Does China Have The Right To Block Rare Earth Exports?

OPEC can set export and production quotas. China cannot set very tight limits on the export of its rare earth metals. The US says China does not have the right. Japan says the same. Each nation has large industries that rely on the metals. The problem could become so dire for some industries that the US may take its case to the World Trade Organization.

Most cases taken before the WTO are for the dumping of products at artificially low prices by one nations into another. The US has accused China of such behavior for years. Now, China has raised several cases of alleged US dumping of chicken parts and livestock feed. Cases based on pre-meditated export limits are much less prevalent if they exist at all.

China may have a right to its own minerals. The People’s Republic claims it will not export a great deal of rare earth metal in the early part of 2011 because it wants to increase its stockpiles. The actual cut China has announced is 10% for the first half of next year compared to the same period in 2010. Most analysts believe that the stockpile excuse is not true. They view the rare earth gambit as a way to improve economic leverage the People’s Republic has over other large nations.

But, the metal is China’s, just like stockpiles of US grain belong to America and oil belongs to the Saudis. Who’s to say where the line is between unfair hording and simple property rights? Perhaps the WTO, but that will take years

Douglas A. McIntyre