China's latest rare earth move disappoints EU, US

Fri Jul 15, 2011 8:56am GMT

By Michael Martina and Ruby Lian

BEIJING/SHANGHAI (Reuters) - China eased export curbs for rare earth elements on Thursday, restoring them to near-2010 levels in a bid to appease trading partners, but the European Union said the move did not ensure stable supplies and the United States said the Chinese were heading the wrong way.

China accounts for around 97 percent of the world's output of the 17 rare earth metals, which are crucial for global electronics production and the defense and renewable-energy industries. They are are used in a wide range of consumer products, from iPhones to electric car motors.

This year's second set of export quotas on the minerals made up for previous cuts and it came just a week after the World Trade Organization ruled against China's curbs on a different mix of raw materials, which some trade partners say could set a precedent.

The EU and the United States were not satisfied.

"This is highly disappointing and the EU continues to encourage the Chinese authorities to revisit their export restrictions policy to ensure there is full, fair, predictable and nondiscriminatory access to rare earth supplies as well as other raw materials for EU industries," EU trade spokesman John Clancy said in an e-mailed statement.

In Washington, the U.S. Trade Representative's (USTR) office said China was moving in the wrong direction because Beijing's latest move expands the scope of products covered by the quota, which for 2011 represented a 40 percent decrease from 2009.

"We continue to be deeply troubled by China's use of market-distorting export restrictions on raw materials including rare earths," USTR spokeswoman Nkenge Harmon said.

"This is not the direction that China should be headed in. We will continue our efforts to engage China in the most constructive ways possible, through both bilateral and multilateral mechanisms, to address its continued use of raw materials export restrictions," Harmon said.   Continued...

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