A Study On The Problems Of Rare Earth Export In China Under The Framework Of WTO

Rare earths are important strategic resources, and have the laudatory name of "industrial vitamin". Because of the special structure, the rare earth elements have good features, such as light, electricity, magnetic, heat, and play an irreplaceable role in the field of fluorescence, magnetism, catalysis, optical fiber communication, hydrogen energy storage and superconducting materials. Therefore, rare earth directly affects the industry of electronics, communications, automotive, energy, aerospace, nuclear energy and so on. Deng Xiaoping once said:"the Middle East has oil, while China has rare earths." China’s rare earth reserves account for about half of the world’s reserves, and the production and exports of rare earth of China rank first in the world. China has played a very important role in the international rare earth trade. But due to various reasons, we fail to get enough benefit from rare earth trade. The resource advantage has not converted into industrial advantages and economic advantages in our country and our export was controlled by others. China is a big country in the field of rare earth, but not a powerful one.This paper attempts to point out the existing problems and find out the reason of the awkward situation of our rare earth export through the analysis of the status quo. Then it puts forward some countermeasures for relevant problems, hope to provide some useful suggestions for government and enterprises.This paper has been divided into six chapters:Chapter I is the introduction. It presents the research background and significance of this paper, has a look at the domestic and foreign related references and research achievements. Then it indicates the research train of thought and the framework, and points out the innovation and deficiency of this paper.Chapter II introduces the relevant theories of this paper, including factor endowment theory, game theory, pricing related theories and the external effect theory, and then explains the applicability of these theories to this paper.Chapter Ⅲ gives an overall analysis of China’s rare earth export situation and put forward the existing problems. First of all, it analyzes the international market from the angle of supply and demand, and points out that China is not the only country which has rare earth resources, but for a long time China almost supplies the whole consumption of the international market. And the rare earth in China has a problem of overcapacity; the annual production capacity is greater than the international market demand. Then through the contrast with the rare earth policies of some developed countries, we found that these countries almost closed their rare earth minerals and paid a high attention to the protection of their own resources, then turned to imports from China in order to meet consumption and even a large number of reserves. Then this chapter analyzes the present situation of China’s rare earth export trade in details:low export price, giant export, and export destination concentrating on a few developed countries. Finally in view of status quo of rare earth export in China, it puts forward the relevant issues:the loss of resources in a low price; the serious environmental problems brought by rare earth mining and production; many problems coming from the imperfect quota system including smuggling, the illegal reselling of quote, international trade disputes, etc., which poses a great challenge to current China’s rare earth policy. Therefore, we can say that China’s rare earth export has been in a situation with problems both from inside and outside of our country.Chapter IV has a deep analysis of the existing problems of the rare earth export in China. It points out the reasons of the lack of pricing power:resource overexploitation, excessive trade; low industry concentration, vicious competition of the domestic enterprise; buyer’s monopoly; ignorance of the environmental costs; the position in the lower end of the rare earth industry chain. Then it has an analysis of China’s rare earth export quotas policy, points out that the purpose of our country of implementing the quota system is to protect resources and environment, promote industrial upgrading, so China’s rare earth export quotas has legal basis and does not violate WTO rules. Finally after the analysis of our country international litigation environment about rare earth, we believe that the current international litigation has a great similarity with the law case in2009between China and America, Europe, Mexico. Therefore, the loss of raw-materials case has cast a shadow over our country international litigation of rare earth.Chapter V is the countermeasures and suggestions to improve China’s rare earth trade. To gain the initiative in rare earth trade, we must recapture the export pricing power of rare earth, so we should establish rare earth reserves, strengthen the industry consolidation, adjust the rare-earth taxes and fees, and improve the industrial chain. When dealing with the rare earth international litigation, we should be well prepared. And citing GATT1994article20"general exception" clause should meet the relevant conditions, in addition, we can also try to invoke GATT1994article21"security exception" clause for exceptions. At the same time, in order to ensure the sustainable development of rare earth exports of our country, we should improve the policy of export quotas, promote industry standards, and strengthen management and environmental protection.Chapter VI summarizes this paper and has a conclusion.