China's reputation as a major military power is crowned by the possession of nuclear weapons that are capable of all ranges and delivery modes.
It is an exhaustive evaluation of the measures that China has put in place to regulate the export of these materials, and follows a two-year investigation by the WTO into the complaints made.
In it I suggested the potential arguments that China might make to defend its export measures, using certain exceptions to the WTO rules, and the potential consequences of various outcomes. In the following article, I will review the main findings of the DSB Panel, the basis for their determinations, and the key takeaway points from the Report.
The Complaints Since the initial request for the formation of a DSB Panel to review the issues at hand, the specific complaints were refined. They focused specifically on measures relating to export duties, export quotas and the limitations placed on companies that are permitted to export these materials.
Process Timeline The process started on March 13,when the Complainants each requested consultations with China, under WTO rules, with respect to the initial measures and claims that were detailed in my previous article ; Consultations were held during April In summary, the DSB Panel found that: Analysis Having reviewed the Panel Report in its entirety, there are three overarching themes to take away from it: China presented extensive evidence on the environmental risks associated with the REE supply chain, including reference to the toxicity of mine tailings and the challenge of air and water pollution.
In this regard, China submits that companies outside of China that were producing, or had the capability to produce, rare earths were not ready to bear the high costs of implementing technology that would tackle environmental harm and meet national regulatory environmental requirements.
On the contrary, the Panel made it crystal clear that it did in fact recognize that such harm had occurred. There was no evidence to suggest that putting export duties in place would have or had had any material effect on the stated goal of pollution control.
This was a similar finding to a previous WTO dispute involving China. This assertion of a connection was always going to be a problem for China to prove, since the final destination of a resource i. China failed to demonstrated that there were any corresponding measures that increase the price of REE products that are intended for use inside China.
However, the Panel noted that: The Panel found that China had not demonstrated evenhandedness in its approach to domestic and foreign entities, with respect to access to REEs, and thus the imposition of export quotas was not made in conjunction with other measures that would affect the domestic supply chain.
There was significant discussion on the role of production and separation quotas, but the Panel was not convinced that the impact of the measures was anything other than discriminatory against foreign entities. If it does not, or if it does and the findings are upheld, then it is likely that China would be required to drop its export duties and export quotas on REEs.
If the prices converge as a result of the elimination of export controls, then the ambiguity goes away, and we are left with similar prices regardless of the destination of the products. That said, there have already been discussions within the industry in China, concerning the imposition of across-the-board resource taxes on REE products, which would elevate the prices above the current domestic levels, presumably to some point below current FOB prices.
If China is genuinely concerned about controlling the environmental impact of REE production, and in protecting its resources from exhaustion, then the imposition of such taxes, as well as a reduction in the overall production quotas, and the imposition of pollution taxes, could be effective measures — measures which do not discriminate against foreign entities, thus conforming with the WTO rules.
It should be noted that regardless of the outcome of the WTO dispute, downstream users of REE products in China, that incorporate these materials into components and other goods that are then exported from China, will still have a distinct advantage over downstream users outside of China.
We will keep an eye on the appeals process for this WTO case, and will of course share what we discover, when we have more to report. Check out Gareth's full bio for more details.
Note that the views and opinions expressed by Gareth on this Web site, or via any other Web site or publication, are solely his alone.policies and environmental policies that promote sustainable development and trade liberalization. The mandate of the Task Force is to assist China in China’s WTO accession and to prepare our report to the China Council for International Cooperation on Environment and Development (CCICED).
The further development of co-operation with the EC on issues of Uzbekistan’s accession to the WTO is anticipated in the integrated program on implementation of the Agreement on Partnership between the Republic of Uzbekistan .
The past week has seen a flurry of activity at the WTO in preparation for the upcoming December ministerial. With the event less than eight weeks away, delegations are pushing to finalise items for inclusion on the ministerial agenda before next week's 2 November deadline.
Chinese and EU officials June 11 agreed to make every effort to conclude talks for China's entry into the WTO by the end of EU trade commissioner Sir Leon Brittan and Chinese trade minister Shi Guangsheng met earlier this month to work out details for facilitating a entry.
Since its accession into the WTO in , China‘s share in global trade has doubled – accounting for percent of the world’s merchandise trade exports and percent of merchandise trade imports.
China's accession to the WTO represents a goal achieved after nearly fifteen years of exhausting negotiations. A special precautionary instrument, the Transitional Review Mechanism (TRM), was included in the Protocol of China's Accession to the WTO, as requested by the US and supported by the EU.