Production of rare earth result in the huge environmental destruction
At the request of the European Union (EU), the United States and Japan, the World Trade Organization (WTO) organized a special group on July 23, investigating, discussing and settling about China's export control measures on rare earth elements, tungsten and molybdenum.
In March, the E.U., the United States and Japan resorted China's export restriction policies on tungsten, molybdenum and 17 rare earth elements to the WTO. On June 27, they again demanded the WTO to launch the dispute settlement mechanism and set up special group so as to solve the dispute on China's controlling exports of rare earth elements and some other metallic elements.
At the request of the European Union (EU), the United States and Japan, the World Trade Organization (WTO) organized a special group on July 23, investigating, discussing and settling about China's export control measures on rare earth elements, tungsten and molybdenum.
In March, the E.U., the United States and Japan resorted China's export restriction policies on tungsten, molybdenum and 17 rare earth elements to the WTO. On June 27, they again demanded the WTO to launch the dispute settlement mechanism and set up special group so as to solve the dispute on China's controlling exports of rare earth elements and some other metallic elements.
What is their intention to deliberately provoke rare earth dispute?
China possesses less than 50 percent of total rare earth reserves in the world but it provided the world with 90 percent of rare earth output in 2001 and 97 percent in 2010.
However, so large world market share did not bring monopoly profits to China and the global rare earth had been maintaining at a super low price by 2005. Supported by local governments of all levels, the large, medium and small enterprises poured in rare earth industry and began excessive competition. Driven by short-term profits, plenty of small enterprises predatorily exploited rare earth elements, bringing the productivity of the whole rare earth industry down. The recovery ratio of rare earth exploited by state-owned enterprises only reaches to 60 percent per ton, that of large private enterprises is 40 percent and that of illegal enterprises is only 5 percent. The rare earth resource was squandered a lot, thus causing severe environmental problem.
In order to protect environment and the rare earth resource, Chinese government tried to control the predatory production and exportations of the rare earth resource. The export quota has been reduced to about 30,000 tons from original 65,000 tons from 2005 to 2010, which greatly decreased overexploitation of rare earth resource.
China possesses less than 50 percent of total rare earth reserves in the world but it provided the world with 90 percent of rare earth output in 2001 and 97 percent in 2010.
However, so large world market share did not bring monopoly profits to China and the global rare earth had been maintaining at a super low price by 2005. Supported by local governments of all levels, the large, medium and small enterprises poured in rare earth industry and began excessive competition. Driven by short-term profits, plenty of small enterprises predatorily exploited rare earth elements, bringing the productivity of the whole rare earth industry down. The recovery ratio of rare earth exploited by state-owned enterprises only reaches to 60 percent per ton, that of large private enterprises is 40 percent and that of illegal enterprises is only 5 percent. The rare earth resource was squandered a lot, thus causing severe environmental problem.
In order to protect environment and the rare earth resource, Chinese government tried to control the predatory production and exportations of the rare earth resource. The export quota has been reduced to about 30,000 tons from original 65,000 tons from 2005 to 2010, which greatly decreased overexploitation of rare earth resource.
If anything, China has exported too much rather than too little rare earths. Related countries should resume their own production of rare earths, instead of forcing China to increase exports of the valuable resources. It is extremely selfish of Western countries to force China to increase rare earth exports and expect to continue buying the resources at unreasonably low prices, without the regard for the severe environmental damage China has suffered.
Of course, China could say “no” to unreasonable requests from Western countries, but Western-led international trade rules would place it under heavy pressure. China must seriously reflect on why it has sold rare earths at unreasonably low prices, and now even face groundless accusations by Western countries after paying a high environmental price.
The United States has implemented high-technology exports restriction to China for long time. During the Cold War, it initiated the Coordinating Committee for Multilateral Export Controls (CoCom) to put an arms embargo on socialist countries like China. After the Korean War broke out, a “China sub-committee” of the CoCom was established to impose stricter embargo on China than on the Soviet Union and Eastern European countries. Especially the forbade shipment of 207 items beyond the CoCom list were also forbade to China. After the end of the Cold War, the United States played a leading role in replacing the CoCom with the seemingly less strict Wassenaar Arrangement, which is in essence aimed at restricting exports to China.
Despite several reforms in recent years, the United States has retained a relatively strict export control policy toward China. In 2007, the U.S. Department of Commerce published the “Revisions and Clarification of Export and Reexport Controls for the People’s Republic of China (PRC); New Authorization Validated End-User; Revision of Import Certificate and PRC End-User Statement Requirements,” stating that nine items such as aircraft and aircraft engines, avionics, navigation systems, and communications equipment “have the potential to contribute to” China’s military buildup, and are thus not allowed to be exported to China. The U.S. export controls seem to only target items concerning national security such as military and aerospace products, but the ambiguous criteria as well as complicated examination and approval procedures actually constitute a serious obstacle to China’s high-tech imports.
Of course, China could say “no” to unreasonable requests from Western countries, but Western-led international trade rules would place it under heavy pressure. China must seriously reflect on why it has sold rare earths at unreasonably low prices, and now even face groundless accusations by Western countries after paying a high environmental price.
The United States has implemented high-technology exports restriction to China for long time. During the Cold War, it initiated the Coordinating Committee for Multilateral Export Controls (CoCom) to put an arms embargo on socialist countries like China. After the Korean War broke out, a “China sub-committee” of the CoCom was established to impose stricter embargo on China than on the Soviet Union and Eastern European countries. Especially the forbade shipment of 207 items beyond the CoCom list were also forbade to China. After the end of the Cold War, the United States played a leading role in replacing the CoCom with the seemingly less strict Wassenaar Arrangement, which is in essence aimed at restricting exports to China.
Despite several reforms in recent years, the United States has retained a relatively strict export control policy toward China. In 2007, the U.S. Department of Commerce published the “Revisions and Clarification of Export and Reexport Controls for the People’s Republic of China (PRC); New Authorization Validated End-User; Revision of Import Certificate and PRC End-User Statement Requirements,” stating that nine items such as aircraft and aircraft engines, avionics, navigation systems, and communications equipment “have the potential to contribute to” China’s military buildup, and are thus not allowed to be exported to China. The U.S. export controls seem to only target items concerning national security such as military and aerospace products, but the ambiguous criteria as well as complicated examination and approval procedures actually constitute a serious obstacle to China’s high-tech imports.
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