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UPDATE 3-EU and WTO seeking solution over China rare earths
October 26, 2010 / 9:45 AM / 7 years ago

UPDATE 3-EU and WTO seeking solution over China rare earths

* German economy minister says rare earths becoming scarce

* EU monitoring situation

* WTO’s Lamy says global trade agreement needed

(Updates with new details in pars 5-8, 19-21)

By Juliane von Reppert-Bismarck

BERLIN, Oct 26 (Reuters) - The World Trade Organisation and the EU said on Tuesday they were seeking a solution to German concerns about reported Chinese restrictions on exports of rare earths used to make many high-tech products.

At a conference in Berlin, where the German government warned of the severe impact of the scarcity of the 17 minerals with magnetic, luminescent and other properties, the EU said it was watching China’s actions for possible legal implications.

Frank Hoffmeister, a top aide of European trade chief Karel De Gucht, was asked at the seminar whether the EU planned legal action against China over the reported export restrictions.

"It is clear we are monitoring the situation quite closely. We need to have clear facts," he answered. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Please double-click on links below for graphics showing: - Facts on rare earth metals: link.reuters.com/bam39p - Rare earth metals prices vs. gold: r.reuters.com/vyg32q ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

The EU called on the Organisation for Economic Cooperation and Development to draw up rules securing raw materials trade.

“The OECD has proved to be an effective forum in which to explore and potentially enlarge pluri-lateral disciplines in the raw materials field,” said Hoffmeister.

“Raw materials have become a geopolitical issue,” German industry federation chief Hans-Peter Keitel said. “We need to integrate ourselves into an international raw materials policy.”

The head of the WTO, Pascal Lamy, prescribed a completion of stalled global trade talks as a way of eliminating uncertainty about access to scarce raw materials.

Lamy said the Doha round -- deadlocked since 2008 -- would set clear rules on the transport, sustainable exploitation and tariffs of raw materials, and avert global political tensions.

“A completion of the Doha Round will serve as a stepping stone towards better international trade rules in resource sectors,” Lamy told the conference.

Germany’s electronics industry has said the market for rare earths, used to manufacture a range of high-tech products, had become “critical” due to reported restrictions on exports from China, which produces 97 percent of the world’s supply.

The country’s dominance of rare earths used in high-tech products has drawn growing international attention after reports that the government has been choking off shipments, possibly for political reasons.

ECONOMIC, SECURITY CONCERNS

Beijing has denied any plans to cut export quotas of the minerals used to make cars, computers, cell phones and other high-technology products. Washington has called it a potential threat to the U.S. economy and national security.

China’s media has accused Western countries of making unreasonable demands over the cheap supply of rare earths.

German Economy Minister Rainer Bruederle said his country was “severely affected when it comes to energy resources and ... rare earths which are growing scarce”.

“When speculation is rife, you lose the foundation in the economy,” he said. “And that is detrimental for the producing industries. Pricing frameworks must remain on our agenda.”

Germany, which depends on raw materials from abroad to power its export-driven economy, this month announced a government strategy to secure access to crucial raw materials and called on countries to address the issue together at international talks.

German companies such as ThyssenKrupp said action was needed to secure scarce resources in China, Central Asia and Africa.

“We do not have time to discuss endlessly what to do, we have to act now,” said Edwin Eichler, head of ThyssenKrupp Steel Europe, adding it is time to enter Russian and Central Asian markets. “We have to go there, we have to bring our knowledge, and maybe we will find some new resources there.”

Chinese representatives were not present on any of the panel discussions in Berlin, though the hosts said an official from the Chinese embassy had been invited.

Turning to efforts to address trade imbalances, Bruederle said Berlin was ready for a “frank dialogue” with the United States, but he rebuffed a proposal by U.S. Treasury Secretary Timothy Geithner for a 4 percent limit on trade imbalances.

Writing by Brian Rohan; editing by Stephen Brown

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