US to file complaint with WTO against China

The U.S. will file a complaint today with the World Trade Organization over Chinese limits on exports of rare-earth materials used in high-tech products, according to an Obama administration official. The U.S. will join Japan and the European Union in requesting consultations with China at the Geneva-based trade arbiter over China’s rare-earths shipments, the administration official said yesterday in Washington, speaking on condition of anonymity ahead of the White House announcement.Rare earths are 17 chemically similar metallic elements used in making batteries, electric cars and wind turbines. The U.S. will argue that China’s curtailment of the exports has given Chinese companies an unfair advantage by increasing production costs for American firms that use the materials, the official said. President Barack Obama will personally announce the action today, according to the official. His administration has been ratcheting up pressure on China over its trade policies a decade after the nation was accepted into the WTO. Shen Danyang, a spokesman for China’s Ministry of Commerce in Beijing declined to comment. Japanese Chief Cabinet Secretary Osamu Fujimura said the government is considering bringing China to the WTO. Fujimura, speaking to reporters today in Tokyo, said no decision has yet been made. Trade-Enforcement Panel Obama signed an executive order two weeks ago creating a U.S. panel to investigate unfair trade practices by nations including China. Obama’s 2013 budget proposal submitted to Congress last month asked for at least 50 people and $26 million in funding, and U.S. Trade Representative Ron Kirk called it the most significant allocation of resources since his office was created almost 50 years ago. The administration has filed five World Trade Organization complaints against China since taking office three years ago, compared with seven George W. Bush filed from 2001, when China joined the Geneva-based trade arbiter, through the end of his term in early 2009. Obama imposed duties in 2009 on Chinese-made tires, which he said has helped to create more than 1,000 U.S. jobs. Congress last week passed bipartisan legislation letting the Commerce Department apply duties to offset government subsidies in nations such as China. The administration’s plans to seek a WTO proceeding against China were reported earlier by the Associated Press. Rare-Earth Prices Before taking other actions, WTO members must speak to each other to see if they can settle their differences. The organization’s rules require China to hold talks with the U.S., EU and Japan within two months. The U.S. and its partners may ask for the appointment of a formal WTO panel should the consultations fail to resolve the issue. Rare-earth prices soared in 2010 after China -- which accounts for 95 percent of global supplies according to the U.S. Geological Survey -- imposed a quota on exports. While the rarest of the 17 chemically similar metallic elements are more common in the earth’s crust than gold and the most abundant are about as well-represented as copper and zinc, they only occur in concentrations that are economic to mine in a few places in the world, according to the Geological Survey. Molycorp Inc. (MCP) of Greenwood Village, Colorado, is the owner of the largest rare-earth deposit outside of China, located near Mountain Pass, California. On March 9, Molycorp agreed to buy Canada’s Neo Material Technologies (NEM) for C$1.3 billion ($1.3 billion) to expand its manufacturing capability and grow its access to markets in China, the largest consumer of the metallic elements. Jim Sims, a spokesman for Molycorp, said the company couldn’t immediately comment when he was reached by phone yesterday.