U.S. presses China on rare-earth quotas

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WASHINGTON, March 13 (UPI) -- The United States has filed a case at the World Trade Organization against China's restrictions on rare-earth exports, officials said Tuesday.

The office of the U.S. Trade Representative Ron Kirk announced the filing, saying the complaint starts with a request for consultations.

This is the initial step in a complaints process at the WTO. Under WTO rules, consultations are resolved within 60 days or they go to the next level of the judicatory process.

"China continues to make its export restraints more restrictive, resulting in massive distortions and harmful disruptions in supply chains for these materials throughout the global marketplace," Kirk said in a statement.

The rare-earths, a collective name for 17 metals, are crucial in the manufacture of a host of items, from iPods, low-emission cars and computers to missiles, and China has 95 percent of the world's rare-earths.

The trade office said the case was filed jointly with Japan and the European Union.

The trade case is expected to show China has a near-monopoly over such critically needed materials, The Washington Post reported.

China has not been concerned about showing its dominance over the rare-earths market as happened in 2010 in a territorial dispute with Japan.

In that incident, the Post said China halted the shipment of anything with rare earths to Japan, causing a temporary panic among electronics manufacturers.

China lately has restricted its rare-earth exports, saying the substances are needed for domestic use. The United States planned to show such export restrictions give Chinese companies an unfair advantage, the Post quoted U.S. officials as saying.

The Trade Representative's office said China "imposes harmful export duties on rare earths, tungsten and molybdenum." Through various pricing policies, China manipulates the market to restrict exports and drive prices up for companies that compete against Chinese firms, the statement said.

"In all, China's export restraints on the materials at issue in this dispute cover more than 100 tariff codes," the statement said.

Reacting immediately to the U.S. plans, China's official news agency Xinhua in a commentary Tuesday said the U.S. decision against its rare-earth export quotas "is likely to hurt bilateral trade ties and trigger a backlash from China instead of settling the rift."