The US, the EU and Japan are justified in bringing a case against Beijing’s rare earths export controls to the World Trade Organisation. But they need not crow quite so much about it. Geostrategic panic about China’s dominance in rare earths is exaggerated.
The case follows a WTO panel’s ruling against Beijing on export controls for eight other industrial raw materials. Its political significance derives from the world’s fit of anxiety upon realising it had abdicated largely all extraction of rare earths – essential inputs into high-tech products such as smartphones – to China. Beijing’s moves to tighten export quotas and, at one point, to suspend exports to Japan in a diplomatic tiff, impressed on importers a sense of vulnerability. But they should not worry too much.
The official rationale for Beijing’s clampdown on rare earths is the legitimate one of cleaning up a sector that has in too many cases been a free-for-all for irresponsible miners. This can be justified on environmental and safety grounds. China’s market dominance has less to do with the rarity of these minerals – they are not all that rare – than with better standards elsewhere having made Chinese supplies particularly attractive. Other countries and companies are belatedly developing new sources of rare earths. Meanwhile, there is a lesson here about imposing standards that industry can then evade through trade.