WTO Dismisses the Chinese Environmental Defense for Limiting Exports of Rare Earth Elements

Rare Earth Deposits & Mining / Rare Earth Exploration, Mining, Processing, & Uses

Date posted: 08/16/14

The World Trade Organization (WTO) slapped down Chinese restrictions on rare-earth element exports as a phony environmental ruse that actually gives the domestic industries an unfair price advantage. The issue had been percolating for years amid a spike in demand for rare earths from the makers of high-tech products, including smartphones, aircraft engines and most electric and hybrid cars. Now, the WTO Appellate Body has sided with the U.S., the EU and Japan, which lodged a formal complaint against China in 2012. The WTO final ruling says China must drop its export tariffs and quotas within a reasonable amount of time or face punitive retaliatory tariff measures. If China complies it would help lower the cost and increase the supply of the key elements used in the tech, automotive, aerospace and defense industries. The difficulty with the Chinese contention is that export restrictions generally do not internalize the social environmental costs of EPRs - Energy-intensive, highly polluting, resource-based products - production in the domestic economy, the decision dated August 7, 2014 stated. This is because export restrictions reduce the domestic price of EPRs and therefore they stimulate, instead of reducing, further consumption of polluting EPR products. China extracts more than 80 percent of the world rare-earth elements, mainly from the environmentally wrecked Bayan Obo Mining District in Inner Mongolia, the world largest single rare earths source mined to date. There will be others mined in the world.