Domestic rare earth exports or WTO investigation to strengthen rare earth management

After the 60th day when the United States, the European Union, and Japan formally filed a lawsuit against the World Trade Organization (WTO), China and the United States, Europe, and Japan have not reached a consensus on the issue of rare earth export restrictions.

On March 13, the United States, the European Union and Japan formally filed a lawsuit against the WTO on China's restrictions on the export of rare earth and other raw materials on the grounds of violating the WTO agreement, and initiated a consultation request to the Chinese side. According to regulations, China should negotiate with it within 60 days to seek consultation and settlement. If no agreement can be reached, the US, Europe and Japan have the right to request the WTO to set up a working group to conduct an investigation.

Yesterday (May 15), at the regular press conference held by the Ministry of Commerce, Shen Danyang, a spokesperson for the Ministry of Commerce, said that China and the United States, Europe and the United States have not reached a consensus on the rare earth export restrictions and are currently negotiating.

It is reported that China and the above-mentioned three parties have no signs of concession. The case is likely to allow the WTO to formally investigate and enter the legal process.

In addition, the author understands that China's rare earth quotas do not have the problem of “not enough use”. Last year, China's rare earth export quotas only used about half. This is mainly due to the difference between the customs price limit and the domestic seller's offer, and foreign customers have begun to look for alternatives to rare earths.

Ministry of Commerce: No agreement reached

In recent years, China has implemented a stricter management system for raw material exports, including the formulation of emission standards for rare earth industrial pollutants, the adjustment of rare earth resource taxes, and the management of rare earth export quotas. A series of regulatory policies and industry consolidation have raised the international rare earth prices, and the export quota is even more dissatisfied with countries such as Europe and the United States.

It is reported that the dispute surrounding China's rare earth export restrictions can be traced back to 2009. At that time, the EU, the United States and Mexico successively stipulated China's raw material export restriction policy to the WTO. The raw materials listed by the three parties involved nine kinds of raw materials: bauxite, coke, fluorite, magnesium, manganese, ferrosilicon, silicon carbide, yellow phosphorus and zinc.

The above nine raw materials do not contain rare earths, but this is generally considered to be a “drunken man’s intention not to drink”. On January 31 this year, the WTO ruled that nine kinds of raw materials such as bauxite and fluorite in China were “violated”, and then the three major economies of the United States, Japan and the European Union joined forces to launch Chinese rare earths.

On March 13, the United States, the European Union and Japan formally filed a lawsuit with the WTO to initiate a consultation request to China on management measures such as China's rare earth export tariffs and export quotas. According to regulations, China should negotiate with it within 60 days to seek consultation and settlement. If an agreement cannot be reached within this time limit, the US, Europe and Japan have the right to request the WTO to set up a working group to conduct an investigation.

At present, 60 days have passed, Shen Danyang said yesterday that the rare earth export restrictions are currently under negotiation and the results of the negotiations have not yet been reached.

"If the consultation fails, the plaintiff will apply to the WTO for an expert group investigation. If the investigation result is unfavorable to the defendant, the defendant can protest and investigate again. If the second investigation still does not change much, then the defendant does not need to agree. Directly enter the legal process ruling." Any of Wei Wen, the head of the China-US European Strategy and Economic Research Center of the China International Trade Association, said in an interview with the author, "In the understanding of the consultation period, it should be from the beginning of the consultation, and now the consultation should be in progress"

Strengthening rare earth management for environmental protection needs

According to the author's understanding, China and the United States and Europe have no signs of concession. In He Weiwen's view, if the case is formally investigated by the WTO and entered the legal process, it will not rule out the possibility of losing the case.

Cheng Dawei, chief expert of the Beijing WTO Affairs Center, also believes that the United States will not give up easily unless it forces China to make concessions. However, after several hearings and reviews by experts, until the release of the interim report, the final review of all WTO members and the final report will take place. The entire process will take at least one year, which will give more time for the adjustment of the domestic rare earth industry.

In response to this argument, He Weiwen analyzed that there is indeed such a precedent. During the Bush administration, the United States had levied a steel surtax on the violation of regulations. Although it eventually lost the case, during the investigation, the US steel companies turned losses into profits. But he cautioned that this approach is more risky because it may eventually lose money.

However, from our own perspective, there are still reasons to strengthen the management of the rare earth industry. At a press conference in April, Zhu Hongren, chief engineer of the Ministry of Industry and Information Technology, emphasized that the series of policy measures adopted by the Chinese government are entirely due to the need to protect resources, the environment and sustainable development. Quotas and tariff measures are part of an integrated approach. China has also adopted simultaneous management measures for rare earth mining, production, and environmental protection, in line with WTO rules. In support of his views, he also took photos of three rare earth mining sites on the spot and said that the environmental damage caused by rare earth mining is “shocking”.

At present, the export quotas of rare earth enterprises have been closely linked to the results of environmental protection verification. The reporter learned that after two batches of public notices from the Ministry of Environmental Protection, there were 56 rare earth enterprises in the country that met the environmental standards. Among the 32 rare earth export quota declaration enterprises, only 7 companies including Baotou Steel Rare Earth failed to obtain a reserve quota of 4,393 tons.

Last year, export quotas only used half

At the same time, the author noted that customs data shows that China's rare earth quotas do not exist "not enough" phenomenon. As of the end of November 2011, the rare earth export quota last year only used 49%.

"In 2011, the export quotas were just over half of the total. From the data point of view, the quota indicators are excessive." Du Shuaibing, a rare earth analyst, told reporters.

Compared with the export quota, the distress of foreign customers is more “unable to use”. The reporter learned on the same day that the price of rare earth exports can reach nearly 10 times when the price difference with the domestic market is the largest. This price is not separately formulated by domestic sellers. It includes various intermediate links and management costs, as well as the Ministry of Industry and Information Technology. , the Ministry of Environmental Protection and other management departments.

It is understood that the general customs export price limit is more than 200% of the domestic market.

“In the case of antimony oxide, the domestic price is 170,000 yuan per ton, and the export tariff price is almost 110 US dollars per kilogram (equivalent to about 690,000 yuan/ton). The prices of individual large enterprises are higher than this. Some." Du Shuaibing said.

In this regard, domestic rare earth traders who do not want to be named reflect that “after the increase in export prices (limit price), the cost of purchasing this piece by foreign companies has increased a lot, and many customers have begun to consider some substitutes.”

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