Ministry opposes disclosure of WTO report on rare earth disputes

The Ministry of Commerce said China strongly opposes disclosure of an interim World Trade Organization report that disfavors the nation's claim in its rare earths disputes with other countries.

"The case is under panel examination, which is not open. Before the panel develops a final report, any move to disclose the panel examination is under suspicion of violating the WTO rules," the ministry said in a note e-mailed to China Daily.

The Financial Times reported on Wednesday that the WTO has concluded that restrictions by China on the exports of rare earths are not in line with WTO rules. The newspaper cited sources in countries that have challenged the Chinese measures, but said the WTO had not yet issued its findings.

The case concerns the 17 rare earth metals, as well as tungsten and molybdenum, which are widely used in advanced technologies for defense, electronics and renewable-energy industries.

They can be found in products such as iPhones, disk drives and wind turbines. China accounts for about 97 percent of world output of the 17 rare earths. The United States, the European Union and Japan accused China of trying to hold down prices for its domestic manufacturers.

In March 2012, the three countries filed a formal complaint to the WTO challenging China's restrictions on exports of the minerals. In July 2012, the WTO set up a panel to look into the dispute.

Japan's ministry of economy, trade and industry confirmed the existence of an interim report but would not comment on its contents, including the ruling, and the WTO declined to comment, the newspaper said.

"We do not comment on the content of the reports," the Ministry of Commerce said. "China has reiterated its policy of protecting resources and the environment for sustainable development. It has no intention of favoring domestic industry through distorted trade."

The final report was expected around the year-end.

Tu Xinquan, deputy director of the China Institute for WTO Studies at the University of International Business and Economics, said that China has little hope to win the case, and the government will have to stop rare earths export tariffs. The EU, the US and Mexico won a similar case against China in January 2012 concerning other raw materials.

Gao Wei, general manager of Shanghai Huaming Gona Rare Earth New Materials, said he welcomes the removal of the current tariff and quota systems that have weakened Chinese rare earth competitiveness in terms of pricing. Chinese products are priced higher than their foreign rivals because of the tariff and quota systems.

"The lifting of the quota and reduction of tariffs will help domestic producers digest their massive volumes of rare earths and bolster the production of medium and heavy rare earths," Gao said.

Du Shuaibing, an analyst with Baichuan Information, said China might remove the export quotas on light rare earths but keep ones on medium and heavy rare earths, which have smaller production volumes compared with light rare earths.

He said the opening up of the market will have a positive effect on rare earth pricing in the country, where the price has been greatly affected by the policies.

Contact the writers at lijiabao@chinadaily.com.cn and wangzhuqiong@chinadaily.com.cn