RTC Director

US, EU, Japan File WTO Case Against China Over Rare Earths

The United States, the European Union and Japan are accusing China of unfairly limiting its exports of so-called “rare earth” minerals that are key components of many high-technology products.

The U.S., Japan and the 27-nation EU filed a complaint against China on Tuesday with the World Trade Organization in Geneva to seek a resolution of the dispute. They alleged that China, which controls 95 percent of the world's supply of rare earth metals, has imposed export restrictions that violate world trade rules.

It is a contention that Beijing rejects.

U.S. President Barack Obama said he is pursuing the trade complaint so American companies can compete fairly against foreign businesses in the production of goods that require the use of the rare earths. He accused China of violating trade rules by limiting export of the minerals.

“Now if China would simply let the market work on its own, we'd have no objections. But their policies currently are preventing that from happening and they go against the very rules that China agreed to follow.”

The rare earth minerals are essential to the production of such common consumer items as flat-screen televisions, smartphones and hybrid cars, as well as advanced weaponry, small motors that raise and lower car windows, and wind turbines.

China says it adheres to WTO rules in exporting the minerals. But U.S. Trade Representative Ron Kirk said that China has reduced its export of the minerals in recent years, giving Chinese companies an unfair advantage in the production of high-technology products. He said China's export restraints result in massive distortions and harmful disruptions in the supply of the rare earths throughout the world.

China says it has restricted the exports in recent years in order to meet its own domestic manufacturing needs, and to ease the environmental impact from excessive mining.

But Patrick Chovanec, a professor at Beijing's Tsinghua University School of Economics and Management, tells VOA that the WTO has already ruled against China in a similar case.

“The WTO ruled, in a ruling last year, regarding other raw materials, not rare earths but other similar raw materials, that if China wanted to conserve natural resources, or it wanted to protect the environment, that export constraints were not a legitimate way of doing so.”

Washington says the restrictions give Chinese companies an unfair advantage by increasing production costs for foreign firms, and Chovanec suggests Beijing is trying to force high-tech manufacturers to relocate their operations to China.

Chovanec said the Chinese restrictions have prompted other countries to begin scrambling for new sources of the materials.

“The reason why China has a monopoly isn't because it has a stranglehold on the supply, it's just that it's the lowest-cost producer and everyone else got out of the business. There are Australian companies, American companies, Japanese companies are looking around in Central Asia and other places and even on the ocean floor for these materials.”

The complaint over rare earths is the latest action taken by the Obama administration against Beijing over what it claims to be unfair trading practices. The administration imposed a series of tariffs on Chinese tires in September 2009, claiming that surging imports of Chinese tires were hurting U.S. tire manufacturers and threatening jobs.

Mr. Obama has also announced the creation of a new trade enforcement center to ensure that China and other nations abide by WTO rules.

by RTC Director

Obama, Cameron Tout Relations, To Attend Basketball Game

U.S. President Barack Obama and British Prime Minister David Cameron are attending a U.S. college basketball game Tuesday, as the two leaders highlight their strong transatlantic ties.

The White House says the game in Ohio is one of the events during Mr. Cameron's official visit that “underscore the special relationship” between the U.S. and Britain.

President Obama, an avid basketball fan, and Mr. Cameron travel to Dayton to attend the NCAA basketball tournament game. The two return to Washington late Tuesday.

At the White House Wednesday, Mr. Obama and Mr. Cameron are expected to discuss Afghanistan, Iran, Syria, and the upcoming G-8 and NATO summits. The British prime minister will also be honored with a state dinner.

In a newspaper opinion piece, the president and prime minister hailed the U.S.-British alliance as a “partnership of the heart, bound by the history, traditions and values” the two countries share.

They write in the Washington Post that they are working with G-8 and G-20 partners to put people back to work, sustain the global recovery, stand with Europe in resolving the debt crisis while curbing the “reckless financial practices” that have been costly to taxpayers.

President Obama and Prime Minister Cameron also say they are proud of the progress that their troops have made in Afghanistan, while noting that recent events — which they did not specify — show that the mission remains difficult.

by RTC Director

US Defense Chief in Kyrgyzstan for Talks on Base

U.S. Defense Secretary Leon Panetta is in Kyrgyzstan in an effort to persuade the country's leaders to allow the U.S. military to continue to use an airbase there after its lease expires in 2014.

The Manas facility is used by the U.S. military for moving troops and supplies in and out of Afghanistan. It also houses a fleet of aerial refueling aircraft.

Panetta met Tuesday with the secretary of Kyrgyzstan's Defense Council, Busurmankul Tabaldiev, and Kyrgyz Defense Minister Taalaybek Omuraliev. At the start of the meeting, Tabaldiev told reporters there should be no military mission at the Manas base after 2014. He said the base is a civilian, commercial enterprise.

However, a U.S. official travelling with Panetta said there may be some “wiggle room” in future talks on the matter.

Losing the base would severely complicate the upcoming drawdown of U.S. combat troops in Afghanistan, which is set to take place through the end of 2014.

The base has been the source of much contention between the two countries. In 2009, Kyrgyzstan threatened to close the base, but reversed the decision after the U.S. increased its yearly payments from $17.5 million to $60 million.

by RTC Director