- The Washington Times - Wednesday, July 6, 2011

Chinese officials said Wednesday they will ease export restrictions on certain “rare earth” minerals critical to the world’s high-tech industries, a day after losing a World Trade Organization complaint brought by the U.S. and Europe over the country’s trade policies.

Xinhua, China’s official press agency, quoted Vice Commerce Minister Zhong Shan as saying the ministry would take steps toward better management of so-called rare earth exports — the 17 minerals critical to such applications as cell phones, pollution-control devices and laser pointers.

“Improving the regulation of rare earth exports will help us to protect the environment and promote industrial restructuring, as well as allow the rare earth industry to develop in a healthy way,” Xinhua quoted Mr. Zhong as saying.

China produces 97 percent of rare earths, but slashed its export quotas to the global market by 35 percent for the first half of this year. Officials in Beijing, who cited environmental concerns in cutting supplies, offered no specific numbers but said they plan to “synchronize” the regulation of the exports and domestic production of rare earth minerals.

U.S. and European lawmakers have expressed concerns over China’s tight grip on the rare earth mineral market in recent years. The concerns were heightened last year, when Beijing briefly halted exports to Japan during a territorial dispute.

Gareth Hatch, co-founder of Illinois-based Technology Metals Research, which monitors trends in the rare earths market, said the Chinese decision could have an immediate impact.

“One would expect to see a commensurate fall in the costs of these materials, which is obviously of value to buyers of these materials who use them to make a wide variety of components that end up in a vast array of products,” Mr. Hatch said. “It also improves the chances of designers and engineers using rare earth-based components for new technologies.”

European Union trade spokesman John Clancy said in a statement that Europe “expects that China will ensure that its entire export regime on raw materials, including rare earths, is in line with international rules ensuring free and fair access for our industries.”

The announcement by China follows a loss dealt Tuesday, when the WTO found that China’s restrictive exporting quotas and tariffs of nine raw materials violated international trade law. The materials in question, including coke, bauxite, and zinc, are crucial to the steel, aluminum, and chemical industries. The ruling came over 18 months after a complaint was filed by the U.S., EU, and Mexico.

China can certainly be expected to appeal the ruling by the panel in the raw materials dispute,” said James Bacchus, a former chairman of the WTO appeals tribunal and former Florida congressman. “I would anticipate that China would comply after the appeal. China has a good record with the WTO.”

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