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China's Rare Earth Export Restrictions Challenged At WTO

The United States, the European Union and Japan on Tuesday launched a joint challenge at the World Trade Organization (WTO) against restrictions imposed by China on its rare earth exports, marking the first such joint action by the three economic powers at the WTO.

In their petition filed at the WTO, the US, Japan and the EU allege that the unfair restrictions imposed by the Chinese government on its rare earth exports have pushed up prices steeply in the international market.

Beijing had earlier raised taxes and enforced several restrictions on processing and exporting of rare earth minerals which are vital to the high-tech industries across the world. China says that the measures are for streamlining its rare earth industry.

Many believe that the Chinese restrictions are aimed at keeping the prices of the rare earths low in the Asian country, which would in turn give Chinese manufacturers an added advantage when compared to their international counter parts.

China, however, denies the allegations, insisting that the restrictions imposed on its rare earths exports as well as its system of allocation of quotas for the export of rare earths were to reduce large-scale environmental damages caused by excessive mining.

"We think the policy is in line with WTO rules. Exports have been stable. China will continue to export, and will manage rare earths based on WTO rules," Chinese foreign ministry spokesman Liu Weimin said Tuesday.

Rare earths are made up of a group of 17 chemically similar metallic elements, including lanthanum, cerium, neodymium and europium. They are used extensively in the manufacture of hi-tech products, including catalytic converters in cars, computer monitors, TVs, radar, high-powered magnets, mini-hard drives in laptop computers, electric-car batteries and wind turbines.

They are classified into heavy rare earth or ion-absorbed rare earth and light rare earth. Both the categories are found abundantly in southern and northern China. China produces about 97 percent of the world's requirement of rare earths and houses an estimated 36 percent of the world reserves.

Two years ago, China had denied reports that Beijing had imposed restrictions on the export of rare earths to the United States and the European Union. Beijing, however, briefly halted exports of the rare earth metals to Japan amidst a tense maritime dispute between the two countries over the ownership of a group of islands in the East China Sea.

China had declared in December that it was leaving its rare earth export quota for this year at almost last year's level. China's overall export quota for rare years for 2011 was reportedly 30,184 tonnes, slightly down from 30,258 tonnes in 2010.

Although the United States remains a major consumer of the rare earths, it had halted the mining of the rare earth elements some 20 years ago. It has since reopened the rare earth mines in recent months in wake of the heavy demand for the elements due to the Chinese moves.

by RTTNews Staff Writer

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