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US, EU, Japan Complain To WTO Over China's Rare Earth Ban
eldavojohn writes "China's rare earth monopoly has resulted in a shortage as China blocks their export and the rest of the world resumes their operations. Now, in a first-ever joint filing from three members of the World Trade Organization, Japan, the EU and the U.S. are not sitting idly by as China repeatedly ignores the WTO's orders to export rare earth metals and raw materials at a fair price to other countries. China claims the embargoes are in place to protect its environment, while Obama denounces China as being unfair and not playing by the rules of the WTO. In 2009, the WTO released a report (PDF) that explained how actions like China's hurt trade partners."
First of all, the WTO has no means to order any country to sell anything at what it determines is a "fair price". Second, China does not have a monopoly on rare earths. They exist is many many countries. Those countries may not be actively pursuing them and exporting them to the same degree but that is not China's fault.
when you shut down mining and manufacturing in western countries and ship it all to China just because they are cheaper.
Other countries have these deposits, but they determined they could just buy China's for less money.
then you gotta surrender your sovereignty.. I think China signed... So there
China beat the other capitalists at their own game. By forcing the other players out of the market and then establishing a monopoly. Now they are crying foul because they lost the game? It's their rare earth metals so just pay them what they want or start making your own! You cant just demand that the rules be changed because now you're being screwed, while previously you enjoyed screwing someone else over.
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>Kony 2012
Is that who you're voting for this November?
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BMO
Don't blame me - I voted for Kodos.
I am not a Chinese government fan by any means but as a sovereign country they have an obligation to protect the interests of their citizens above the financial gains of the globalists. Besides, these are the same guys that say the free market solves all problems. As the price of these materials go up alternatives should surface or recycling efficiency should increase.
If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be-T J
For 200+ years China was bullied by western powers
This is true. And then China proved itself to be the equal bully of Victorian era European powers.
/severe/ environmental issues.
You are right about the declining influence of the USA and the EU. I suspect, however, that China will not rise above, but will trace a similar arc as the soviet union did. In many ways, the Chinese miracle reflects the decade-long double-digit growth of the soviet union. And likewise, both countries have serious internal problems, including
I do believe that the chinese leadership will not sit idly by on these environmental issues, and their environmental policy looks bizarre to outsiders. I suspect they are drawing down on the possibility of future technical solutions which they are now investing in. But the future of industrial china has not yet been written.
btw, the USA, France, Britain, Germany, Japan, Russia and China are probably the only countries that can sustain a significant war. There may be a dearth of political will within the USA, France, Britain, German and Japan -- but if the will is ever galvonised, make no mistake, they could prosecute a real war anywhere on the planet.
Like all pain, suffering is a signal that something isn't right
If China were simply limiting the amount of rare earths permitted to be dug out of the ground, there would be no WTO issue. The problem is that this is an export cap which has the potential to create different pricing for rare-earths between domestic and foreign purchasers of these materials.
Now if you look at mentions of today's prices of rare earths (by googling for "rare earth prices"), as yet, there is no such disparity. The linked WTO article also doesn't directly talk about price disparities between domestic and foreign purchasers. It turns out that global demand for rare earths went down quite a bit last year, and as a result, only about 60% of the export quota was used up (according to this FT article).
The concern is that as the global economy recovers, if demand is seen to exceed the quota, then a huge price difference between what domestic companies and foreign companies pay will emerge. This would amount to a kind of state subsidy (making prices for domestic producers artificially cheap) and would violate WTO rules.
The two metrics to watch to determine whether or not the claim of environmental protection vs. economic protectionism would be:
(1) Domestic rare earth production volume (e.g. in tons) - If slope of this curve continues unchanged, then there really is no environmental effect. If the slope flattens out, then it could be argued that the quota did slow down the pace of mining and did have an environmental consequence
(2) Domestic (China buyer) vs. Foreign (non-China Buyer) price (e.g. difference $/ton) - If this disparity is big, then there's a stronger case that there is some kind of domestic subsidy occurring, if the disparity is small, then the case that there is a subsidy is weaker.
This is not really a matter of sovereignty since China is a willing party to the WTO and has volunteered to play by those rules.
...good thing! The mines that were shut down will eventually come back on line when it is profitable to do so again. In the meantime:
1) Rare earth materials can be purchased cheaper because China was undercutting everyone (even if they were used for manufacturing within china, the goods were still being sold abroad).
2) Less pollution generated in my home country (USA) because that mining was put on hold.
3) Non-Chinese resources are preserved and will last longer while China burns through theirs.
What we're seeing is an eventuality. Eventually China is going to wise up and realize they are going through a very valuable resource at an unsustainable rate.
Better known as 318230.
The ONLY reason why rare earth minerals are dominated by China is because no other country is willing sacrifice the environment to extract these minerals.
Wrong, it is because China's ore deposits are more highly concentrated than any other, by a very wide margin.
From my vantage point, China has every right to restrict this trade to protect its environment.
I don't know about your argument (which seems wildly far fetched to me) but do know that subsidizing domestic industry with favorable pricing of raw materials is, in general, not allowed by the WTO.
Have you got your LWN subscription yet?
It all boils down to election posturing
Obama accuses China of not selling the rare earth "at fair price" while in California there is a large rare earth mine still remain closed
Muchas Gracias, Señor Edward Snowden !