WTO to examine China's rare earth export restrictions

The World Trade Organization will hold specials meetings on Tuesday to consider the United States, the European Union and Japan's request to establish special dispute settlement panels to examine China's export restrictions of rare earth.

At the heart of the debate is whether China unfairly imposes export restrictions, including export duties and quotas on rare earth materials.

Professor Liu Baocheng at the University of International Business and Economics believes that China is within their right to regulate certain exports in the WTO system.

"We are justified by clause 20 of the General Agreement on Tariffs and Trade within the WTO system to enjoy certain exceptions in regulating the exports of those exhaustible materials. But in the meantime they must be matched by the same pace, if not harder control on those domestic consumption and also domestic production."

However, Patrick Chovanec, associate Professor at the School of Economics and Management at Tsinghua University, disagrees, saying this case is very similar to the one brought against China last year where the WTO ruled against China.

"Many people see, in fact many people in China who take a close look at it say that this is essentially the same case and that the WTO is likely to rule against China on this. The key issue is that countries are allowed to impose restrictions on industries that do environment damage or that use restrictions to preserve precious resources but they have to do it in a nondiscriminatory way. It can't just be a disguise for favoring domestic competitors over foreign ones."

But China has reiterated that such restrictions are aimed at controlling environmental problems caused by rare earth mining and sustainable development.

According to the State Council's white paper on rare earth, China's rare earth reserves account for some 23 percent of the world's total, but the country supplies more than 90 percent of the rare earth products on the global market.

Liu Baocheng believes China should play more of a leadership role in bringing the the three powers together to find the best solution to this issue.

"China needs to play more of a leadership role on this issue, instead of a more defensive manner, but more proactively. As how to bring those major partners together. Instead of holding such a meeting in Japan, we should hold a meeting in Beijing as to find what those strategic viable and sustainable solutions, so instead of simply defending China's position at the moment."

Now China can reject the establishment of the panel on Tuesday, following this first request. However, the panel would then be established after a second request at the following meeting.