Research On The Dispute Over China’s Rare Earths Export Restrictions

Rare earths refer to17metal elements on the periodic table. Due to their excellent special physical properties, such as magnetism, luminescence, and strength, their application field is very broad. Known as "industrial vitamins", rare earths are important industrial raw materials to a mass of high technology defense weapons, as well as lubricant to many hi-tech industries such as electronics, laser, nuclear industry, superconducting.China has supplied a large amount of cheap rare earths to the rest of the world for a long time, making a significant contribution to other industrial countries, while causing great damage to domestic rare earths conservation and environment. Chinese government has implemented a range of policies and measures to tighten its control over the production and export of rare earths since2005, raising strong protests among U.S^Japan and EU, which concern that the sharply raised price caused by the decreased export volume of rare earths would weaken the competitiveness of their own companies. The dispute between the parties draws the extensive attention worldwide.This paper is developed against the background of China’s Rare Earths Dispute in2012, trying to clarify which measures adopted by China in restricting export are inconsistent with WTO rules and China’s accession commitment through detailed analysis of the evolution of China’s rare earths export policy, hoping to make comments on this issue objectively, and put forward several enlightenments with reference to the Panel Report to better protection of China’s rare earths.This paper consists of five parts:Part1presents the background of the China’s rare earths disputes and the latest progress of this Dispute, combing and reviewing some domestic and abroad research achievements on the issue, proposing the innovations as well as the insufficiency of this paper.Part2,"Challenges Encountered by China’s Rare Earths Export Policy", could be divided into five sections:The first section sets forth the three stages of the evolution of China’s rare earths export policy according to different policy guidance:exports encouragement、exports restrictions and strict control of rare earths exports. This section also clarifies the main reason of China’s policy shifting to strict restriction from two aspects:the over-exploitation of domestic rare earths conservation and the serious damage to the environment. But due to restrictions of the existing export restrictions under the WTO/GATT rules and China’s accession commitments to cancel export restrictions, compared to policies and measures adopted by United States and Japan to protect domestic rare earths resources, China’s export control over rare earths is vulnerable to be challenged.Part3is the main part of this paper, introducing several factual aspects and legal aspects of the Panel on this Dispute. The factual aspects of this Dispute involve China’s export duties and export quotas on rare earths as well as the qualification management of exporting enterprise. The legal problems focus on whether China has the right to quote Article XX of GATT1994, whether China’s export duties could quote Article XX (b) of GATT1994, whether China’s export quotas could quote Article XX (g) of GATT1994. The forth section brings two positive places of the Panel Report of China’s Rare Earths Dispute:one is that one panelist is of the view that the general exception provisions of the GATT1994are available to China, the other is that panel agrees with China’s comprehensive conservation policy and China’s efforts made to protect rare earths resources and domestic environment.After losing in this Dispute, China will have to eliminate export duties and export quotas on rare earths. But how to maintain rare earths conservation in a manner consistent with WTO rules and China’s accession commitment will be the focus of China’s future efforts. Part4of this paper gives inspiration to the following points with fully reference to the experience of U.S. and Japan:transform the traditional trade policies and measures, be strict with legislation and law enforcement of rare earths industry access and environmental protection, tighten control and management of rare earth mining and production;subdivision and reasonable positioning of rare earth elements, establish rare earths resources stockpile; increase R&D investment to improve the utilization and recycling of rare earths elements, realizing the sustainable development of rare earths industry.Part5is the conclusion of the article, briefly summarizing basic content of this paper.