U.S., WTO Pressure China On Rare Earth Minerals

Mar 13, 2012
Originally published on March 15, 2012 1:44 pm
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A new trade dispute is brewing over China's export of rare earth minerals. They're vital to the manufacture of everything from missiles to smartphones. And today, the United States, Japan and the European Union filed a complaint with the World Trade Organization. They accused China of slapping unfair export restrictions on the materials. The Chinese government warned that the complaint could strain ties with Washington.

NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: The case involves 17 rare earth minerals that are widely used in high-tech products like flat screen TVs and hybrid cars. Here was President Obama speaking at the White House today.

PRESIDENT BARACK OBAMA: We want our companies building those products right here in America. But to do that, American manufacturers need to have access to rare earth materials which China supplies.

ZARROLI: In recent decades, China has become the dominant supplier of these minerals, but it has imposed strict limits on their export, and even cut off supplies to Japan altogether following a territorial dispute in 2010. This has made them extremely expensive for non-Chinese companies.

President Obama says it's time to level the playing field between China and its trading partners.

OBAMA: Now, if China would simply let the market work on its own, we'd have no objections. But their policies currently are preventing that from happening. And they go against the very rules that China agreed to follow.

ZARROLI: The complaint filed today kicks off a process that could ultimately result in sanctions against the Beijing government. China insists it has to limit production of rare earth minerals because of environmental concerns. And it says the decision to file a complaint with the WTO could cause a backlash against the United States and its trading allies. But the U.S. says Beijing's policies give Chinese companies an unfair advantage over their foreign rivals.

Scott Kennedy, who directs the Research Center for Chinese Politics and Business at Indiana University, says that advantage isn't as big as it once was. He says for a number of reasons the price of rare earth minerals has begun to come down in recent months.

SCOTT KENNEDY: In reality, there's been a lot of production within China that has been not approved, and a lot of smuggling of rare earths abroad, which has led to Japanese and Americans and others being able to get access to rare earths.

ZARROLI: Kennedy says mining companies in Australia and even the United States are now beginning to produce rare earth minerals of their own, and that promises to bring down the price over time. But he says the U.S. and its allies have clearly decided to take a stand against Chinese policies.

KENNEDY: I think the significance of the case is that the United States has decided that even though probably the monetary value of this case may not be particularly large, it's extremely important that where there is clear evidence of potential Chinese violations with their WTO commitments, to hold the Chinese accountable.

ZARROLI: Kennedy says the U.S. recently won a similar WTO case against China over its export of raw materials and may have figured it could prevail again. That remains to be seen, he says, since the cases are somewhat different. But whatever the outcome, the United States has shown it's ready to take a stand against a trading partner that many Americans believe doesn't play by the rules. And in an election year, that can only benefit the White House.

Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.