China prepares rare earths defense

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BEIJING, March 14 (UPI) -- China is preparing a case to defend itself and its policy on rare earths export restrictions in response to a complaint filed by the United States, Japan and the European Union with the World Trade Organization, a government official said.

The complaint is against China's export restrictions and duties on metals including rare earths, a collective name for 17 metals used in the electronics, defense and renewable energy industries.

Miao Wei, of the Chinese minister of industry, was quoted as saying by state-run news agency Xinhua that China is "actively preparing to defend ourselves and will explain the case if they bring the complaint against us."

While China has about one-third of global rare earth deposits, it produces about 95 percent of the world's supply of rare earths.

China's grip on rare earths began more than 25 years ago when it flooded the market with cheap rare earths, forcing the closure of mines in other parts of the world.

Last year, China's export quota of rare earths was 30,184 tons, a drop of 40 percent from 2009. But last year's actual exports amounted to just half of the quota, Miao was quoted as saying by China Daily newspaper. The Ministry of Commerce has said this year's quota would be in line with last year's.

"Because China is a top global producer for these key inputs, its harmful policies artificially increase prices for the inputs outside of China while lowering prices in China," a statement from the office of U.S. Trade Representative Ron Kirk said.

But Miao repeated what Chinese officials have often said, that China's policy on rare earths export restrictions is motivated by environmental concerns and for the sustainable use and development of resources.

Miao said that some of China's rare earths would be depleted in 20 years if China doesn't halt excessive mining.

He maintained that China's policy on the minerals isn't aimed against any specific country and denied that it is a form of trade protectionism.

Ministry of Foreign Affairs spokesman Liu Weimin said Tuesday that China would continue to manage exports, "and make sure a certain volume of rare earths are available for export according to the WTO rules."

Yet Li Chenggang, head of the ministry's department of treaty and law, indicated that Beijing has no intention of changing its export policy.

Li also questioned the motivation behind the complaint filed with the WTO.

"We cannot exclude the possibility that the U.S. lodged the appeal on rare earths against China for political reasons. China is a major target during the presidential election," Li said.