WTO rules against China rare earth hoarding

In a dispute that highlights growing tension between China and its Western trading partners, the World Trade Organisation ruled that Beijing violated global rules by restricting exports of nine raw materials used in the manufacturing of high technology products.

In a dispute that highlights growing tension between China and its Western trading partners, the World Trade Organisation ruled that Beijing violated global rules by restricting exports of nine raw materials used in the manufacturing of high technology products.

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The case, lodged by the US the European Union and Mexico, dates from 2009 and underlines the anxiety in the West about the way China is consolidating its trading dominance.

Significantly, the ruling strengthens other European arguments against Chinese restrictions on another category of exports — rare earths, 17 minerals also used in the high-tech industry. However it also demonstrates how dependent technology industries have become on some exports from China.

The WTO panel rejected China’s argument that its restrictions were motivated by a desire to protect the environment and prevent a critical shortage of the materials. The decision concluded that Chinese quotas, export duties and license requirements put in place a discriminatory system for the sale overseas of industrial raw materials widely used in the steel, aluminum and chemicals industries, including coke, zinc and bauxite.