U.S. Representative Mike Coffman (R-CO) today lauded the recent decision by the World Trade Organization (WTO) that China's restrictive export policy related to rare earth metals is in clear violation of WTO rules. Three years ago, on March 3, 2011, Coffman sent a bipartisan letter, signed by 28 Members of Congress, to the U.S. Trade Representative Ron Kirk demanding that he file this trade complaint against China's unfair export policies regarding rare earth metals. On June 26, 2012, Kirk filed the complaint.
"The Chinese government's policy regarding rare earth metals was designed to unfairly exploit their manufacturing base at the expense of jobs in the United States and in the rest of the industrialized world. This decision is a victory for free trade, and hopefully, manufacturing jobs in the United States," said Coffman, the Republican Co-chairman of the bipartisan House Rare Earth Caucus.
Rare earth metals are critical to manufacturing in the digital age and can be found in everything from cell phones to computers to precision guided missiles. They get their name because although rare earth metals are plentiful in the earth's crust they are rarely found in deposits that are concentrated enough to make them commercially viable. Specific examples of rare earth metals include scandium; used in aerospace components, neodymium magnets; critical for making wind turbines for renewable energy, and yttrium; for making energy efficient light bulbs.
According to Coffman's 2011 letter, reflected in the trade complaint filed by the US. Trade Representative, China had amassed a near monopoly status of rare earth metals and then, though discriminatory policies and tariffs promulgated by their government, restricted exports. The intention of the Chinese government was to provide for a stable low cost supply of rare earth metals for only their own domestic industrial base while significantly increasing the prices of rare earth metals to their global competitors. The net result would eventually be to force more and more manufacturing to relocate to China. The WTO ruling confirms these actions were in violation of international trade laws.
"China's attempt to strategically create a near monopoly on the rare earth market is alarming, particularly to those of us in Congress who sit on the Armed Services Committees. This decision will have a wide-ranging positive effect on both our economy as well as our national security interests," said U.S. Representative "Hank" Johnson (D-GA), the Democrat Co-Chairman of the bipartisan House Rare Earth Caucus.
According to the USTR, China now has until May 25, 2014 to appeal the decision under WTO rules, a decision their government is widely expected to make.
"Free trade with China must also be fair trade with China," said Coffman.