WTO Case On Chinese Rare Earth Hegemony Gets Under Way With Panel Appointment

on Jul 30, 2012
Listen

Writing in Forbes on 25 July, commentator – and apparently rare earth-guru – Tim Worstall is contemptuous of the World Trade Organisation for what he characterises as its laggardly and ultimately futile response to China’s rare earth elements hegemony. He says this –

>>The World Trade Organisation has just announced that it is finally going to do something about the Chinese restrictions on rare earths. No, no, not to actually do anything, don’t be so absurd, they’ve agreed to sit down and study and discuss the points being made …
He then quotes from an admittedly less than riveting WTO press release of 23 July, reporting on its meeting that day on the subject, before continuing –

>>The WTO has now graciously agreed to actually take note of the complaints and think about possibly looking at whatever evidence anyone wants to put forward.
Biting wit – but misleading. In fact, at its 23 July meeting the WTO – with its Dispute Resolution Board hat on – ordered, at the behest of the US, the EU, Japan and Canada, the appointment of a panel which will now formally hear and determine the complaints that China’s restrictions on REE exports breaches both the GATT and the specific terms of the PRC’s accession to the WTO.

!m[](/uploads/story/210/thumbs/pic1_inline.png)Given that the request for a panel was only filed in March, and that China then refused to acquiesce thus forcing the WTO to act, it can’t be said that there has been undue delay in reaching this point. And it is not the case anymore, if ever it was, that the WTO will ‘sit down and study and discuss’. Under its dispute resolution rules, there is now a clear and well-trodden path to be followed, and a well-established time-frame. The panel functions in a quasi-judicial capacity, taking submissions and supporting evidence from both sides to the dispute, takes time to consider, and then issues a ruling. The process takes around six months. Any party may appeal the ruling which could see final resolution a further 12 months out.

Not a breath-taking pace but a lot more streamlined than some other international tribunals – it’s currently taking four to five years for an application to the European Court of Human Rights, for example, to come on for a hearing.
And, with all due respect for Mr Worstall’s apparent expertise in REEs, a lot faster than the market will be able to deal with things. It’s one thing for the 429 enterprises he alludes to in his commentary to start casting about for global deposits, and the money to fund their extraction; it’s quite another for refined REE products to appear on the market, of a type and quality and in the places that the market wants.

As Mr Worstall notes, China has had no natural monopoly in getting to somewhere over 90 percent of REE supply. It’s been possible because other countries – notably the US – which had hitherto been undertaking the dirty and expensive process were quite happy to flag it away when the Chinese decided to ramp up their REE industry back in the 90s. Especially so, given that the Chinese price undercut everyone else’s.
Back in 2010, when China started throwing its REE weight around, a useful item appeared on the website geolgogy.com, explaining the process of discovering, assessing, permitting, preparing and commercially exploiting an REE deposit. The commentary can be accessed at http://geology.com/usgs/developing-a-rare-earth-elements-mine/ It came with a table showing actual timeframes for projects in different parts of the world. Periods of five to 50 years are in prospect for any start-up today starting up an REE mining venture. We needn’t hold our breath. And we can be confident that the WTO ruling will be out – and operational – long before more than a tiny fraction of Chinese REE production starts coming onstream elsewhere on the planet.

Ad

Invest in commodities like Gold, Wheat, Lithium, Oil & more in minutes with our highest-rated broker, eToro.

10/10

eToro offers real assets only, no CFD products. eToro USA LLC and eToro USA Securities Inc.; Investing involves risk, including loss of principal; Not a recommendation.

Visit site

Featured Broker

Looking to invest?

Invest globally in stocks, options, futures, currencies, bonds and funds from a single unified platform, with our highest-rated broker.

Ad
Commodity Mining Precious Metals Stock Market