Ifri-CIGS Op-Ed Series, "Rare Earths and the WTO: Tougher case than it looks"

Deepening their partnership, Institut français des relations internationales (Ifri) and the Canon Institute for Global Studies (CIGS) are launching a series of op-eds, written both by Ifri and CIGS experts. This new series aims at providing the European and Asian public with original and different visions on the rapidly evolving international affairs.

The European Union, the United States and Japan have finally decided to take their case on China's rare earth export policies to the WTO. China stands accused of violating the terms of its WTO accession agreement by limiting exports of rare earths and driving an artificial wedge between prices in China and prices abroad - in essence using its resource advantage to shelter nascent high-tech industries and even to coerce the transfer of foreign expertise. Beijing, meanwhile, argues that this is a purely internal matter motivated by the need to impose environmental restrictions on a highly polluting industry. Uncontrolled production practices have indeed wrought havoc on local environments and human health in rare earth-producing regions. The Chinese authorities argue that export permits and higher prices for rare earths are needed to allow industries to adapt to higher production standards - export tariffs and quotas being a useful tool in China's eye.

Ultimately, this issue is in dire need of adjudication and clear legal lines need to be drawn between environmental protection and resource protectionism. There has been some doubt in the last year as to whether a formal complaint would be made before the international body. Many questioned whether it was fortuitous to push China at a time when its help was needed on other pressing issues - notably the European debt crisis and the Iranian nuclear question. Some industries also worried that it might bring about repercussions in other parts of their business in China, and thus urged caution...