THE US, THE EU AND JAPAN SAY SHAME ON CHINA

Surprise, surprise, the Chinese don’t play by our rules.

DESPERATE WEST HEADS TO WTO IN BID TO STOP CHINA STOCKPILING RARE EARTH METALS USED TO MAKE MOBILE PHONES AND FLAT-SCREEN TV SETS
U.S. companies having to manage with small, expensive supply, while Chinese companies have greater access

By Rachel Richard Straus

Mail Online
March 13, 2012

The United States, European Union and Japan all filed complaints today with the World Trade Organization, claiming that China is stockpiling rare earth metals vital to the production of technology components.

China has a stranglehold on the global supply of 17 rare earth materials essential for making high-end goods such as hybrid cars, camera lenses, mobile phones and weapons.

However, it has cut its export quotas in recent years, which critics say gives Chinese companies an unfair competitive advantage.

U.S. companies are having to manage with a small, expensive supply, while Chinese companies have access to more of these essential materials at a cheaper price, according to senior U.S. administration officials.

It is thought China has cut its export quotas to cope with growing demand at home, although the Chinese government also says environmental concerns are behind the restrictions.

U.S. industry officials claim the restriction is an unfair trade practice and forbidden by WTO rules, a group that includes China as a member.

President Barack Obama planned to announce that the U.S. was filing a complaint from the White House today.

The fresh action is part of President Obama's broader effort to crack down on what his administration sees as unfair trading practices by China.

The U.S., European Union and Japan filed separate but coordinated complaints, which will trigger a dispute settlement consultation.

If no resolution can be found within 60 days, the dispute may be put to a WTO panel for a ruling.

Depending on the outcome, sanctions against China are possible at the end of the process.

The complaints also cover tungsten, a very hard metal, and molybdenum, a metallic element used to make different types of steel.

Anticipating the complaints, China defended its curbs on rare earths production earlier today, calling it an environmental measure.

China needs to limit environmental damage and conserve scarce resources, said a Chinese foreign ministry spokesman, Liu Weimin.

‘We think the policy is in line with WTO rules,’ Liu said at a briefing.

Global manufacturers that depend on Chinese supplies were alarmed by Beijing's decision in 2009 to limit exports while it built up an industry to produce lightweight magnets and other goods that use them. China has about 30 per cent of rare earths deposits but accounts for 97 per cent of the world's production.

The complaints filed today follow an earlier EU challenge to China at the WTO on restrictions on other raw materials.

Earlier this year, the WTO ruled that export restrictions on those other materials were incompatible with the rules of the global trade organization.

But EU officials said China has made no move to comply with the earlier ruling.

EU Trade Commissioner Karel De Gucht said China's export quotas and export duties give Chinese companies an unfair competitive advantage, and must be removed.

‘These measures hurt our producers and consumers in the EU and across the world,’ De Gucht said.