Government to challenge China on rare earths curbs at WTO

WASHINGTON Tue Mar 13, 2012 12:41am EDT

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WASHINGTON (Reuters) - The United States, Japan and European Union plan to bring a new trade case against China over its export restrictions on rare earth minerals used in a variety of high-tech and clean energy products, senior administration officials said on Monday.

They were responding to a published report by the Associated Press which said President Barack Obama would announce on Tuesday that the United States would ask China for talks on the issue at the World Trade Organization, the first step in filing a trade case, and be joined by the EU and Japan.

The move appears to be part of a broader effort by Obama to toughen his stance on trade with China as he seeks re-election in November.

He recently created a new interagency trade enforcement center, which is expected to be up and running in the coming months. A primary focus is to make sure China honors WTO rules.

Obama administration officials also have been considering a WTO complaint against anti-dumping and countervailing duties that China imposed late last year on U.S. auto exports.

U.S. lawmakers have vigorously protested the duties, which they say were unwarranted and appear to have been imposed in retaliation for legitimate trade curbs the United States has imposed on Chinese products, such as tires.

China accounts for around 97 percent of the world's output of the 17 rare earth metals, which are crucial for global electronics production and the defense and renewable-energy industries. They are also used in a wide range of consumer products, from iPhones to electric cars.

Beijing's restrictions on exports of the valuable minerals became a flash point in 2010, when China halted rare earth shipments to Japan during a diplomatic dispute.

The United States and the EU have long been expected to file a WTO case against China's rare earth mineral export curbs, but appeared to be awaiting the outcome of a separate case against Beijing's exports on a long list of other raw materials.

That dispute was finally decided in favor of the United States, EU and Mexico in January after China lost an appeal to keep its raw material export curbs. Beijing has not yet announced how it intends to comply with the January ruling.

(Reporting By Doug Palmer; Editing by Paul Simao)

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