US., EU, Japan gang up against China in trade war

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US., EU, Japan gang up against China in trade war

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The 3 trade powers accused Beijing of trying to hold down prices for its domestic manufacturers.

14 March,2012 10:14 am

The United States, Europe and Japan have joined forces to challenge Chinas restrictions on exports of rare-earth metals, escalating a trade row over access to some of the most important raw materials used in advanced technologies.In a formal complaint to the World Trade Organization (WTO), the three trade powers accused Beijing of trying to hold down prices for its domestic manufacturers and to pressure international firms to move operations to China.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, US. President Barack Obama said at the White House.Europes trade chief said Chinas restrictions violated international trade rules and had to be removed.These measures hurt our producers and consumers in the EU and across the world, including manufacturers of pioneering hi-tech and green business applications, said European Union Trade Commissioner Karel De Gucht.Rare earths are crucial for the defense, electronics and renewable-energy industries and are used in a range of products such as the iPhone, disk drives and wind turbines.Chinese state media described the trade complaint on Wednesday as rash and unfair.The accusations, which stress that Chinas rare earth policies have restricted global supplies, can hardly hold up, with demand only filling around half the export quotas last year, said state news agency Xinhua whose commentaries are generally seen as reflecting official views.Beijing set an export quota of 30,258 tonnes in 2011, but it exported only 16,861 tonnes over the year, according to official customs data. Industry executives said the fourfold increase in export prices over the past two years had encouraged buyers not only to relocate their operations to China, but also to develop alternative non-rare earth technologies. As prices began to decline in the second half of last year, China also sought to reduce supplies further, launching a crackdown in August to force domestic producers to shut down until they were proven to be compliant with state output quotas, industry consolidation plans and new environmental regulations. China has said its export curbs are needed to control environmental problems caused by rare earths mining and refining, and to preserve supplies of an exhaustible natural resource. Refining rare earths requires large amounts of acid, and produces low-level radioactive waste.Earlier on Tuesday, Chinas Minister of Industry and Information Technology Miao Wei said China was preparing to defend itself against a possible WTO case.