U.S., EU, Japan take on China at WTO over rare earths

Wed Mar 14, 2012 4:00am EDT
 
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By Doug Palmer and Don Durfee

WASHINGTON/BEIJING (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.   Continued...

 
A labourer hoses water into the site of a rare earth metals mine at Nancheng county, Jiangxi province December 21, 2010. REUTERS/Stringer