US, EU, Japan elevate rare earth complaint against China

The three governments want the WTO to appoint a dispute settlement panel to examine China's export policies

The Office of U.S. Trade Representative has elevated a trade complaint by asking for the World Trade Organization to establish a dispute settlement panel to rule on U.S. claims that China is unfairly restraining exports of rare earth materials used in electronics and other products.

The European Union and Japan on Wednesday also requested a dispute settlement panel at the WTO, the USTR said in a press release. In March, the U.S., E.U. and Japan filed a WTO complaint, accusing China of using several types of export restraints on the rare earth materials, including export duties, export quotas, export and pricing requirements.

China produces more than 95 percent of the world's rare earth materials. The U.S. complaint covers rare earths, tungsten and molybdenum, used in the manufacturing of mobile phones, laptops and MP3 players as well as hybrid car batteries, wind turbines, steel and petroleum.

"These materials are key inputs in a multitude of U.S. manufacturing sectors and American-made products," U.S. Trade Representative Ron Kirk said in a statement. "It is vital that U.S. workers and manufacturers obtain the fair and equal access to raw materials like rare earths that China specifically agreed to when it joined the WTO."

When China joined the WTO in 2001, it agreed to eliminate export duties for rare earths and most other products, the USTR said.

"Despite China's characterizations, its export restraint measures on rare earths, tungsten and molybdenum appear to be part of a troubling industrial policy aimed at providing substantial competitive advantages for Chinese manufacturers at the expense of foreign manufacturers," the USTR said in its press release.

Representatives of the Chinese Embassy in Washington, D.C., didn't respond to a request for comment,.

The WTO dispute resolution process has several steps. The whole process can take longer than a year if the dispute settlement panel's decision is appealed. Ultimately, the WTO could allow trade sanctions in a WTO dispute.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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