July 22, 2011

Gillibrand Presses China On Rare Earth Metals After WTO Rules Against China’s Export Restrictions

China Produces Over 95 Percent of World’s Rare Earth Metals, But Restricts and Bans Shipments of Exports

Washington, DC – After the World Trade Organization ruled earlier this month that China has violated international rules by restricting exports of raw materials used in clean technology products, U.S. Senator Kirsten Gillibrand (D-NY) pressed China’s Ambassador to the United States today to address her specific concerns over the country’s stronghold of rare earth elements (REEs). China accounts for over 95 percent of the world’s supply of REEs – minerals used in a broad range of household consumer products, as well as high-tech, clean energy and defense industry products that are vital for America’s economic future and national security. China’s restriction of export shipments creates an unlevel playing field among American companies. 

Senator Gillibrand wrote in a letter to Ambassador Zhang Yesui, “This is deeply disappointing and harmful to the interests of both of our countries, as well as the global community at large… China’s quotas, and the reported leveraging of its supply monopoly to force companies to shift production to China, have the potential to unfairly undermine the competitiveness of U.S. companies and to mitigate the benefit of years of American investment in the research and development innumerable green technologies.”

Earlier this month, the World Trade Organization (WTO) announced that China violated WTO obligations by restricting exports on raw materials, with last year’s supply at an all-time low. While the WTO’s decision does not specifically address rare earth elements, China increased export restrictions last year on more than a dozen rare earth metals. Senator Gillibrand expressed concerns at the time and is now reiterating her call for China’s Ambassador to reexamine the country’s rare earth policies.

Full text of Senator Gillibrand’s letter is below:

Your Excellency,

It was a pleasure to meet you earlier this year.  I am writing to follow up on our conversation regarding issues such as the lack of adequate exports of rare earth elements, where I had hoped to see improved cooperation between our countries.

This month, the World Trade Organization (WTO) dispute settlement panel found that export restraints imposed by China on certain raw materials are inconsistent with China’s WTO obligations.  Only a few weeks after this WTO decision, China released its new annual quotas for rare earth exports without significantly altering these limits, thus making further disputes over Chinese export restraints likely.  As you know, last year’s quota was at a significantly reduced level from previous years. This is deeply disappointing and harmful to the interests of both of our countries, as well as the global community at large.

Last year, I had written to you regarding my concerns that China’s rare earths policies would stifle renewable and alternative energy production and violate China’s WTO obligations.  I am concerned that China’s recently released export quotas on rare earths reveal a misunderstanding of the seriousness of the broader concerns of the countries that brought the export restraint case to the WTO.   Although the WTO case did not directly address China’s export restraints on rare earth elements, the underlying decision is widely viewed as applicable to China’s policies in this area as well.

I believe that China and the United States stand to mutually benefit from future clean technology

collaboration that is undertaken fairly and in good faith.  However, as the exporter of more than 90 percent of rare earth metals by weight, China’s export restrictions stifle these opportunities.  China’s quotas, and the reported leveraging of its supply monopoly to force companies to shift production to China, have the potential to unfairly undermine the competitiveness of U.S. companies and to undermine the benefit of years of American investment in the research and development of innumerable green technologies.

I hope that the government of the Peoples’ Republic of China will reexamine its rare earth export policies and work with the United States, WTO, and other members of the international community to ensure that we maintain a level playing field as we work collaboratively to develop more efficient and environmentally sustainable mining methods, better recycling technologies and new alternatives to rare earth elements.