China eases export restrictions of rare earth metals

BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/02

At the start of January, China ended export quotas on rare earth metals and some other critical high-tech metals. The quotas have been replaced with export permits. Last August, a WTO panel upheld a US complaint that China’s export quotas violated WTO rules. China had argued the quotas were needed in light of e.g. the environmental damage caused by mining rare earth elements (REEs). In 2010, China sharply cut its export quotas, causing world prices for REEs to soar. The elimination of quotas, however, is unlikely to have much of an impact on prices as export volumes in recent years have remained below the quota amounts. Some observers note that China is also planning to eliminate export duties on REEs, which would have a bigger impact on prices.

Other trade policy issues have also been in the news recently. A WTO panel in December found in China’s favour on its complaint that US duties on Chinese-made solar panels violated WTO rules. The US commerce department recently conceded that the alleged price dumping of Chinese manufacturers was not as widespread as earlier believed and says it is ready to cut anti-dumping duties on solar panels.

Talks on expanding the WTO-enforced Information Technology Agreement (ITA) have been delayed on issues such as a dispute between South Korea and China on duties for flat panel displays. Since the US and China broke their ITA deadlock in bilateral talks in November, the expanded ITA has been considered much more likely.

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