On March 26, 2014, a Dispute Settlement Panel of the World Trade Organization (“WTO”) released its report in China – Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum, finding that China’s export duties (taxes) and quotas on these raw materials violate commitments under both China’s Protocol of Accession and the General Agreement on Tariffs and Trade (“GATT”). In addition, the WTO Panel found that China failed to justify these export restraints pursuant to Articles XX(b) and (g) of the GATT, which permit otherwise WTO-inconsistent measures when they are necessary for the protection of health and the environment or are related to the conservation of exhaustible natural resources. The Panel also found that China’s measures were applied in a manner that constituted arbitrary and unjustifiable discrimination between countries and a disguised restriction on international trade. Removal of these export restrictions by China should result in greater global availability and fairer pricing for the affected raw materials. The Panel’s report follows similar findings in an earlier WTO dispute, China – Measures Related to the Exportation of Various Raw Materials, which concluded in January 2012.
A summary of the rare earths dispute to date, as well as a link to the Panel’s report, can be found on the WTO’s Website here.
More information regarding the dispute can be found on the Website of the Office of the United States Trade Representative here.