Is the U.S. Being Unfair in China Rare Earth Complaint? Debate Rages
March 19, 2012 3:55 PM
Is China playing a clever capitalist or malicious miscreant?
To the victor go the spoils, they say. But the U.S. isn't happy with China's control of over 95 percent of rare earth metal production. It's
lodged a formal complaint
World Trade Organization
, with President Barack Obama accusing the Asian economic giant of playing dirty.
I. Once the U.S. Was a Rare Earth Leader
The earliest mining of rare earth elements came from placer sands in India and Brazil. Then in the 1950s, South Africa took the lead with its rare earth containing monazite deposits. Between the 1960s and 1980s, Mountain Pass mine in California was a leading producer.
Then came the red giant. China, which owns an estimated third of the world's rare earth deposits, pumped up production in Inner Mongolia in the 1990s, putting price pressure on American and other producers. It worked. The Mountain Pass mine was shuttered in 2002, and with it the majority of American rare earth mineral mining.
Slowly China came to dominate rare earth metal production, a realm once dominated by the U.S. (neodymium magnets pictured) [Image Source: Doug Kanter/Bloomberg]
But in their quest for ever more-efficient power electronics, electric vehicle makers, flat-panel television makers, wind turbine makers, and solar panel makers all turned to this category of scarce resources. In short, rare earth minerals suddenly became a prized commodity, just as the U.S. exited the market and China cornered it.
China responded by imposing a
2010 cap on exports
, which continued into 2011. The artificial ceiling limited exports and sent prices soaring,
the electronics, alternative energy, and automotive industries.
That pain finally boiled over in the form of the trade complaint filed by the EU, U.S. and Japan last week.
II. Tough Talk
"We met at least a half a dozen times with the other countries that joined us. And I'm not talking about 'howdy dowdy' kind of meetings. These were three and four day-long sessions of going through legal issues," a U.S. official is
as saying. "Literally thousands of pages of Chinese language documents needed to be found, translated and analyzed."
Fertile sands: a laborer moves earth at a Chinese company's Inner Mongolia rare earth metal mining facility [Image Source: Stringer Shanghai/Reuters]
U.S. Trade Representative
Ron Kirk views this as a case of a fresh player not wanting to play by the rules. He states:
In fact China adds a small fraction of value to such a product - as reflected in the final price - usually at the assembly stage. China's share is well below 10 percent. Our businesses, as a general rule, really do believe, and maybe it's that American spirit, let me go compete in the global market and I'll accept that if (my friend) has got a better idea she wins and sometimes I'll win. But you've got to promise me that the deck's not going to be stacked.
I'm not saying you can't have state-owned enterprises. But how do we determine to give my businesses and competitors the sense that they truly are operating as independent market-driven entities?
Ironically the U.S. effort received a boost from a WTO
to the EU in a complaint about subsidies the U.S. government paid to The Boeing Comp. (
), a Seattle, Wash. based firm and top aircraft contractor. The U.S. has an almost identical counter-complaint about EU subsidies to Airbus, a subsidiary of the European Aeronautic Defence and Space Company N.V. (
In the WTO complaint, judges set in place new guidelines. Under these rules, if a nation refuses to reveal information on subsidies (as the U.S. did with Boeing) it will "draw negative inferences" -- assume the worse. This could be a fatal policy for China who reportedly hasn't published information on
any of its subsidy efforts
in five years.
III. Is the U.S. Being Unfair?
But some say the U.S. and Europe are being unfair to China. While China doesn't necessarily have
the best environmental track record
, expanding rare earth production could damage the Mongolian wilds, as well as put miners' lives at risk. Also, there is some irony that the U.S. and European authorities are irate at China for playing skillful entrepeneur at driving a hard bargain when it comes to rare earth resources.
Jonathan Fenby, head of China research at
, says that China is a convenient whipping boy for American politicians, stating, "I think that in this electoral season (in France and the United States), China-bashing is on the rise. Hence the action. China is an obvious easy candidate and it is interesting that in the U.S. the Republicans, normally free traders, have gone for China."
