The European Union launched a second challenge of China's export restrictions on raw materials including 17 rare earths, as well as tungsten and molybdenum.
Together with the US and Japan, the EU formally requested dispute settlement consultations with China in the World Trade Organisation (WTO). This follows a successful EU challenge at the WTO on similar restrictions for other raw materials earlier this year.
"China's restrictions on rare earths and other products violate international trade rules and must 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 EU Trade Commissioner Karel De Gucht. "Despite the clear ruling of the WTO in our first dispute on raw materials, China has made no attempt to remove the other export restrictions. This leaves us no choice but to challenge China's export regime again to ensure fair access for our businesses to these materials."
China imposes a set of export restrictions, including export quotas, export duties and additional requirements that limit access to these products for companies outside China. These measures significantly distort the market and favour Chinese industry at the expense of companies and consumers in the EU.
The EU considers that these restrictions are in violation of general WTO rules and also of China's specific commitments on export duties as part of its WTO Accession Protocol. Earlier this year, the WTO confirmed the EU's claim that China's export restrictions on a different set of raw materials were incompatible with WTO rules.
Despite this recent ruling, China has not sent any signals that it would remove its wider export restrictions. The latest rare earth quota announcements further tighten the restrictions. Therefore, the EU decided to launch a second challenge on rare earth elements, tungsten and molybdenum. The EU hopes that these WTO consultations will lead to a satisfactory solution with China.
The EU supports and encourages all countries to promote an environmentally friendly and sustainable production of raw materials. However, the EU believes that export restrictions do not contribute to this aim; there are more effective environmental protection measures that do not discriminate against foreign industries.