Rare earth elements (REEs) are coveted minerals used in high-tech products. China has about 50% of known world reserves and until very recently was behind 95% of global supplies. It has reduced its export quotas drastically since 2010, arguing that the country had paid a heavy price for its mining activity in the form of resource depletion and severe environmental damage.
In March 2012, together with Japan and the US, the EU demanded dispute settlement consultations in the World Trade Organisation (WTO) on China’s REE export restrictions. The consultations failed and, in June 2012, the EU, Japan and the US, decided to pursue further litigation at the WTO. In a similar case concerning China’s raw materials export restrictions, a WTO appeals panel found, in its report, that the country had violated international trade rules. Up to now, China has maintained its position, releasing a White Paper reflecting the country’s official rare earth policy. Nevertheless, the country is still open to some consultations under the umbrella of the WTO.
Several international experts believe that nothing will come of the WTO action. Moreover, China’s monopoly could be coming to an end with the opening of new production facilities elsewhere in the world. Some other experts expect that the WTO will oblige China to raise its export quotas.