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Rare-earth tensions set to rise

By Song Shengxia (Global Times)

08:24, July 24, 2012

China said Monday it regretted a request by the EU, US and Japan to set up a dispute settlement panel by the World Trade Organization (WTO) to investigate into China's export policies on rare earths, tungsten and molybdenum and said its policies are aimed at protecting natural resources.

China's response came after WTO announced Monday to set up the panel at the request of the EU, US and Japan to resolve the dispute over China's rare-earth export policy.

China's policies concerning the products at issue are aimed at protecting natural resources and achieving sustainable economic development, and China has no intention of protecting the domestic industry through means that would distort trade, China's delegation at meeting of the WTO Dispute Settlement Body on Monday said in a statement forwarded to the Global Times by the WTO.

"The formation of the panel means the dispute between the four parties has flared up and the case has entered into the judicial procedure," Tu Xinquan, associate director of the China Institute of WTO Studies at University of International Business and Economics, told the Global Times Monday.

China has already rejected a request from the EU, US and Japan for the panel to rule on their complaint on the alleged rare-earth export restrictions on June 10.

Under the WTO's dispute settlement regime, China would not be able to reject the request for the second time after the complainants made the second request, Tu said.

In March, Japan, the US and EU filed a joint case with the WTO, accusing China of unfairly limiting its rare-earth exports.

The focal point of the dispute is whether China imposes rare-earth export quotas to protect its environment and exhaustible natural sources or the quotas are aimed at shielding domestic industries, which amounts to trade distortion.

"China's intent to protect the environment through management of rare-earth exports can not be questioned. Rare-earth export management is not just for the benefit of China but also for the whole world, as unrestricted mining and trading could lead to depletion of the rare resources," Bai Ming, a researcher with the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, told the Global Times.

"Export management is just one of the many measures that China is taking to protect the environment and preserve resources, and the country has also taken other measures such as industry consolidation and mining restriction," Chen Zhanheng, vice secretary-general of the Association of China Rare Earth Industry, told the Global Times.

China will cut the number of rare-earth mining licenses to 65 within three years and release a higher market access standard for miners soon, the Ministry of Land and Resources announced last week.

"China may remove the export quota in the future after the rare-earth industry is consolidated and well-regulated but currently the quota is still very effective in curbing excessive mining and environmental damage," Chen said.

"The quota will not affect the use of the resources by other countries. In fact, China's rare-earth export quota was not even used up by foreign countries last year," he said.

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