WTO judges have found that China’s rare earths export restrictions cannot be justified as conservation measures.

The WTO’s highest court confirmed in August that China’s export restrictions on various rare earths, as well as tungsten and molybdenum, are largely inconsistent with international trade rules. The decision upheld the main findings of a previous dispute panel ruling, released in March.

China is the leading producer of rare earths, which are primarily used for manufacturing high-tech products, such as wind turbines, energy-efficient lighting, hybrid and conventional vehicles, and medical equipment. However, despite accounting for over 90 percent of production of these minerals, it holds less than 25 percent of the estimated global supply.

In recent years, the Asian economy has imposed various measures to limit the exports of such rare earths. These decisions prompted the US, EU, and Japan to file nearly identical complaints at the WTO in 2012, questioning whether the measures were unfairly propping up global prices of these minerals and giving Chinese producers an unfair competitive advantage.

China, in turn, argued that the measures were geared toward protecting these natural resources, along with limiting the severe environmental damage that comes as a result of their extraction.

The case has drawn particular notice in the trade and environment community, as it brought to the fore the question of how to design natural resource conservation measures while adhering to global trade rules.

How the Appellate Body would rule on the relationship between China’s accession protocol and the WTO Agreements also piqued the interest trade law observers, particularly given the country’s loss in a separate case involving restrictions on raw materials exports.

“By upholding rules on fair access to raw materials, this decision is a win not only for the United States, but also for every nation that respects the principles of openness and fairness,” said US Trade Representative Michael Froman.

For the complete article, please see International Centre for Trade and Sustainable Development.