The World Trade Organisation yesterday ordered China to dismantle export restrictions on rare minerals vital to the production of smartphones, cameras, steel and hybrid cars in a significant victory for the US, EU, and Japan.
The WTO said Beijing had for years used trade policy to control key markets for strategic commodities and to encourage manufacturers to move their operations to China.
The ruling was welcomed by trade officials in the US, Japan and Europe who had complained the restrictions gave unfair advantage to Chinese companies.
“Today’s ruling by the WTO on rare earth shows that no one country can hoard its raw materials from the global market place at the expense of its other WTO partners,” said Karel De Gucht, EU trade commissioner.
欧盟贸易专员卡洛?德古赫特(Karel de Gucht)表示：“今日WTO关于稀土的裁决表明，没有哪个国家能够从全球市场囤积稀土，而让其他WTO成员国付出代价。”
China accounts for 90 per cent of world production of 17 elements – including lanthanum, tungsten, neodymium and molybdenum – known as rare earths.
Beijing’s export restriction, first introduced in 2009, caused a surge in prices around the world in 2011. The cost of some rare earths soared by as much as 500 per cent amid fears of global shortages.
The restrictions prompted investment in mines in the US and Australia aimed at breaking Beijing’s stranglehold. Last year, Japanese scientists claimed to have discovered vast deposits on the Pacific Ocean floor.
But the more immediate fight has been at the WTO, where Japan, the US and EU lodged complaints in 2012. China argued the restrictions were to conserve resources and protect the environment. The WTO rejected that argument.
Mike Froman, the US trade representative, told reporters some US manufacturers had to pay three times more than their Chinese competitors for the same rare earths. “China’s actions unfairly deny unlimited access to key raw materials?.?.?.?this ruling will mean American companies and workers throughout our manufacturing economy will be able to compete fairly,” Mr Froman added.
The rare earths case is unlikely to end with yesterday’s ruling, however. Beijing has 60 days to appeal. China’s commerce ministry expressed “regret” at the WTO decision and said it was assessing the report.
China said its “regulatory” measures “are perfectly consistent with the objective of sustainable development promoted by the WTO and contribute to the co-ordinated development of resources, environment and human beings”.
The ruling has broader implications, however. The WTO panel said it had sought to reconcile the UN principle of countries’ “permanent sovereignty” over natural resources with global trade rules. It concluded that once they were dug up and put on to the market natural resources should be subject to WTO rules. This could make it harder for other countries to impose or maintain such restrictions.
But the ruling is also about a bigger battle under way between China and the US over industrial policy and how Beijing used it to benefit from globalisation.
China has used low-cost labour, requirements for foreign companies to produce locally and cleverly constructed restrictions on the trade in key raw materials to develop its manufacturing base. The result has been rapid development as a key link in supply chains and, critics of globalisation claim, the hollowing out of the manufacturing sector in the US and Europe.
The latest finding follows a 2012 WTO ruling that China’s export restrictions on nine more common commodities, including bauxite and zinc, violated trade rules. It was seen as laying the groundwork for the rare earths case, especially since China has since complied with the 2012 ruling.
Yesterday’s ruling – first reported in October but not released in full – was greeted with dismay by an official at the Chinese Society for Rare Earths, which helps set policy. “I think China will definitely appeal because the WTO ruling is unfair,” she said.
昨日的裁决在去年10月就有过报道，但没有披露全文。中国稀土学会(Chinese Society of Rare Earths)的一位官员在听到该裁决时表示惊愕。她说：“我认为中国肯定会上诉，因为WTO的裁决是不公平的。”该学会帮助政府制定稀土政策。
But the ruling could help the Obama administration, which is facing trouble garnering political support for trade deals with the EU and 11 Pacific nations. More WTO cases – and victories – could help bring some members of Congress on board.