Abdul A. Zahra B. Franklin B. DS431: China — Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum Abdul A. Zahra B. Franklin B.

History and Context Rare Earth Elements and their importance Lanthanum This is the primary metal used in the ever-so-important battery. With the help of a bit of nickel, lanthanum enables more power to be stored in a smaller space, making the hybrid cars more efficient Erbium Erbium and its pink-colored ions can produce a very mechanically simple stream of light particles that's handy for everything from fiber optic cables to dermatology equipment. Europium is used in glass and lasers. However, europium is a little bit more versatile and is used to produce everything from to the anti-counterfeiting technology in European bank notes to the red in TV and smartphone displays.

History and Context Cerium is useful for TV screens and lighting Rare Earth Elements and their importance Cerium is useful for TV screens and lighting Neodymium This metal makes great magnets that tend to be used in guitar pickups, microphones and in-ear headphones. Yttrium is another rare earth-metal used to create red pixels.

History and Context Global rare earth element production (1 kt=106 kg) from 1950 through 2000, in four categories: United States, almost entirely from Mountain Pass, California; China, from several deposits; all other countries combined, largely from monazite-bearing placers; and global total. Four periods of production are evident: the monazite-placer era, starting in the late 1800s and ending abruptly in 1964; the Mountain Pass era, starting in 1965 and ending about 1984; a transitional period from about 1984 to 1991; and the Chinese era, beginning about 1991.

History and Context Modern technologies (military and green industrial goods) are powered in part by most of rare earth-metals which, as the name implies, are hard to come by Everywhere in the world except in China, they are difficult to mine. China controls 97% of these minerals Beijing currently extracts between 95 to 97% of REE world’s supply Increase vulnerability of high tech industries in US, EU and Japan to Beijing mineral policy Environmental degradation and resource depletion provoked by its REE overexploitation

History and Context Limit rare earth exports, with the intention of reducing mining without cutting supplies to its domestic downstream factories The supply difficulties faced by the most technologically advanced non-Chinese companies in obtaining Beijing natural resources significantly worsened in 2010, China decided a marked 40% reduction on exports of rare earths Increase of the prices of rare earths at international level +Decrease of REE domestic costs, amounting on average to nearly half of international prices = significant competitive advantages for the Chinese manufacturing industry to the detriment of foreign competitors.

Major Parties Involved Major Complainants: Respondent: US China EU Japan

America Announces WTO Case Obama announces WTO case against China over rare earths (Video) https://www.cnn.com/2012/03/13/world/asia/china-rare-earths-case/index.html

Main WTO ISSUE March 2012, The United States sought consultations with China to review Chinese restrictions on the export of rare earths The US contested that the Chinese were in violation of the following articles of the GATT 1994: · VII- Valuation for Customs Purposes · VIII- Fees & Formalities connected with Importation and Exportation · X- Publication & Administration of Trade Regulations · XI- General Elimination of Quantitative Restrictions

Main WTO ISSUE The United States Disputed Chinese Restrictions that included: Export Duties Export Quotas Minimum Export Price Requirements Export Licensing Requirements Quantitative Restrictions

Dispute Formulation origins (1) ·Violation of China’s Protocol to Accession: Paragraph 2(A)2- shall apply and administer in a uniform, impartial manner all its laws regulations and other measures of the central government as well as local regulations rules and other measures. 2(C)1- China undertakes that only those laws, regulations pertaining to or affecting trades in goods, services or the control of foreign exchange that are published and readily available to other WTO members shall be enforced.

Dispute Formulation origins (2) (5.1) -Right to Trade- China shall progressively liberalize the availability and scope of the right to trade (5.2)- Except as otherwise, oil foreign individuals and enterprises including those not contested shall be accorded treatment not less favorable that accorded to enterprises in China with respect to trade. (7.2)-China shall eliminate and shall not introduce, re-introduce non-tariff measures that cannot be justified under the provisions of the WTO. (8.2)- Foreign individuals and enterprises and foreign funded enterprises shall be accorded treatment no less favorable than other individuals and enterprises. (11.3)-Eliminate all taxes and charges applied to exports unless specifically provided for in Annex 6 of this Protocol or applied in conformity with the provisions of Article VII of the GATT 1994.

Dispute Formulation origins (3) China Defence: China claims that its export restrictions are perfectly in with WTO rules In particular with the general exceptions clause of the GATT, i.e. Article XX. According to the official statements of the Ministry of Commerce (MOFCOM), Beijing rare earth policy aims to protect resources and environment, and realize sustainable development, therefore excluding any Chinese intention of restricting free trade or protecting domestic industries through trade-distorting measures.

Chinese Defence of Export Quotas China Says Rare-Earth Restrictions "Appropriate" https://www.youtube.com/watch?v=-xcb7BjoAbE

GATT Article XX Subject to the requirement that such measures are not applied in a manner which would constitute a means where the same conditions prevail, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures: (a) necessary to protect public morals; (b) necessary to protect human, animal or plant life or health; (c) relating to the importations or exportations of gold or silver; (d) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, including those relating to customs enforcement, the enforcement of monopolies operated under paragraph 4 of Article II and Article XVII, the protection of patents, trade marks and copyrights, and the prevention of deceptive practices; (e) relating to the products of prison labour; (f) imposed for the protection of national treasures of artistic, historic or archaeological value

Panel Proceedings Jun 2012 The US requested the establishment of a panel which was deferred by the DBS. A month later the DSB established a single panel to examine the dispute. The following nations reserved their third-party rights: Brazil, Canada, Colombia, The European Union, India, Japan, Korea, Norway, Oman, Saudi Arabia, Chinese Taipei, Viet Nam, Argentina, Australia, Indonesia, Peru, the Russian Federation, and Turkey. September 2012 The three main complainant parties (The US, The EU and Japan) requested that the Director General compose the panel. March 2013 The Chair of the panel informed the DSB that the panel expected to issue the final report by November 2013 in accordance with the adopted timeline of the participating parties. March 2014 the panel report was circulated to Members, the WTO ruled against China, saying the quota system was discriminatory and gave unfair advantage to domestic firms

Appellate Body Proceedings April 2014 Following the Panel Report from the DSB both the US and China filed separate appeals to the Appellate Body. The appeals concerned certain issues of law covered in the panel report and legal interpretations that the panel developed. August 2014 After receiving all relevant dispute from all major participating parties, the Appellate Body issued three App Body reports in one single document. The App Body Report upheld the panel report.

Implementation September 2014 China announced it intended to implement the recommendations and rulings of the DSB in a reasonable period of time according to WTO obligations December 2014 Both parties informed the DSB that they had agreed the period of time would be 8 months and 3 days from the adoption of the Appellate Body and panel reports. That period of time would expire by May 2015.

Implementation Jan 2015 China has put an end to the export quotas for rare earths Under the new guidelines announced by the Ministry of Commerce, there is no ceiling on the amount of rare earths that can be sold abroad. However, companies are required to have a license to export them. The ministry also abolished export quotas of tungsten, molybdenum and fluorspar. In December, the government decided to keep export tariffs on rare-earth minerals unchanged, and the abolition of the quota system was the only remaining option to comply with WTO rule.

Observations The landmark ruling by the WTO in the case 'WTO-Plus' Obligations/ Fairness Political nature of the dispute