The European Union, United States and Japan on Tuesday formally asked the WTO to settle a dispute with China over restrictions placed on exports of raw materials including rare earth elements.
The MOC confirmed in a statement posted on its website that it has received the request for dispute settlement.
"Previously, China has been in constant communication and contact with related countries about its export policy on raw material products, and has emphasized repeatedly that the policy aims to protect resources and the environment, and realize sustainable development," the statement said.
China has no intention of protecting domestic industries by distorting its foreign trade, it added.
"China will properly deal with the request for dispute settlement in accordance with the WTO’s settlement procedures," the MOC said.
Earlier Tuesday, Minister of Industry and Information Technology Miao Wei told Xinhua that China is actively preparing to defend itself. "We would feel sorry for their decision to complain to the WTO," he said.
China has abundant reserves of rare earth metals, a group of 17 elements that are vital for manufacturing an array of high-tech products, including cell phones, wind turbines, electric car batteries and missiles.
The country has supplied more than 90 percent of rare earth products on the global market, but its reserves only account for about one-third of the world’s total. Disorderly mining of rare earths has been blamed for environmental damage in rare-earth-rich regions across China.
In order to control environmental damage and protect resources, China has suspended the issuance of new licenses for rare earth prospecting and mining, imposed production caps and export quotas, and announced tougher environmental standards for rare earth production.
Miao stressed that China’s rare earth export restriction is not against any specific country, nor is it a kind of trade protectionism. "Instead, the policy was drawn up out of concern for the environment and the sustainable use and development of resources."
Tu Xinquan, professor with the University of International Business and Economics, said the complaint led by the United States is understandable.
"The economy of the United States is experiencing faltering recovery, and meanwhile the country will hold a presidential election this year. The timing of the complaint has both economic and political considerations.
Liao Jinqiu, economist with Jiangxi University of Finance and Economics, said that environmental costs had not been included in the pricing of the commodities in the past years.
"The exploitation of rare earths should be further integrated, and a rare earth industry chain must be forged to ease the environmental pressure created by excessive extraction," Liao said.
The United States, European Union and Mexico filed complaints to the WTO in 2009, claiming China’s export restraints over nine raw materials, including zinc, coke and magnesium, pushed global prices high and benefited the country’s domestic industry.
China argued that those restraints were aimed at protecting the environment and exhaustible resources.
As a rule, the WTO allows members to take necessary measures to protect resources and environment, and considers it fair if export restraints are accompanied by simultaneous restrictions over domestic production or consumption.
Rash as it is, the United States’ latest decision to enlist World Trade Organization (WTO) support against China’s rare earth policy is based upon unfair accusations.
The United States, European Union and Japan have teamed up to bring a joint case against China to the WTO over alleged export controls on rare earths, which they claim are hurting domestic manufacturers.
The accusations, which stress that China’s rare earth policies have restricted global supplies, can hardly hold up, with demand only filling around half the export quotas last year.
It’s well recognized that rare earths, a class of 17 mineral elements, are one of the most sought-after metals for their vital roles in green technologies like wind turbines and electric car batteries, and of particular concern, in military sectors.
If following the precedents set by the United States, exhaustable resources of great strategic importance should have not been applicable to free-trade theories when "national security" is concerned.
However, for decades, China has been feeding most of the world’s demand for the metals. Excessive exploitation, antiquated mining technologies and previously lax environmental standards have taxed the country’s environment.
In some small towns in east China’s Jiangxi province, where reserves of precious ion-absorbed-type rare earths abound, lavish exploitation of the metals since the late 1980s has not only destroyed local landscapes, but also poisoned streams and crops.
Therefore, China’s rare earth policies — implementing domestic production caps, export quotas, stricter environment standards and resource taxes, are reasonable.
Pressing China to abort these policies is like building a greener and cleaner future by exploiting China’s environment.
As a rule, the WTO allows its members to take necessary measures to protect resources and environment, and considers it fair if export restraints are accompanied by simultaneous restrictions over domestic production or consumption.
China’s policies, in line with the WTO rules, should not draw criticism.
The fact is, although China now produces more than 90 percent of the world’s rare earth supplies, it does not have all the deposits. Most nations with rare earth deposits, including the United States, closed their own mines decades ago and craved for cheap supplies from China.
Rare-earth mining and processing is notoriously devastating to the environment, making it politically difficult for those countries to reopen the mines, which means China is still expected to contribute tremendously to rare earth supplies.
However, those undeniable truths are overlooked as tunnel vision only sees unfair trading practices.
Few if any trade issues have been as heated in the last several years as rare earths. It’s predictable that the United States would bring the matter out under fierce election-year pressures at home.
In the face of such unreasonable and unfair charges, China will make no hesitation in defending its rights.
The European Union, Japan and the United States on Tuesday filed trade complaints with the WTO over China’s rare earth export quotas, saying the restriction has limited other countries’ access to those minerals.
The three trading powers claim that China’s export restriction gives it a competitive advantage while hurting producers and consumers in other parts of the world.
The filings request dispute settlement consultations with China, the first step in handling a WTO complaint. The dispute could be transmitted to a WTO panel for a ruling should no agreement be reached in 60 days.
When confirming that it has received the request for dispute settlement, the Chinese Ministry of Commerce said in a statement posted on its website that it will properly deal with the issue.
China, the statement said, has no intention of protecting domestic industries by distorting its foreign trade.
Earlier in the day, Chinese Minister of Industry and Information Technology Miao Wei told Xinhua that the Chinese side would prepare to defend itself if a complaint was filed with the WTO.
Miao said China’s rare earth export policy is drawn up out of concern for the development of resources and environmental damage. Some rare earth metals would last only 20 years if China does not stop excessive mining, Miao added.
China’s rare earth export restriction was not targeted at any specific country, nor was it a kind of trade protectionism, the minister said.