In an earlier
statement, the European Union said the challenge mounted with Washington
and Tokyo "formally requested dispute
settlement consultations with China
in the World Trade Organization."
However, U.S. Sen.
Chuck Schumer, D-New York, said tougher steps are needed than the dispute
resolution requested.
"There are
faster ways to assert leverage on China than relying on the WTO, which could
take years to resolve the case," Schumer said in a statement that called
for U.S. efforts to block Chinese-funded mining projects in the United States
as well as World Bank financing for Chinese mining projects.
Beijing defended its approach Tuesday.
"China has
worked out its own policy on managing rare earths, which is in line with WTO
regulations," Liu Weimin, a spokesman for the Chinese Ministry of Foreign
Affairs, said at a news conference. "Our policies tackle not only the
export of rare earth but also its production and exploration."
The United States accuses China of hoarding the valuable
minerals for its own use. But China
said its restrictions are motivated by environmental concerns.
White House Press
Secretary Jay Carney told reporters Tuesday that the issue is about uniform
rules for all, rather than an effort to hurt China.
"We believe
that China's rise is a good
thing for the Chinese people and for the global community, a good thing for the
United States,"
Carney said. "It is also important that, as China
becomes a bigger and bigger economic power, that China play by the same set of rules
that other major economic powers play by."
China will have 10 days to respond to the case and must hold
talks with the other parties within two months.
The EU statement
said the challenge to the WTO targets raw materials including 17 rare earths
such as cerium, neodymium and dysprosium, as well as tungsten and molybdenum.
The elements and substances are used in high-tech and "green"
businesses, as well as in cars, machinery manufacturing, chemicals and steel.
Tungsten is used
in lighting technology, in electronics and in automotive, aerospace and medical
technologies, the EU statement said. China produces 91% of the world'stungsten.
Molybdenum is a
metallic element used for filaments in light bulbs. China produces 36% of the world's molybdenum,
according to the EU statement.
Most of the time,
rare earths cannot be substituted for without resulting in a redesigned and
more costly product, the EU statement said, adding: "Their
non-availability can lead to the disruption of whole value chains."
China has gradually tightened export restrictions on the
materials through raising export taxes and "drastically reducing the
export quota," according to the European Union. In 2010, China reduced
the quota by 32% for domestic companies and 54% for foreign-invested companies.
"Because China is a top global producer for these key
inputs, its harmful policies artificially increase prices for the inputs
outside of China while
lowering prices in China,"
said a Tuesday statement from the U.S. trade representative.
"This price
dynamic creates significant advantages for China's
producers when competing against U.S.
producers -- both in China's
market and in other markets around the world," said the U.S. statement.
"The improper export restraints also contribute to creating substantial
pressure on U.S. and other
non-Chinese downstream producers to move their operations, jobs and
technologies to China."
The WTO, the body
tasked with monitoring trade between nations, will be asked to be a facilitator
in talks with China,
an Obama administration official said Monday.
"China's
restrictions on rare earths and other products violate international trade
rules and must be removed," Karel De Gucht, EU trade commissioner, said in
a statement. "These measures hurt our producers and consumers in the EU
and across the world, including manufacturers."
Despite a recent
ruling in a separate dispute over different raw materials, "China has made
no attempt to remove the other export restrictions," he said. "This
leaves us no choice but to challenge China's export regime again to
ensure fair access for our businesses to these materials."
Ron Kirk, the U.S. trade representative, said, "America's
workers and manufacturers are being hurt in both established and budding
industrial sectors by these policies. China continues to make its export
restraints more restrictive, resulting in massive distortions and harmful
disruptions in supply chains for these materials throughout the global
marketplace."
Concern in the United States over the supply of rare earths
resulted in a September hearing on the matter by the House Foreign Affairs
Subcommittee on Asia and the Pacific.
Of particular
concern was how vital the minerals are for top-of-the-line weapons, including
missile guidance systems, drones and the new F-35 Joint Strike Fighter.
American companies
are trying to answer the demand. Molycorp Inc., one of the few producers of
rare earth minerals outside China,
has urged Congress to do more to confront the problem and encourage research
and development. Molycorp has mines in California
and Colorado.
In 2010, China temporarily halted shipments of rare
earths to Japan,
prompting a sharp spike in prices of the minerals.
The EU said it has
raised the issue repeatedly with China over the past few years
without success. If no solution can be found through the consultation process,
the dispute can be transmitted to a WTO panel for a ruling, the European Union
said.