China, rare earth minerals and the WTO

China’s wrist’s been slapped by the WTO over its restricting of its exports of rare earth minerals including bauxite, magnesium, zinc and silica of which China is the leading producer according to The Economist this week. This is a topic gaining momentum and has been blogged about on this site on a number of occasions recently (here and here). In 2009 the US, EU and Mexico lodged complaints at the WTO arguing that “China’s policies gave domestic firms that use these commodities an unfair competitive advantage, while also restricting world supply of these inputs and causing their prices to soar.”

Part of China’s defence is that it was driven by its desire to protect the environment from the pollution caused by the mining of these minerals, rather ironic perhaps from a nation where one new coal fired power station is built every week. Anyway, the WTO has ruled that these restrictions are illegal and now China has 60 days to lodge an appeal.