Thursday, March 15, 2012

U.S. Challenges China's Unfair Export Restraints On Rare Earths

Mar 13: U.S. Trade Representative Ron Kirk announced that the United States has requested consultations with the People's Republic of China at the World Trade Organization (WTO) concerning China's unfair export restraints on rare earths, as well as tungsten and molybdenum. These materials are key inputs in a multitude of U.S made-products and American manufacturing sectors, including hybrid car batteries, wind turbines, energy-efficient lighting, steel, advanced electronics, automobiles, petroleum, and chemicals.

    Consultations are the first step in the WTO dispute settlement process, and parties are encouraged to agree to a solution at this stage. Under WTO rules, if the matter is not resolved through consultations within 60 days, the United States may request the establishment of a WTO dispute settlement panel. The European Union and Japan also requested WTO consultations with China on this matter also.

    Ambassador Kirk said, "America's workers and manufacturers are being hurt in both established and budding industrial sectors by these policies. China continues to make its export restraints more restrictive, resulting in massive distortions and harmful disruptions in supply chains for these materials throughout the global marketplace. The launch of this case against China today, along with the President's creation of the Interagency Trade Enforcement Center, reflects the Obama Administration's commitment to make all of our trading partners play by the rules. We will continue fighting for a level playing field for American workers and manufacturers in order to grow our economy, and ensure open markets for products made in America."

    The United States recently won a WTO challenge against China's export restraints on nine other industrial inputs. China's export restraint measures on rare earths, tungsten, and molybdenum appear to be part of the same troubling industrial policy aimed at providing substantial competitive advantages for Chinese manufacturers.

    China imposes several different types of unfair export restraints on the materials at issue in the consultations request, including export duties, export quotas, export pricing requirements as well as related export procedures and requirements. Because China is a top global producer for these key inputs, its harmful policies artificially increase prices for the inputs outside of China while lowering prices in China. This price dynamic creates significant advantages for China's producers when competing against U.S. producers – both in China's market and in other markets around the world. The improper export restraints also contribute to creating substantial pressure on U.S. and other non-Chinese downstream producers to move their operations, jobs, and technologies to China.

    U.S. Senator Debbie Stabenow (D-MI) applauded the action and said, "I have been calling for strong action to address China's illegal actions and am glad that action is now being taken. Michigan's economic turnaround depends on innovative businesses being able to manufacture the products of the future. We cannot let China's unfair trade practices stop job growth." She indicated that China is currently hoarding rare earth elements critical to a wide range of industries -- from hi-tech batteries for advanced technology vehicles, to smart phone batteries to important military technologies. She said China now controls production of more than 95% percent of the world's supply -- and has increasingly been using export controls to reduce the amount available on the world market.
    U.S. Senator Lisa Murkowski (R-AK) took the opportunity to criticize the President and said, "The president wants to sue the Chinese for something that we could -- and should -- be producing for ourselves. Instead of settling for Chinese imports, the president should be taking steps to jumpstart development of our own supplies of rare earth elements and other critical minerals. All he has to do is look north to Alaska, which has already identified roughly 70 rare earth elements sites. We have some of the strictest environmental standards in the world, but the president prefers to import minerals critical to our competitiveness and security from a country that has some of the lowest. If the president wants to address China's dominance in critical minerals production, he should support changes to U.S. federal minerals policy to allow domestic mining."
    Senator Murkowski said, "The United States is 100 percent dependent on foreign sources for 17 critical minerals." She has been calling for reforming Federal minerals policy for the past two years. Murkowski introduced the Critical Minerals Policy Act (S. 1113) last year, with 19 bipartisan cosponsors, to update Federal mining policy, but the legislation has languished in the committee waiting for the Majority to schedule a markup.

    Access a release from the U.S. Trade Representative with additional information and background (click here). Access a release from Sen. Stabenow (click here). Access a release from Sen. Murkowski and link to related information (click here). Access legislative details for S.1113 (click here). [#Land]

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