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Trade war escalates over Chinese raw materials

Text by News Wires

Latest update : 2012-03-14

An international trade row over access to Chinese raw materials escalated on Wednesday as the US, Europe and Japan joined forces to challenge Chinese restrictions on exports of rare-earth materials needed to produce high-tech goods.

REUTERS - The United States, Europe and Japan have joined forces to challenge China’s restrictions on exports of rare-earth metals, escalating a trade row over access to some of the most important raw materials used in advanced technologies.

In a formal complaint to the World Trade Organization (WTO), the three trade powers accused Beijing of trying to hold down prices for its domestic manufacturers and to pressure international firms to move operations to China.
 
“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,” U.S.  President Barack Obama said at the White House.
 
Europe’s trade chief said China’s restrictions violated international trade rules and had to be removed.
 
“These measures hurt our producers and consumers in the EU and across the world, including manufacturers of pioneering hi-tech and ‘green’ business applications,” said European Union Trade Commissioner Karel De Gucht.
 
Rare earths are crucial for the defense, electronics and renewable-energy industries and are used in a range of products such as the iPhone, disk drives and wind turbines.
 
China described the trade complaint on Wednesday as unfair, arguing that it only controlled 90 percent of global production because other countries, notably the United States, had long ago closed their own rare earths refineries on pollution concerns.
 
“The irrational exploitation of rare earth in China had led to underestimation of the values of rare earth,” state news agency Xinhua said in a commentary, adding that pollution from rare earths refining had forced it to curb production.
 
“It is strange that the Western world has never launched ‘anti-dumping’ measures against China’s rare earth products as they have, more often than not, done to other China-made products such as shoes, shirts and tyres.”
 
China has said its export curbs aim to both control environmental problems and preserve supplies of an exhaustible natural resource. Refining rare earths requires large amounts of acid, and also produces low-level radioactive waste.
 
Beijing set an export quota of 30,258 tonnes in 2011, but it shipped only 16,861 tonnes last year, official data shows. The squeeze has led to a fourfold increase in export prices over the past two years, encouraging buyers to shift operations to China and also develop non-rare earth technologies.
 
China’s Minister of Industry and Information Technology Miao Wei said China was preparing to defend itself in the WTO.

 

Date created : 2012-03-14

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