US raising rare earth case against China may backfire

Updated: 2012-03-13 15:47


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BEIJING - The US decision to bring a lawsuit against China over its rare earth export quotas is likely to hurt bilateral trade ties and trigger a backlash from China instead of settling the rift.

US President Barack Obama Tuesday will announce the United States, together with the European Union and Japan, is to file a rare earth case against China at the World Trade Organization (WTO), senior White House officials said late Monday.

Rare earth metals are a group of 17 elements that are widely used in high-tech products, including iPhones, flat-screen televisions, lasers and hybrid cars.

US officials have claimed that China, by imposing rare earth export quotas, has given unfair competitiveness to domestic buyers and caused soaring prices on the world market. The accusations were rejected by the Chinese side, and for a good reason.

As a rule, the WTO allows members to take necessary measures to protect resources and environment, and considers it fair if export restraints are accompanied by simultaneous restrictions over domestic production or consumption.

China's rare earth export quotas just follow this rule.

Over the past decades, China, due to lack of a sustainable development strategy, made excessive exploitation of rare earth metals, which were sold at very low prices, and severe environmental problems occurred in many areas.

Therefore, China's current policy of implementing export quota policies on rare earth is quite reasonable.

To promote healthy development of the industry, besides imposing export quotas, China has also suspended the issuance of new licenses for prospecting and mining, adopted production caps and stringent environmental standards, and launched crackdowns on illegal mining activities.

But China has never adopted discriminatory policies against foreign companies in terms of rare earth supplies, as policies and treatment for both domestic and foreign companies are the same.

China is still contributing tremendously to the rare earth industry. China, whose reserves only make up one-third of the world total, currently accounts for nearly 90 percent of the global total production.

It is rash and unfair for the United States to put forward a lawsuit against China before the WTO, which may hurt economic relations between the world's largest and second-largest economies.

In face of such unreasonable and unfair charges, China will make no hesitation in defending its legitimate rights in trade disputes.

Therefore, a better choice for the United States would be sitting down with China face to face and solve the problem through negotiations instead of making it an internationalized issue.

Past experiences have shown that policymakers in Washington should treat such issues with more prudence, because maintaining sound China-US trade relations is in the fundamental interests of both sides.