The U.S., Japan and European Union have banded together against China in a trade dispute over rare earths, a resource that is essential to the fabrication of advanced technologies in the defense industry, and for products like high definition TVs and smartphones.
The trio has filed an official complaint with the World Trade Organization, accusing Beijing of imposing quotas on the export of rare earths, thus hampering other countries’ ability to competitively manufacture related products. China is responsible for 90 per cent of the world’s supply of rare earths. “We want our companies building those products right here in America. But to do that, American manufacturers need to have access to rare earth materials which China supplies,” said U.S. President Barack Obama, quoted by Reuters.
China says the criticism is unfair, saying that Western countries have purposefully scaled back their own rare earths production due to pollution concerns. They say this has led to an over-exploitation of China’s reserves, and justifies the restrictions on rare earths exports from that country.
Regardless, as the Wall Street Journal reports, there’s evidence that China’s efforts to curb rare earths production have been futile. After decreasing the export quota in 2010, the newspaper reports that import data from Japan showed little change. In other words, some Chinese exporters simply ignored the new rules.
But rare earth prices have experience massive spikes due to supply constrictions. And, evidently, that has developed countries concerned.