China to appeal WTO rare earth ruling

Reuters News
Posted: Apr 17, 2014 2:16 AM

BEIJING (Reuters) - China said on Thursday it would appeal against a World Trade Organization (WTO) ruling that found it violated global trade rules with its export limits on rare earth minerals used in defense and technology products.

China lost a WTO dispute in March, handing Europe and the United States a victory over what they see as China's unfair trade practices.

"China will make the utmost efforts in the appeals process," Ministry of Commerce spokesman Shen Danyang told reporters at a monthly briefing.

China produces more than 90 percent of the world's rare earths, key elements in defense industry components and modern technology from iPhones and disk drives to wind turbines.

China imposed strict rare earth export quotas in 2010, saying it was trying to curtail pollution and preserve resources.

"Regardless of the appeal's outcome, China's policy objectives to protect the environment and natural resources will not change," Shen said. "They will also continue to strengthen management of natural resource products in a manner that accords with WTO rules and safeguards fair competition."

Prices of the prized commodities soared by hundreds of percent after China imposed is export quotas, and the United States, European Union and Japan complained that the restrictions gave Chinese companies an unfair competitive edge.

The United States said the export limits allowed China to artificially increase world prices for raw materials crucial for products like hybrid car batteries, wind turbines and energy-efficient lighting, while artificially lowering prices for Chinese producers.

China had been widely expected to lose the case, after a successful challenge two years ago to its export restraints on a different set of raw materials used in the steel, aluminum, and chemicals industries, including bauxite and magnesium.

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In that ruling, a WTO panel said China had failed to demonstrate that its export duties were to curtail pollution or conserve resources.

Decades of unrestrained economic growth has hit China's environment hard. Refining rare earths requires large amounts of acid, and also produces low-level radioactive waste.

China has pointed out that other countries, notably the United States, have closed many of their own rare earths refineries, citing pollution concerns.

(Reporting by Aileen Wang and Michael Martina; Editing by Robert Birsel)