ANALYSIS-Raw materials present EU with trade, growth conundrum

Thu Nov 18, 2010 2:26pm GMT

* EU struggling to shape policy on raw materials

* Scarcity of materials threatens to depress EU growth

By Juliane von Reppert-Bismarck

BRUSSELS, Nov 18 (Reuters) - To fuel its economic recovery, Europe needs raw materials. But its efforts to acquire them are being frustrated by a mistrust of foreign supplies and internal disagreement over what a raw material is.

The European Union, the world's largest trading zone, has complained for years about non-EU countries restricting the export of essential materials used by European manufacturers to make products such as steel, semiconductors and light bulbs.

It has even taken China, one of the world's largest raw materials exporters, to the World Trade Organization for inflating the cost of materials via steep export taxes, a challenge that has been joined by the United States and Mexico.

But its efforts have done little to increase access to the ingredients it needs, and now China is threatening an even more restrictive policy, with plans for ceilings on exports of rare earths -- sought-after raw materials used in most high-tech products and a driver of the global economy.

The situation has prompted European policymakers and industry to try to come up with measures that will encourage countries to be more open with their resources. But it has also led to a debate about what exactly constitutes a raw material, and how much the EU should be making or buying from abroad.   Continued...

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