw materials.

China accounts for 95% of global production of rare earths, a term covering 18 metals vital for the production of smartphones, hybrid car batteries, wind turbines, steel and low-energy light bulbs.

The country is home to 23% of global reserves of such metals, and has argued its restrictions on exports were aimed at conserving natural resources and reducing pollution caused by mining.

The WTO's Appellate Body said in a report Thursday that "China has not demonstrated that the export quotas that China applies to various forms of rare earths, tungsten and molybdenum are justified," and called on Beijing to fall in line with international trade rules.

The Appellate Body's decisions are considered final and, in principle, WTO member states are obliged to follow its rulings.

China hit back, saying it "strongly regrets" the decision, arguing that it "did not give up its rights in its accession to the WTO to assert a defense to its export duties based on the need to protect its environment."

Beijing said it would "carefully assess the ruling, continue to improve its management on resource-consuming products in a WTO-consistent manner" and "take future steps consistent with the (WTO dispute settlement system) requirements."

Copyright Agence France-Presse, 2014

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