WTO Panel Backs Japan, U.S. EU over China Rare Earths

Geneva, Oct. 24 (Jiji Press)--A World Trade Organization dispute settlement panel has basically upheld the joint claim by Japan, the United States and the European Union that China's export duties on rare earths violate WTO rules, it was learned Thursday. This is the first case of Japan's direct complaint against China at the world trade watchdog. In a preliminary decision presented to parties concerned, the WTO panel says the export duties on rare earths, tungsten and molybdenum run counter to an agreement on abolition in principle of export duties that China adopted in 2001 when the country joined the WTO, informed sources said. The panel is expected to issue its final report in the light of opinions of the parties concerned as early as in mid-November. The parties are allowed to file an appeal with the Appellate Body, the WTO top court, if they are discontent with the report. The Chinese side has insisted that overproduction of rare earths will likely to lead to environmental destruction and hinder sustainable development of the rare earth industry. China has also said the export duties and rare earth export volume quotas are reasonable from the perspective of protection of the environment and natural resources. After unsuccessful efforts to solve the issue through bilateral talks with China, Japan, the United States and the EU jointly filed a complaint with the WTO in March 2012. In January 2012, China lost in a dispute at the WTO with the United State, the EU and Mexico over its export control on minerals including rare metals. China has taken corrective measures such as abolition of export duties. Japan depends on China for rare earths, key materials used for high-tech products such as motors of hybrid vehicles. But Japan is developing alternative materials and moving to obtain new suppliers since international prices of rare earths have soared due to China's export control and a near halt of China's rare earth exports to Japan in the aftermath of a collision incident involving a Chinese fishing boat and Japan Coast Guard ships off the East China Sea islands of Senkaku in Okinawa Prefecture in 2010. END