Obama to announce rare earth trade case against China
WASHINGTON — US President Barack Obama will Tuesday announce a new trade suit against China prompted by Beijing’s restrictions on the export of rare earth materials used in manufacturing high-tech products.
A senior White House official said on condition of anonymity that the United States would bring the case at the World Trade Organization with the European Union and Japan, in a new sign of election-year trade tensions with Beijing.
China is the world’s largest producer of rare earths — 17 elements critical to manufacturing a range of high-tech products from iPods to missiles — and its moves to dictate production and exports have raised a global outcry.
Critics say Beijing’s strategy is aimed at driving up global prices of the metals and forcing foreign firms to relocate to the vast emerging nation to access them.
But Beijing says the restrictions are necessary to conserve the highly sought natural resource, limit harm to the environment from excessive mining and meet domestic demand.
The Chinese government has set its 2012 export quota for rare earths at around 30,000 tonnes, the same level as 2011. Yet exporters only filled roughly half the quota last year.
State media have already reported that China was bracing for renewed calls to ease its rare earths controls after the WTO ruled that limits on such key raw materials broke trade rules.
China has also called for greater use of rare earths for its own domestic manufacturing, a move which also raised concerns in the West.
Rare earth goods have a wide range of applications in the military and technology sectors of the economy in particular.
They are used in products including computers, MP3 players, disc drives, missiles and flat screen televisions and cellphones.
Obama, facing fierce election-year pressure on China from Republican opponents, has repeatedly called on Beijing play by the “rules of the road” as it rises to become one of the dominant players in the global economy.
The US president has already launched a new enforcement center to more aggressively challenge “unfair” trade violations, including by China.
In other disputes, Washington has accused China of artificially undervaluing its yuan currency in order to boost its own exports, hurting US manufacturers and hobbling the economic recovery.
But China defends its exchange rate regime, saying it is moving gradually to make the yuan more flexible.
During a visit earlier this year to Washington by China’s presumed next ruler, Vice President Xi Jinping, Obama spelled out expectations of China on trade.
“We want to work with China to make sure that everybody is working by the same rules of the road when it comes to the world economic system,” Obama said, as Xi sat by his side ahead of their Oval Office talks.
“That includes insuring that there is a balanced trading flow not only between the United States and China but around the world.”
Xi used the visit to express hopes that US election-year politics would not have a “regrettable impact” on ties between the world’s two largest economies.
The United States has also accused China of subsidizing its auto parts sector and of not doing enough to crack down on US-developed and produced computer software.
Early in the Obama administration in 2009, Washington also slapped harsh tariffs on Chinese tires, even as the White House sought to establish a cooperative relationship with Beijing on geopolitical issues.