Foreign allies urge WTO to settle China rare earth dispute

The European Union, the United States and Japan on Wednesday requested a dispute settlement panel at the World Trade Organization (WTO) after failing to resolve a battle over China's export restrictions on rare earth minerals, according to Reuters.

The move followed a complaint the three trade powers took to the WTO in March, the first they have launched jointly, and comes amid a series of clashes with China over economic issues, including the value of the Chinese currency.

"China's restrictions on rare earths and other products are violating its WTO commitments and continue to significantly distort global markets to the disadvantage of our companies," EU Trade Commissioner Karel De Gucht said in a statement. "We regret that we are left with no other choice but to solve this through litigation."

The case concerns the 17 rare earth metals, as well as tungsten and molybdenum, which are used in advanced technologies for the defense, electronics and renewable-energy industries. They go into products such as the iPhone, disk drives and wind turbines.

The damage done to European manufacturing runs into billions of euros because it is nearly impossible to diversify away from the Chinese supply, according to EU officials.

China accounts for about 97 percent of world output of the 17 rare earths and the three powers accuse Beijing of trying to hold down prices for its domestic manufacturers and pressure international companies into moving operations to China. The European Union and United States say this hurts their producers and consumers, as foreign companies pay up to twice as much as Chinese companies for rare earth metals.

In March, China described the trade complaint as unfair, arguing that it only controlled 90 percent of global production because other countries, notably the United States, had long ago closed their own rare earths refineries due to pollution concerns.

Beijing also says its export curbs aim to both control environmental problems and preserve supplies of an exhaustible natural resource. Refining rare earths requires large amounts of acid and also produces low-level radioactive waste.