But he warns that the WTO complaints and tough rhetoric may backfire, commenting, "If China hits back, how important is the Chinese market to Western firms, and what is the impact on foreign companies that rely on China for assembly such as Apple?"
Pushing China too hard could backfire, particularly for U.S. companies like Apple who rely on the nation to produce their products. [Image Source: PocketLint]
China isn't above such petty retaliation. It recently sunk a $12B USD Airbus deal after the EU moved to enforce carbon taxes on it. With the manufacturing futures of virtually every American devicemaker --
, Inc. (
) -- on the line, Mr. Fenby argues that America may have more to lose than the Chinese.
"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA
Famed Writer/Monologist Caught Lying About Much of Apple China Exposé
March 18, 2012, 3:15 PM
Obama Blasts China in WTO Complaint, China Claims it Can't Stop Hoarding
March 14, 2012, 4:14 AM
Unlike U.S., China's Smaller Electric Vehicle Plan Puts Local Firms First
May 9, 2011, 1:44 PM
China's Stranglehold on Rare Earth Metals Could Choke EV, Hybrids
April 30, 2010, 11:41 AM
Hybrids, EVs More Dangerous to U.S. Security Than Foreign Oil, Says Expert
April 19, 2010, 11:31 AM
Car Insurance - The Hidden Discriminatory Practise
October 18, 2016, 5:00 AM
End of the Road for the Audi R8 e-tron
October 15, 2016, 5:00 AM
Paralyzed Race Car Driver Recieves Nevada License
October 12, 2016, 5:00 AM
Take a Glance at the Cars of the Paris 2016 Motor Show
October 4, 2016, 5:00 AM
Automaker Porsche may expand range of Panamera Coupe design.
September 18, 2016, 11:00 AM
Uber - Everyone's Autonomous Car Driver?
August 20, 2016, 6:01 AM
Most Popular Articles
Car Insurance - The Hidden Discriminatory Practise
October 18, 2016, 5:00 AM
Tesla Announces Level 5 Autonomous Driving
October 19, 2016, 8:30 PM
Apple iOS Contains Secret One-handed Keyboard Code
October 22, 2016, 5:00 AM
Thieves Love iPhones – More than $13,000 Stolen from Apple Store
October 21, 2016, 7:13 AM
Do you hate to do yard work?
October 20, 2016, 5:00 AM
Latest Blog Posts
Key EpiPen Competitor Out in 2017 At ' Very Low' Cost
Oct 27, 2016, 5:30 AM
Researchers use CRISPR to Accelerate Search for HIV Cure
Oct 26, 2016, 5:00 AM
Medical Council of India Makes Generic Medicines Mandatory
Oct 25, 2016, 5:00 AM
MacBoo Pro 2016: Release date Oct. 27
Oct 24, 2016, 7:16 AM
Mac Users, Try this if Your Mac is Infected?
Oct 23, 2016, 7:00 AM
Tips to Prevent Smartphones From Overheating:
Oct 22, 2016, 5:00 AM
Nasa Flies Drones at Nevada Airport
Oct 21, 2016, 8:21 AM
T-Mobile Data Problems
Oct 20, 2016, 10:17 AM
Annoying Apple Watch Problems and How to Fix Them
Oct 20, 2016, 5:00 AM
Your Mail May Soon Be Delivered By Robot
Oct 19, 2016, 9:34 AM
2018 Jeep Wrangler Prototype Sells At Junkyard
Oct 18, 2016, 5:00 AM
Samsung Shines with Gold Edition Tablet
Oct 17, 2016, 9:24 AM
Tesla Hints Mysterious Product Debut for October 17th
Oct 16, 2016, 10:14 AM
Samsung Galaxy Note 7 Phones on US flights
Oct 15, 2016, 5:00 AM
Comcast Fined $2.3 Million For Unconfirmed Services Charged To Customers
Oct 14, 2016, 5:00 AM
“American singer / songwriter “Bob Dylan is awarded 2016 Nobel Prize in Literature.
Oct 13, 2016, 10:33 AM
Battery Defect in Medical Device
Oct 12, 2016, 5:00 AM
More Blog Posts
Copyright 2016 DailyTech LLC. -
Terms, Conditions & Privacy Information