China Holds Firm on Quotas

Source:

"China is 'not worried' about a possible WTO ruling on rare earths."

Financial Times, Joshua Chaffin and Leslie Hook

The EU accused China of restricting exports of rare earth metals (REMs) essential for the production of mobile phones and other high-tech gadgets.

After months of lobbying from Brussels, Washington and Tokyo, China on Thursday released new quota figures that would keep exports of the strategic materials on par with last year's levels.

EU officials and traders contend that the new quota amounted to an effective decrease because it had been amended to include "ferroalloys," which contain REMs.

"This is highly disappointing," said the European Trade Commission. "The EU continues to encourage the Chinese authorities to revisit their export restrictions policy to ensure there is full, fair, predictable and non-discriminatory access to rare earth supplies. . .for EU industries."

The World Trade Organization ruled against China's export restrictions on other raw materials, such as bauxite and zinc. Officials in Brussels and Washington had hoped that ruling would encourage Beijing to ease similar controls on its REM exports.

EU Trade Commissioner Karel De Gucht expressed optimism that a negotiated solution could be found after a meeting with his Chinese officials in Beijing.

"From the general response they gave me, they indicated that they understand they cannot have a policy for exports different from that for domestic trade," De Gucht said.

While EU officials insist all options remain on the table, Chinese officials said on Thursday they were "not worried" about a possible WTO ruling on rare earths.

Europe's manufacturers have grown nervous, as China has moved to tighten REM exports, which fell 40% last year to 30,259 tons.

Miners are rushing to develop new deposits of REMs in Australia, the U.S., South Africa and other countries but these fresh supplies are unlikely to become available until 2012 or 2013.

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