The World Trade Organization (WTO) has rejected China's appeal of a ruling that found the country violated trade rules by restricting the export of rare earth materials. Rare earths are used in various products, including permanent-magnet direct-drive generators for wind turbines and hybrid car batteries. China produces about 90% of the world's rare earths.
According to U.S. Trade Representative Michael Froman, the U.S. initiated this WTO dispute in 2012, in cooperation with the European Union and Japan, after China drastically reduced its export quotas for rare earths and caused a spike in world prices. The WTO later determined that China's export duties and quotas breach trade rules. The WTO Appellate Body has now upheld that decision, and China will be charged with abolishing its export restraints.
In a statement, Froman says this latest decision "marks the end of the line for this dispute." He later adds, "By upholding rules on fair access to raw materials, this decision is a win not only for the United Sates, but also for every nation that respects the principles of openness and fairness. Those principles are the pillars of the rules-based global trading system, and we must protect them vigilantly."
The WTO decision was also praised by the United Steelworkers (USW), which says it helped spark the WTO case after filing a petition in 2010. Leo W. Gerard, USW's international president, calls the ruling "a big win."
‘Rare earth minerals are used in countless products from lighting to high-technology products to batteries and auto parts," says Gerard in a statement. "China's restrictions starved foreign producers of these vital products and raised the price to foreign purchasers."
According to a Reuters report, China had claimed its export restraints on rare earths were necessary in order to keep from over-mining. The report cites a statement from China's Ministry of Commerce, which says, ‘China will carefully assess this ruling, continue to improve its management on resource-consuming products in a WTO-consistent manner, facilitate the protection of natural resources, and maintain fair competition with the objective of achieving sustainable development."