China's rare earth policy accords with WTO rules

BEIJING -- Chinese experts have regreted a WTO ruling against China's rare earth export policies, while calling for consolidation in the highly polluting sector.

The World Trade Organization (WTO) ruled on Wednesday that China's export duty, export quotas, and export quota administration and allocation measures imposed on rare earths, tungsten and molybdenum products were inconsistent with WTO rules and China's Accession Protocol.

Under WTO rules, China can make an appeal within 60 days and the final ruling will come in three to four months.

Mei Xinyu, a foreign trade expert at the Ministry of Commerce, said China's restriction on rare earth exports is designed to conserve resources and protect the environment, and it is in line with WTO rules and China's own situation.

China is the world's largest rare earths supplier, serving around 90 percent of the world's demand for rare earths, a group of 17 elements that are widely used in high-tech products ranging from flat-screen TVs to lasers and hybrid cars.

However, the country holds only 23 percent of the world's rare earth reserves. For decades, excessive exploitation, antiquated mining technologies and lax environmental standards have taxed the country's environment.

In some towns in east China's Jiangxi province, where reserves of precious ion-absorbed-type rare earths abound, exploitation since the late 1980s has not only destroyed local landscapes, but also poisoned streams and crops.

Li Yang, with the China Institute for WTO Studies at the University of International Business and Economics, urged WTO personnel to take field trips to China and learn about the real situation.

Then they will understand that the Chinese government is limiting rare earth production and consumption for the environment's sake, said Li.

As a matter of fact, most nations with rare earth deposits, including the United States, closed their own mines decades ago as rare-earth mining and processing is notoriously devastating to the environment.

Besides export quotas, China has implemented policies including output caps, stricter emissions standards and high resource taxes to curb environmental degradation and protect the resources.

Now, as the country may have to scrap its export measures, the experts believe the country should put more weight on alternative measures to better manage rare earth production.

Feng Jun, an analyst from the Shanghai WTO Affairs Consultation Center, said China should raise resource taxes to increase the cost of mining. What's more, higher emissions standards will force substandard companies to close.

Mei Xinyu added that China should speed up the consolidation push in the sector to upgrade the industry and crack down on illegal mining.

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