WTO decides for US in rare earths case

The World Trade Organization this week upheld a March decision that found China’s restrictions on exports of rare earths materials violated international trading rules.

The WTO’s Appellate Body’s decision gave the United States, European Union and Japan a victory in the case that determined China’s export restraints on rare earths — tungsten and molybdenum — which are key components in a multitude of U.S-made products, to be inconsistent with Beijing's WTO obligations.

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U.S. Trade Representative Michael Froman said the report “marks the end of the line for this dispute.”

“We have sent a clear signal to our trading partners that we will be tenacious in protecting American businesses, American workers and the rule of law,” he said.

China produces more than 90 percent of the world's rare earths, which are used in products such as hybrid car batteries, wind turbines and energy-efficient lighting.

“China has not demonstrated that the export quotas that China applies to various forms of rare earths, tungsten and molybdenum by virtue of the series of measures at issue are justified," the WTO report concluded.

The three nations challenged China’s export restraints including export duties and quotas, which can artificially increase world prices while lowering prices for Chinese producers.  

China argued that it was attempting to avoid over-mining the materials and said it would “carefully assess this ruling” while continuing “to improve its management on resource-consuming products in a WTO-consistent manner, facilitate the protection of natural resources and maintain fair competition with the objective of achieving sustainable development," according to a statement from China's Ministry of Commerce.

Congressional lawmakers praised the decision as a win for U.S. manufacturers and workers. 

House Ways and Means Committee ranking member Rep. Sandy Levin (D-Mich.) said the report “is a vindication for America’s workers and manufacturers whose rights, livelihoods and ability to innovate have been held hostage by China’s predatory and illegal policies.”

The result today is another example of the payoff for persistence and diligence in enforcing U.S. trade rights and pursuing the interests of U.S. workers and businesses.”

Senate Finance Committee Chairman Ron Wyden (D-Ore.) called the decision a “resounding victory for American workers whose jobs depend on a stable supply of rare earth elements.”

The ruling “makes clear that China must withdraw its mercantilist restrictions on rare earth elements, and it stands as an example of how strong enforcement of global trade rules is vital for American businesses, workers and families.”

The United States initiated the WTO dispute in 2012, in cooperation with the EU and Japan, after China drastically reduced its export quotas for rare earths and caused a spike in world prices and disruption in the global rare earths market.