This strikes me as nonsense. I may not be a fan of Chinese trade policies, but I have a hard time seeing where the WTO gets the authority to decide what a country MUST do with it's natural resources. Seriously, the US has the resources and technology to mine and refine our own rare earth minerals. We shut that down due to the low cost of Chinese supplies (partially due to cheap labor and unenforced environmental controls). Now it's a WTO ruling that the Chinese are required to exploit their resources? When the tables turn on the US, we will be seeing these rulings from a completely different viewpoint.
...Obama is proposing to further increase already large subsidies for EV, and presumably wind power, these policies use quite a bit of rare earths. I guess they are looking down the road.
Countries agree to join the WTO.. so that's where they get the authority. (ETA: The authority extends to trade practices only) This is only a pre-complaint motion made by the US (and EU and JP). The formal complaint has not been made, and nothing has been decided by WTO (the article mentions a decision but that was on a previous issue). As the article notes, these things take quite a bit of time. In no way would the WTO rule that China has to mine materials. However they cannot give a preference to domestic markets and the allegation is that domestic producers are given preferential prices. The circumstances surrounding China's current control of the market are not relevant, but the US mines are in the process of restarting production.
As stated above, the WTO regulates trade practices. China's pricing for rare earth elements is suspect but typical practice for China: Initially they flooded the market with low priced rare earths, leading to the world-wide collapse of rare earth prices and ending mining and extraction everywhere except China. Now that they have a temporary monopoly, China is restricting export, which raises prices and gives an advantage to Chinese manufacturers. The market will respond and production will restart in other countries, but this takes time and money. After other production restarts, China can once again flood the market and the cycle continues. This is why we have the WTO, to prevent such abuse. Tom
so basically like OPEC with oil China don't wanna sell REM cheap. 20% price decrease is a good reason to limit production. So we'd rather depend on China then depend on russians? http://www.telegraph.co.uk/sponsore...n-as-China-cuts-rare-earth-metal-exports.html
Afghanistan "Afghanistan’s Helmand province, scene of some of the heaviest fighting between U.S. forces and the Taliban, holds at least 1 million metric tons of rare-earth elements such as lanthanum, cerium and neodymium, according to a study by the U.S. Geological Survey."
Isn't THAT a crazy idea now. Plugin an EV powered vehicles means that we will need more electricity (rare-earth needed) and generating more electric (via wind) requires more rare-earth. So we need it. Or, we can wait until the economy sinks real hard again - and THEN trt to invest heavily in alternative energy. How you gona do that? The economy getting boosted means we use more oil/coal/dirty fuels. That demand will cause the already limited supply of oil to skyrocket even more, which in turn causes the economy to sink. The price of oil and the economy are inextricably linked: Get Ready for Oil Price Volatility to Kill the 'Recovery' - Mar 13, 2012 - Martenson Reports at Chris Martenson - Martenson Report No alternative/renewable energy is a silver bullet, but we really need to get as many alternatives going as we can, because if/when the economy spirals downward again, what's going to fund alternate energy sources?
This study www.re-journal.com/en/download.asp?ID=2638 indicates that Brazil has the largest deposits. do not know how Afghanistan got missed in that study. Practical accessibility and local policies are another matter. No doubt there will be increasing need for strong magnets, catalytic converters and all the other end uses in the future. Having competitive suppliers would probably do more for price&production stability than the WTO can implement.
Originally Posted by wjtracy ...Obama is proposing to further increase already large subsidies for EV, and presumably wind power, these policies use quite a bit of rare earths. I guess they are looking down the road. Hill...I think I nailed this one, couple days later the Administration was pushing the mid-Atlantic wind project which will need more rare earths than you can shake a stick at.
While I can understand the need to curb trade abuse, I still see an issue with the enforcement organizations (member countries) being the ones subject to the rulings (the member countries). None the less, please keep the good comments coming.
That is the inherent problem with international rules. There is no superior force to maintain order. It's just like a bunch of kids on a playground, with no adult supervision. Unfortunately, instead of throwing stones, we have atomic weapons. Tom
I don't think the WTO demands that a country exploit resources per se, but rather that if they are mined then agreed upon trade practices must prevail.
What got my attention is that China complying with WTO desires had a potential downside. Specifically, if China really did want to bring the exploitive mining under control via state export control, then that good environmental intent could run afoul of the ruling. Now that is a big "if" since economic games usually are the cause of market swings, so I have to acknowledge that. But could the tables be turned in the future? For example, lets say the US shipping all our dirty coal to China needs to be redirected since no efforts are made to burn it cleanly overseas whereas US coal plants have to follow many regulations and natural gas is running dry. Will this run afoul of a WTO desire? Should we comply just because we established a baseline? Would really like to hear other's viewpoints.
Yes, the fundamental problem is that they are engaged in unfair market manipulation. They have export controls of the metal but you can bet they allow unrestricted export of products using the metals. If they're concerned about environmental damage they should have production controls. Recycle. Recycle. Recycle.
